In this article, we discuss the 5 best dividend stocks for inflation. If you want to read our comprehensive analysis of these stocks and the current market situation, go directly to 10 Best Dividend Stocks For Inflation.
5. AT&T Inc. (NYSE:T)
Number Of Hedge Fund Holders: 74
Dividend Yield as of June 24: 5.29%
The world’s largest telecommunications company and the largest provider of mobile telephone services in the United States, AT&T Inc. (NYSE:T) is an American multinational telecommunications holding company based in Dallas, Texas, that offers wireless voice and data plans, cloud solutions, different kinds of telephony services, and cloud solutions. The company currently offers a quarterly dividend of $0.2775 per share, with a dividend yield of 5.29%, as of June 24.
On June 16, Tigress Financial analyst Ivan Feinseth lowered the price target on AT&T Inc. (NYSE:T) to $28 from $31 and maintained a Buy rating on the shares. According to the analyst, his target drop accounts for the WarnerMedia spin-off as AT&T Inc. (NYSE:T) pivots back to its communication focus. He adds that the company’s subscriber growth and “resilient” business model will continue to drive increasing cash flow and long-term shareholder value creation.
AT&T Inc. (NYSE:T) reported earnings for Q1 2022 on April 21, posting an EPS of $0.77, above market estimates by $0.08. The $38.11 billion revenue also outperformed Street consensus estimates by $8.68 billion. Shares of the company rose after these results surpassed expectations, with the latest performance being partly attributed to the aggressive expansion of its 5G services.
At the end of March 2022, AT&T Inc. (NYSE:T) remained popular among elite funds, as 74 hedge funds tracked by Insider Monkey reported owning stakes in the company, up from 70 in the previous quarter. These stakes hold a total value of more than $4 million. Among these funds, Arrowstreet Capital was the leading stakeholder of the company in Q1.
Weitz Investment Management mentioned AT&T Inc. (NYSE:T) in its Q4 2021 investor letter. Here is what the firm has to say:
“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”
4. Enbridge Inc. (NYSE:ENB)
Number Of Hedge Fund Holders: 24
Dividend Yield as of June 24: 6.44%
Enbridge Inc. (NYSE:ENB) is a multinational pipeline company headquartered in Calgary, Alberta, Canada. The company invests in natural gas pipelines and gathering and processing facilities in the US and Canada, alongside providing services related to energy infrastructure.
Another dividend aristocrat on our list, the energy company has successfully raised its dividend yield for the past 27 years. Currently, the company offers a quarterly payout of C$0.86, with a yield of 6.44%, as of June 24. Earlier this May, RBC Capital analyst Robert Kwan raised his price target on Enbridge Inc. (NYSE:ENB) to C$65 from C$60 and kept an Outperform rating on the shares of the company.
For the fiscal first quarter of 2022, Enbridge Inc. (NYSE:ENB) recorded earnings per share of $0.6, beating the previous quarter’s EPS of $0.5. The company’s revenue was $11.7 billion, also surpassing the previous quarter’s revenue of $9.8 billion.
Out of 912 hedge funds, 24 hedge funds were long Enbridge Inc. (NYSE:ENB) in the first quarter of 2022, with a total stake value of $2.4 billion. In comparison, 21 hedge funds held stakes in the stock in the previous quarter, with a total stake value of $550 million.
3. Devon Energy Corporation (NYSE:DVN)
Number Of Hedge Fund Holders: 66
Dividend Yield as of June 24: 6.70%
Devon Energy Corporation (NYSE:DVN) is an energy company based in Oklahoma. The core business of the company is the exploration, development, and production of oil and hydrocarbon in the United States. The company’s dividend yield as of June 24 came in at 6.70%. On May 2, Devon Energy Corporation (NYSE:DVN) declared a $1.27 per share quarterly dividend, surpassing the previous. The dividend will be paid to shareholders on June 30.
Devon Energy Corporation (NYSE:DVN) announced its financial results for the first fiscal quarter of 2022 on May 5, posting an EPS of $1.88, crossing market estimates by $0.12. Revenue for the quarter increased 116.35% on a year-over-year basis to $3.81 billion, surpassing predictions by $242.30 million.
Raymond James analyst John Freeman raised the price target on Devon Energy Corporation (NYSE:DVN) to $102 from $90 and maintained a Strong Buy rating on the shares after the company announced the acquisition of RimRock Oil and Gas for a purchase price of $865 million. Based on the analyst’s remarks, the deal is immediately accretive, with a free cash flow yield of 25% at strip pricing.
A top dividend stock among investors, 66 hedge funds were long Devon Energy Corporation (NYSE:DVN) in the first quarter of 2022, up from 51 funds in the preceding quarter. The total stakes held in Q1 amounted to $1.92 billion, compared to $1.74 billion in the last quarter. Rajiv Jain’s GQG Partners is the company’s biggest shareholder, with a position worth roughly $888 million.
