Below we presented the 5 best dividend stocks under $20. For a detailed discussion and a more comprehensive list please see 10 Best Dividend Stocks Under $20.
5 – Devon Energy Corporation (NYSE:DVN)
Based on our filters we see another energy company in the fifth spot in our list. DVN is a leading independent oil and natural gas exploration and production company. Currently, the company produces approximately 140,000 barrels of oil per day and has a deep inventory of development opportunities to deliver future growth. Devon also produces about 575 million cubic feet of natural gas a day and about 80,000 barrels of natural gas liquids per day.
According to recent SEC filings the company had total assets of $10,3 billion. Devon also reported $1 billion in total revenues and a net loss of $92 million. On October 1, Devon completed the sale of its Barnett Shale assets and in conjunction with this sale Devon paid a $100 million special dividend to its shareholders. Annual dividend for the company is at $0.44 and this corresponds to a 2.73 percent dividend yield. Closing price of DVN shares on Thursday was $16.10 and that is pretty below the historic peak of $104.16 in 2008.
If we have a look at the hedge funds that are taking bullish positions in this stock, we see Holocene Advisors at the top of the list with its $53 million investment. Among the other 44 big hedge funds, Ken Griffin’s Citadel Investment Group, D E Shaw and Renaissance Technologies are among the other names with large positions.
4 – Vistra Energy Corp. (NYSE:VST)
Vistra is a holding company, which operates in the integrated retail and electric power generation business. Serving nearly 5 million residential, commercial, and industrial retail customers with electricity and natural gas, VST is the “largest competitive residential electricity provider in the U.S.” according to its website. The company is also the largest competitive power generator in the country. In addition, the company is a large purchaser of wind power.
For the three months ended September 30, 2020, Vistra reported Net Income of $442 million. Vistra’s third quarter Adjusted EBITDA from Ongoing Operations was $108 million higher than third quarter 2019 results, primarily driven by higher margins in its Texas segment. “Vistra’s very strong performance during the first three quarters of the year has positioned the company to achieve year-end results firmly above our recently raised 2020 guidance midpoint.” said Curt Morgan, Vistra’s president and chief executive officer and he continued so: “This will mark the fifth year in a row where Vistra has delivered financial results exceeding our guidance midpoint, with 2020 results achieved despite a tail-event pandemic. We have a team that knows how to operate cost-effectively and flexibly to extract the embedded option value from our portfolio.”
Based on these figures and statements it is very understandable why 45 hedge funds chose to invest in this stock. Total amount of these hedge funds exposure to the company is slightly over $1,5 billion. Among the top three we see very familiar faces. Howard Mark’s Oaktree Capital Management with its $571 million interest has a position more than twice the next largest fund holder. And that is Fortress Investment Group with a $192 million worth of investment. On the third place we spot once again Jim Simons’ Renaissance Technologies with a $128 million shares of interest.
The company has announced an annual dividend of $0.54 per share, and this makes a 3.01 percent dividend yield. Closing price of the VST shares on 17th December was $17.93 and its price-earning (P/E) ratio in trailing twelve-month basis was 9.85.
3 – General Electric Company (NYSE:GE)
Although you might not be familiar with some of the companies in our list, I am sure most of you know General Electric very well. Starting with the Thomas Edison’s first incandescent light bulb, this company has pioneered technologies that transformed our world. GE has improved the lives of billions with its products and innovations on various fronts. The company has long been a leader in power, renewable energy, aviation and healthcare. General Electric has also another segment, which is financial services and activities of this business listed under GE Capital in the SEC filings.
As of this year’s third quarter report, GE had $254 billion worth of total assets. Due to steep market decline, recovery will be probably very slow on some business areas and this might hit the profitability. Not surprisingly GE declared only $0.04 dividends per share recently, and this is one of the lowest figures on our list. This payment corresponds to a 0.37 percent dividend yield. However, the company is taking action to navigate through risks. And it seems that market participants are convinced. Out of 823 big hedge funds 45 managers decided to invest in GE. Among these hedge funds Eagle Capital Management had the biggest position in GE with its $821 million investment. Closing price of the General Electric’s shares on December 17th was $10.87.
