5 Best Materials Dividend Stocks To Buy Now

2. Dow Inc. (NYSE:DOW)

Number of Hedge Fund Shareholders: 45

Dividend Yield: 5.27%

Dow Inc. (NYSE:DOW), which provides packaging, plastics, and specialty coatings, among other products, has maintained a $0.70 quarterly dividend since being split off from DuPont de Nemours, Inc. (NYSE:DD) in 2019. While the dividend hasn’t grown at all in over three years as the company instead focuses on paying down its debt, it nonetheless boasts two of the most attractive components of a good dividend, which are a nice yield (over 5%) and a low payout ratio (less than 50%).

Dow Inc. (NYSE:DOW) shares have slumped this year as oil and gas prices have risen, which raise the costs associated with Dow’s many manufacturing processes. There is likewise some concern that demand for the company’s products will slump considerably during a recession, though management has stated that packaging and plastics volumes only decline by about 2% to 3% during lean economic periods. In the first half of this year, Dow’s free cash flow grew to $2.7 billion, up from $2.1 billion during the year-ago period.

Hedge fund ownership of Dow Inc. (NYSE:DOW) has remained relatively steady over the past two years, with the number of funds holding DOW in their 13F portfolios never falling below 39 or topping 47 during that time. Richard S. Pzena’s Pzena Investment Management added to its already sizable DOW holding during Q3, raising by 20% to 7.51 million shares worth $330 million.