In this article, we will be taking a look at the 10 best dividend stocks with over 5% yield according to hedge funds.
As the COVID-19 pandemic continues to rage on and doubts continue to circulate among investor circles surrounding economic uncertainty, inflation concerns, and disillusionment with the Treasury yield in the second half of 2021, dividend stocks begin to retake attention. Despite the fact that the pandemic induced many companies to cut or entirely slash out their dividends since its outbreak, investors are again beginning to focus on, and place their trust in, companies that are offering dividends, especially if their yields are managing to beat those of US government bonds. As such, stocks like Altria Group, Inc. (NYSE: MO), Exxon Mobil Corporation (NYSE: XOM), McDonald’s Corporation (NYSE: MCD), and The Coca-Cola Company (NYSE: KO) are catching investor attention yet again.
According to a Reuters report from this July, the above claim was substantiated by Bob Leininger, who is a portfolio manager at Gabelli Funds. Leininger was quoted to have commented that as the year progresses, the market and those within it will begin to gravitate towards companies that have the potential to grow their payouts and raise their current returns. Apart from such speculation, financial analysts at reputable firms like Goldman Sachs have also offered positive insights into the future of dividend stocks, at least until the end of 2021 and throughout 2022. Goldman Sachs has estimated, for instance, that the S&P 500 will grow its dividend payouts by about 6% in 2021 and 2022.
Finally, Goldman Sachs’ reported data has also somewhat dealt with concerns surrounding market and dividend stock volatility are concerned, particularly in light of recent dividend cuts and slashes. For instance, it was mentioned that despite the fact that about 57 companies were reported to have decreased or entirely suspended their dividends come 2021 and the worsening pandemic-induced economic recession, about 22 of those companies have, as of July, resumed or increased their dividends again. Additionally, about 19 more companies are estimated to be likely and able to increase their dividends again, all by the end of this year. Financial stocks, in particular, are ones to keep an eye on, as many of them like Morgan Stanley (NYSE: MS) and JPMorgan Chase & Co. (NYSE: JPM) managed to increased their payouts this year after passing the Federal Reserve’s stress tests. Analysts have thus estimated that the total buy-back and dividend payouts from these financial companies and others will surpass the $130 billion figure as the year progresses.
Investing has become difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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Without further ado, let’s take a look at the best dividend stocks with over 5% yield according to hedge funds.
Our Methodology
Insider Monkey tracks the data of about 873 hedge funds, and we have used this data to pick dividend stocks highly popular among hedge funds today. For each stock we have mentioned its yield and the number of hedge fund holders holding a stake in it, ranking them from the lowest to the highest number of hedge fund holders. Additionally, each stock has a dividend yield of 5% and above. Finally, we have used analysts’ ratings to determine which stocks are favorably placed in analyst and investor circles, picking stocks with mostly positive ratings and strong fundamentals.
Best Dividend Stocks with Over 5% Yield According to Hedge Funds
10. Equitrans Midstream Corporation (NYSE: ETRN)
Number of Hedge Fund Holders: 27
Dividend Yield: 7%
Equitrans Midstream Corporation (NYSE: ETRN) owns, operates, acquires, and develops assets in the areas of natural gas gathering, transmission, and storage, and water services. The company primarily operates in the Appalachian Basin and ranks 10th on our list of best dividend stocks with over 5% yield according to hedge funds.
This June, Barclays analyst Christopher Tillett raised his price target on shares of Equitrans Midstream Corporation from $7 to $9.
In the second quarter of 2021, Equitrans Midstream Corporation had an EPS of $0.13, missing estimates by $0.09. The company’s revenue was $348.30 million, up 2.26% year over year and beating estimates by $7.42 million. Equitrans Midstream Corporation has gained 18.63% in the past 6 months and 7.75% year to date.
By the end of the second quarter of 2021, 27 hedge funds out of the 873 tracked by Insider Monkey held stakes in Equitrans Midstream Corporation worth roughly $289 million. This is compared to 28 hedge funds in the previous quarter with a total stake value of approximately $361 million.
