This article presents an overview of the 5 Best High Yield Dividend Stocks To Buy Now. For a detailed overview of such stocks, read our article, 14 Best High Yield Dividend Stocks To Buy Now.
5. Kinder Morgan Inc (NYSE:KMI)
Number of Hedge Fund Investors: 42
Energy infrastructure company Kinder Morgan Inc (NYSE:KMI) is one of the top high-yield dividend stocks to buy according to hedge funds. Last month, BofA published a list of “Magnificent 80” stocks it believes would offer higher dividend yield over the next three years than cash. Kinder Morgan Inc (NYSE:KMI) was part of the list.
A total of 42 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in Kinder Morgan Inc (NYSE:KMI). The biggest stake in Kinder Morgan Inc (NYSE:KMI) is owned by Bob Peck and Andy Raab’s FPR Partners which owns a $186 million stake in Kinder Morgan Inc (NYSE:KMI).
4. 3M Co (NYSE:MMM)
Number of Hedge Fund Investors: 62
3M Co (NYSE:MMM) on February 6 increased its dividend by 0.7%. The dividend was payable March 12 to shareholders of record as of February 16.
A total of 62 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in 3M Co (NYSE:MMM) as of the end of 2023.
3. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Investors: 63
Verizon Communications Inc. (NYSE:VZ) ranks third in our list of the best high-yield dividend stocks to buy according to hedge funds.
As of the end of the last quarter of 2023, 63 hedge funds tracked by Insider Monkey had stakes in Verizon Communications Inc. (NYSE:VZ). The most significant stake in Verizon Communications Inc. (NYSE:VZ) is owned by Cliff Asness’s AQR Capital Management which owns a $176 million stake in Verizon Communications Inc. (NYSE:VZ).
Ariel Global Fund made the following comment about Verizon Communications Inc. (NYSE:VZ) in its Q3 2023 investor letter:
“By comparison, global communications and technology leader, Verizon Communications Inc. (NYSE:VZ), continued to weigh on performance following an article in the Wall Street Journal outlining concerns on lead cable lines posing a significant public health threat. Although the lead covered cable lines remain an overhang on shares, we find Verizon’s valuation to be compelling. The company delivered a solid earnings report, with subscriber and financial metrics in-line or ahead of consensus. Management also reiterated full year guidance and noted it may exceed its outlook for free-cash-flow. From a competitive and financial standpoint, we view Verizon to be among one of the best positioned telecoms in the world. Looking forward, we expect free cash flow to grow significantly in the years ahead as the company moves past the secular peak in 5G capital spending.”
2. AT&T Inc (NYSE:T)
Number of Hedge Fund Investors: 66
AT&T Inc (NYSE:T) shares recently came in the limelight after Wolfe Research upgraded the stock, saying AT&T Inc’s (NYSE:T) growth and unit economics were stable. Wolfe Research analyst John Janedis also increased its price target for the stock to $21.
Miller Value Income Strategy made the following comment about AT&T Inc. (NYSE:T) in its Q3 2023 investor letter:
“Our third-largest holding at quarter end was AT&T Inc. (NYSE:T), a leading provider of communications and connectivity services in the US. At $15/share, the stock trades at the same price it did almost thirty years ago. The share price is much less interesting to us in relation to where it has traded in the past than in relation to how much cash the company generates and what management is doing with it. At just over 6x earnings, the stock trades near its lowest price-to-earnings (P/E) multiple ever, also representing close to its largest-ever P/E discount to the stock market. The business converts most of its earnings to free cash flow, implying a forward free cash flow yield north of 15%. Just under half of free cash flow is going toward the dividend (7.5% yield), while much of the balance is going to debt paydown. In other words, if the stock does not fall below its lowest-ever valuation, investors clip a rock-solid 7.5% in cash, while owning a growing portion of a very steady business as management reduces debt outstanding. A discounted cash flow model will suggest that intrinsic value for shares begins with a “2,” suggesting the stock is undervalued on an absolute basis. The lack of volatility in the underlying fundamentals also makes it unique when compared to many other things we own, which reduces the probability of permanent capital impairment and argues for a significant weight in the portfolio.
AT&T looks particularly attractive when compared to some of the larger names dominating the S&P 500. Compare the stock to Apple, for instance, whose revenues and profits are likely to shrink this year, even as it trades at 29x this year’s earnings estimate. The ongoing return to rationality and capital accountability, along with extreme valuations in the megacap tech stocks, have us more excited about our portfolio’s prospects than we can remember for quite some time. As always, we remain the largest investors and welcome any questions or comments.”
1. Pfizer Inc (NYSE:PFE)
Number of Hedge Fund Investors: 79
Pfizer Inc (NYSE:PFE) is a stock with a decent dividend yield as well as stock price growth potential. Recently, the FDA approved Pfizer Inc’s (NYSE:PFE) antibody-drug conjugate inotuzumab ozogamicin, marketed as Besponsa, for an additional indication in children with a form of leukemia.
A total of 79 hedge funds tracked by Insider Monkey had stakes in Pfizer Inc (NYSE:PFE).
Pfizer Inc (NYSE:PFE) has increased its dividend consistently for the past 13 years.
Diamond Hill Large Cap Strategy stated the following regarding Pfizer Inc. (NYSE:PFE) in its fourth quarter 2023 investor letter:
“Among our bottom contributors in Q4 were BorgWarner and Pfizer Inc. (NYSE:PFE). Biopharmaceutical company Pfizer was pressured as COVID sales were slower than expected in Q4. However, outside COVID-related sales, the base business is performing as expected, and the company is starting a cost-cutting program that should restore margins to pre-pandemic levels. We continue to like Pfizer for its diversified business, strong cash flow generation capabilities and balance sheet, and solid leadership under a quality CEO.”
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