Here is what GoodHaven Capital Management has to say about Devon Energy Corporation (NYSE:DVN) in their Q4 2020 investor letter:
“After a rough start to the year our two biggest energy holdings – WPX Energy rebounded materially in the last six months though energy was still our biggest detractor for the year. I’ve previously written about deciding earlier this year to direct new capital towards better businesses versus adding more to the energy sector, but given the material optionality at WPX, we opted to maintain a material exposure. Recently WPX announced an all stock merger with a larger competitor – Devon Energy – which will leave the new company with plenty of cash flow at lower oil prices, less leverage, and material upside to higher commodity prices.”
2. Kinder Morgan, Inc. (NYSE:KMI)
Number Of Hedge Fund Holders: 40
Dividend Yield as of June 24: 6.74%
Kinder Morgan, Inc. (NYSE:KMI) is one of the largest energy infrastructure companies in North America that operates through four business segments: Natural Gas Pipelines, Products Pipelines, Terminals, and CO2. The company’s 85,000 miles of pipelines serve major consuming domestic markets and transport approximately 40% of the natural gas consumed in the United States. The company has raised its dividends for 5 years in a row. As of June 24, the stock’s dividend yield stood at 6.74%.
Earlier this April, Wells Fargo analyst Michael Blum upgraded Kinder Morgan, Inc. (NYSE:KMI) to Equal Weight from Underweight with a price target of $21, up from $19, to reflect higher assumed multiples for refined products assets in his sum-of-the-parts valuation. Although the analyst still views Kinder Morgan, Inc. (NYSE:KMI) as a defensive midstream company, he believes the company could benefit from a number of tailwinds on account of surging inflation, oil prices hovering around $100/Bbl, and robust demand for natural gas/LNG. These include higher products pipeline growth, higher CO2 segment earnings, strong demand for natural gas, and potential LNG liquefaction projects.
On April 20, Kinder Morgan, Inc. (NYSE:KMI) announced its financial results for the first fiscal quarter of 2022, posting an EPS of $0.32, beating Street estimates by $0.04. The $4.29 billion revenue surpassed market consensus forecasts by $546.32 million.
At the end of Q1 2022, 40 hedge funds were bullish on Kinder Morgan, Inc. (NYSE:KMI) with stakes worth $1.34 billion. This is compared to 39 positions in the previous quarter with stakes worth $998.85 million. The hedge fund sentiment for the stock is positive.
1. Altria Group, Inc. (NYSE:MO)
Number Of Hedge Fund Holders: 47
Dividend Yield as of June 24: 8.29%
A Virginia-based corporation and a worldwide distributor, Altria Group, Inc. (NYSE:MO) is one of the world’s largest producers and marketers of tobacco, cigarettes, and related products. One of the highest yielding S&P 500 dividend stocks, the tobacco company is a dividend king with a history of 52 years of consecutive dividend growth, making it one of the best stocks for inflation hedge.
Altria Group, Inc. (NYSE:MO) currently offers a quarterly payout of $0.90 per share, with a dividend yield of 8.29%, as of June 24. This June, Goldman Sachs analyst Bonnie Herzog noted that shares of Altria Group, Inc. (NYSE:MO) have traded off sharply following a Wall Street Journal article suggesting that the FDA is preparing a marketing denial order on all JUUL products, which would effectively remove such products from the U.S market. However, the analyst maintained her Buy rating and $59 price target on Altria Group, Inc. (NYSE:MO) shares, citing “strong conviction” that Altria will be able to deliver on its mid-single digit EPS growth target for FY22 and beyond despite this hurdle.
A total of 47 hedge funds out of the 912 tracked by Insider Monkey held stakes in Altria Group, Inc. (NYSE:MO) worth roughly $1.95 billion at the end of the first quarter of 2022. This is compared to 39 hedge funds in the previous quarter with a total stake value of approximately $1.05 billion. Rajiv Jain’s GQG Partners is a leading shareholder in Altria Group, Inc. (NYS:MO), with over 18.3 million shares worth more than $956 million.
Here is what Broyhill Asset Management has to say about Altria Group, Inc. (NYSE:MO) in its Q2 2021 investor letter:
“Altria (MO) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 20%. We shared our thoughts on these regulations during the quarter, which are available here.
MO Valuation. MO is up ~ 18% YTD (even accounting for the recent sell-off). We expect MO to generate close to $5 in annual FCF per share over the next few years, putting the stock at ~ 10x, which is less than half the market’s multiple today. Over the last decade, shares have traded at an average multiple of 15x and within a range of ~ 10x – 20x (+/-1 standard deviation). The stock yields 7.2% at the current price, close to a 6% premium to treasuries. Historically, shares have traded closer to a 3% premium to the 10Y, which would imply a ~ $75 share price.”
You can also take a look at Top Stock Picks of Michael Burry and 10 Low Beta Dividend Stocks with High Yields