Like Altria Group, Inc., Exxon Mobil Corporation, McDonald’s Corporation, and The Coca-Cola Company, Equitrans Midstream Corporation is a good stock to invest in
9. Two Harbors Investment Corp. (NYSE: TWO)
Number of Hedge Fund Holders: 30
Dividend Yield: 10.6%
Two Harbors Investment Corp. (NYSE: TWO), a real estate investment trust, ranks 9th on our list of the best dividend stocks with over 5% yield according to hedge funds. The company invests in, finances, and manages residential mortgage-backed securities (RMBS), non-agency securities, mortgage servicing rights, and other financial assets.
As of this June, Credit Suisse analyst Douglas Harter holds a Neutral rating on shares of Two Harbors Investment Corp., alongside a $7.50 price target.
In the second quarter of 2021, Two Harbors Investment Corp. had an FFO of $0.19, in line with estimates. The company’s revenue was $19.04 million, missing estimates by $24.47 million. Two Harbors Investment Corp. has gained 3.72% year to date and 13.65% in the past year.
By the end of the second quarter of 2021, 30 hedge funds out of the 873 tracked by Insider Monkey held stakes in Two Harbors Investment Corp. worth roughly $160 million. This is compared to 32 hedge funds in the previous quarter with a total stake value of approximately $200 million.
Like Altria Group, Inc., Exxon Mobil Corporation, McDonald’s Corporation, and The Coca-Cola Company, Two Harbors Investment Corp. is a good stock to invest in
8. New York Community Bancorp, Inc. (NYSE: NYCB)
Number of Hedge Fund Holders: 30
Dividend Yield: 5.53%
New York Community Bancorp, Inc. (NYSE: NYCB), the bank holding company for New York Community Bank, is next on our list of the best dividend stocks with over 5% yield according to hedge funds. The company offers financial services through its bank in Metro New York, New Jersey, Ohio, Florida, and Arizona. It ranks 8th on our list.
This May, Deutsche Bank analysts raised their price target on shares of New York Community Bancorp, Inc. from $11.50 to $15. The firm also reiterated a Hold rating on the shares.
In the second quarter of 2021, New York Community Bancorp, Inc. had an EPS of $0.33, beating estimates by $0.03. The company’s revenue was $347 million, up 23.38% year over year and beating estimates by $12.69 million. New York Community Bancorp, Inc. has gained 6.5% in the past 6 months and 17.05% year to date.
By the end of the second quarter of 2021, 30 hedge funds out of the 873 tracked by Insider Monkey held stakes in New York Community Bancorp, Inc. worth roughly $393 million. This is compared to 25 hedge funds in the previous quarter with a total stake value of approximately $329 million.
7. Valero Energy Corporation (NYSE: VLO)
Number of Hedge Fund Holders: 38
Dividend Yield: 6.1%
Valero Energy Corporation (NYSE: VLO) manufactures transportation fuels and petrochemical products for sale in the US, Canada, the UK, Ireland, and internationally. The company operates through its Refining, Renewable Diesel, and Ethanol segments, and ranks 7th on our list of the best dividend stocks with over 5% yield according to hedge funds.
Theresa Chen, an analyst at Barclays, just this June raised her price target on shares of Valero Energy Corporation from $84 to $94. The analyst also reiterated an Overweight rating on the stock.
In the second quarter of 2021, Valero Energy Corporation had an EPS of $0.48, beating estimates by $0.35. The company’s revenue was $27.75 billion, up 166.88% year over year and beating estimates by $6 billion. Valero Energy Corporation has gained 13.96% year to date and 16.02% in the past year.
By the end of the second quarter of 2021, 38 hedge funds out of the 873 tracked by Insider Monkey held stakes in Valero Energy Corporation worth roughly $259 million. This is compared to 41 hedge funds in the previous quarter with a total stake value of approximately $462 million.