On the latest earnings call company’s CEO Larry Culp said: “I am proud of the GE team’s work in the third quarter to build momentum while continuing to protect the safety of our employees, serve our customers and communities, and preserve GE’s strengths. We are improving our profit and cash performance with organic margin expansion in every segment except Aviation, though orders more broadly remain under pressure. While our work continues, GE’s transformation is accelerating, and we expect Industrial free cash flow to be at least $2.5 billion in the fourth quarter and positive in 2021. We remain focused on unlocking upside potential for the long term.”
2 – Kinder Morgan, Inc. (NYSE:KMI)
Kinder Morgan provides energy transportation and storage services to its customers, and with its 83,000 miles of pipelines and 147 terminals. It is the largest energy infrastructure firm in the S&P500 Index. Before the collapse of oil prices in March, KMI was trading around $21 and at its trough the shares sank slightly below $9. Considering the closing price of $14.30 on Thursday, we can say that it has an upside potential of 50% if it can reclaim its February highs.
Although the energy sector had tough challenges this year, KMI has managed to increase its dividend and declared an annual $1.05 dividend per share to its shareholders. This corresponds to a 7.34 percent dividend yield and this figure is the highest yield in our list. The company was popular among hedge funds and there were 46 hedge funds with bullish KMI positions at the end of September. FPR Partners stands at the top of the list with its $222 million worth of shares. First Pacific Advisors LLC follows it with $186 million interest in the shares. Although the sentiment for the KMI shares is in a declining mode among the hedge fund managers, there are still many who believe in the upside potential of the company.
After a detailed reading of its earnings release following remarks from the KMI President Kim Dang are worth considering: “Despite the on-going headwinds facing the energy sector overall, including continued low crude oil and natural gas production and reduced demand for refined products, we generated third quarter earnings” In addition to that KMI’s this statement is also striking: “We generate substantial cash and we remain committed to funding our capital needs internally, maintaining a healthy balance sheet and returning excess cash to our shareholders through dividend increases and/or share repurchases.”
1 -Vertiv Holdings, LLC (NYSE:VRT)
Vertiv Holdings is a Columbus, Ohio based mid-cap company and at the time of this writing had a $6.3 billion market capitalization. The company “provides mission-critical infrastructure technologies and life cycle services for data centers, communication networks, and commercial and industrial environments” according to its website.
On 28/10/2020, the Board of Directors declared cash dividend of $0.01 for the first time, which constitute the lowest dividend amount in our list. Despite the 0.05% dividend yield in annualized terms, 51 hedge funds did not hesitate to buy the shares of this company. Brahman Capital is the largest hedge fund holder of VRT with a total investment of $137 million. Hedge Fund Eminence Capital, which is led by Ricky Sandler, follows Brahman Capital with a $115 million position.
GreenWood Investors recently talked about VRT in its Q2 2020 investor letter. Here is what they said:
“Vertiv, which makes cooling and power solutions for data centers, reported a 9% drop in second quarter organic revenue. Due to both supply and customer logistical issues, the company had trouble completing customer orders, which are accelerating at a record rate with the widespread increase in data consumption around the world (ending the second quarter with a record high backlog of $1.8 billion). Chris recently detailed Executive Chairman David Cote’s book, Winning Now, Winning Later, in an article which you can read by clicking here. Of course it didn’t take a genius to understand data center capacity was going to have to accelerate around the world just as Vertiv’s stock was cut in half earlier this year. We are excited to own Vertiv for the long-term, as Cote turns it into the Danaher of data-centers. With Cote, we are getting a seasoned manager from Honeywell, but in a much smaller company in an equally large addressable market. We are excited for him to exceed his Honeywell performance given a better and smaller collection of assets with stronger industry tailwinds.”
Please also see 10 Best High Dividend Stocks To Buy and 10 Best Dividend Paying Stocks Under $50
Disclosure: None.