Like Altria Group, Inc., Exxon Mobil Corporation, McDonald’s Corporation, and The Coca-Cola Company, Valero Energy Corporation is a good stock to invest in
6. Kinder Morgan, Inc. (NYSE: KMI)
Number of Hedge Fund Holders: 38
Dividend Yield: 6.4%
Kinder Morgan, Inc. (NYSE: KMI), an energy infrastructure company operating in North America, is next on our list of the best dividend stocks with over 5% yield according to hedge funds. The company operates through its Natural Gas Pipelines, Terminals, and C02 segments. It ranks 6th on our list.
As of this July, Mizuho analyst Gabriel Moreen holds a Buy rating on shares of Kinder Morgan, Inc.. Additionally, Moreen also raised the price target on the stock from $21 to $22.
In the second quarter of 2021, Kinder Morgan, Inc. had an EPS of $0.23, beating estimates by $0.03. The company’s revenue was $3.15 billion, up 23.05% year over year and beating estimates by $237.33 million. Kinder Morgan, Inc. has gained 13.33% in the past 6 months and 23.53% year to date.
By the end of the second quarter of 2021, 38 hedge funds out of the 873 tracked by Insider Monkey held stakes in Kinder Morgan, Inc. worth roughly $1.03 billion. This is compared to 38 hedge funds in the previous quarter with a total stake value of approximately $1.2 billion.
Like Altria Group, Inc., Exxon Mobil Corporation, McDonald’s Corporation, and The Coca-Cola Company, Kinder Morgan, Inc. is a good stock to invest in
5. The Williams Companies, Inc. (NYSE: WMB)
Number of Hedge Fund Holders: 39
Dividend Yield: 6.7%
The Williams Companies, Inc. (NYSE: WMB) is also an energy infrastructure company, operating mainly in the US through its Transmission & Gulf of Mexico, Northeast G&P, and West segments. The company ranks 5th on our list of the best dividend stocks with over 5% yield according to hedge funds.
This May, Argus analyst Bill Selesky upgraded shares of The Williams Companies, Inc. from Hold to Buy. The analyst also placed a $30 price target on the stock.
In the second quarter of 2021, The Williams Companies, Inc. had an EPS of $0.27, missing estimates by $0.01. The company’s revenue was $2.28 billion, up 28.19% year over year and beating estimates by $215.23 million. The Williams Companies, Inc. has gained 9.97% in the past 6 months and 21.79% year to date.
By the end of the second quarter of 2021, 39 hedge funds out of the 873 tracked by Insider Monkey held stakes in The Williams Companies, Inc. worth roughly $551 million. This is compared to 34 hedge funds in the previous quarter with a total stake value of approximately $475 million.
Like Altria Group, Inc., Exxon Mobil Corporation, McDonald’s Corporation, and The Coca-Cola Company, The Williams Companies, Inc. is a good stock to invest in
Longleaf Partners Fund, a Memphis-based fund under Southeastern Asset Management, mentioned The Williams Companies, Inc. in its second-quarter 2021 investor letter. Here’s what they said:
“Williams (14%, 0.50%), the natural gas pipeline operator, was also a positive contributor. The value grew slowly but steadily thanks to continued cash flow growth at Williams’s main Transco pipeline, as well as good volume trends (up 11% YOY) in its Northeast assets. The stock traded up with gas price strength as the quarter went on. We believe that management is open to more transactions to grow and simplify value per share, and as industry conditions improve, this becomes more likely.”
4. Altria Group, Inc. (NYSE: MO)
Number of Hedge Fund Holders: 47
Dividend Yield: 7.1%
Altria Group, Inc. is a tobacco company manufacturing cigarettes, oral tobacco products, and wine in the US. The company ranks 4th on our list of the best dividend stocks with over 5% yield according to hedge funds.
This August, Morgan Stanley’s Pamela Kaufman retained her Overweight rating on shares of Altria Group, Inc.. The analyst also has a $110 price target on the stock.
In the second quarter of 2021, Altria Group, Inc. had an EPS of $1.23, beating estimates by $0.06. The company’s revenue was $5.61 billion, up 10.90% year over year and beating estimates by $250.80 million. Altria Group, Inc. has gained 11.3% in the past 6 months and 18.9% year to date.
By the end of the second quarter of 2021, 47 hedge funds out of the 873 tracked by Insider Monkey held stakes in Altria Group, Inc. worth roughly $948 million. This is compared to 38 hedge funds in the previous quarter with a total stake value of approximately $1.1 billion.
3. Chevron Corporation (NYSE: CVX)
Number of Hedge Fund Holders: 50
Dividend Yield: 5.3%
Chevron Corporation (NYSE: CVX) works with and manages integrated energy, chemicals, and petroleum operations. The company ranks 3rd on our list of the best dividend stocks with over 5% yield according to hedge funds, operating in the energy industry as one of the only dividend aristocrats of the sector.
This July, Chevron Corporation was upgraded at Redburn. The firm’s new rating on shares of the company is Buy, compared to the previous Neutral rating.
In the second quarter of 2021, Chevron Corporation had an EPS of $1.71, beating estimates by $0.11. The company’s revenue was $37.6 billion, up 178.62% year over year and beating estimates by $1.15 billion. Chevron Corporation has gained 6.03% in the past 6 months and 18.91% year to date.
By the end of the second quarter of 2021, 50 hedge funds out of the 873 tracked by Insider Monkey held stakes in Chevron Corporation worth roughly $4.3 billion. This is compared to 41 hedge funds in the previous quarter with a total stake value of approximately $4.9 billion.
2 AT&T Inc. (NYSE: T)
Number of Hedge Fund Holders: 68
Dividend Yield: 7.4%
AT&T Inc., one of the world’s largest and most renowned communication services companies, ranks 2nd on our list of the best dividend stocks with over 5% yield according to hedge funds. The company operates through its Communications, WarnerMedia, and Latin America segments.
This July, Deutsche Bank raised the price target on AT&T Inc. from $34 to $37, alongside reiterating a Buy rating on the stock.
In the second quarter of 2021, AT&T Inc. had an EPS of $0.89, beating estimates by $0.09. The company’s revenue was $44.05 billion, up 7.56% year over year and beating estimates by $1.32 billion.
By the end of the second quarter of 2021, 68 hedge funds out of the 873 tracked by Insider Monkey held stakes in AT&T Inc. worth roughly $2.9 billion. This is compared to 63 hedge funds in the previous quarter with a total stake value of approximately $2.7 billion.
1. Exxon Mobil Corporation (NYSE: XOM)
Number of Hedge Fund Holders: 68
Dividend Yield: 6.2%
Exxon Mobil Corporation operates primarily in the use for the exploration and production of crude oil and natural gas. The company also has operations internationally. It ranks 1st on our list of the best dividend stocks with over 5% yield according to hedge funds.
Ryan Todd, an analyst at Piper Sandler, just this July raised his price target on shares of Exxon Mobil Corporation. The analyst’s new target on the shares is $69, compared to the previous target of $63.
In the second quarter of 2021, Exxon Mobil Corporation had an EPS of $1.10, beating estimates by $0.11. The company’s revenue was $67.74 billion, up 107.77% year over year and beating estimates by $3.02 billion. Exxon Mobil Corporation has gained 6.81% in the past 6 months and 33.88% year to date.
By the end of the second quarter of 2021, 68 hedge funds out of the 873 tracked by Insider Monkey held stakes in Exxon Mobil Corporation worth roughly $3.7 billion. This is compared to 65 hedge funds in the previous quarter with a total stake value of approximately $2.8 billion.
You can also take a look at 15 Best Cities For Singles Over 40 and 10 Best High-Yield Dividend Stocks to Buy According to Billionaire George Soros.
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This article is originally published at Insider Monkey.
