10 Best Stocks to Buy for Medium Term

In this article, we will be taking a look at the 10 best stocks to buy for medium term.

While some investors prefer to hold long-term positions in the stocks they pile into, others take notice of company fundamentals and other factors to hold short-term positions in stocks. The practice of holding positions in stocks for a shorter time period before exiting them is known as medium-term trading. This strategy often enables investors to keep their portfolios active while cutting out stocks that perform poorly, so they can reinvest in better companies. It also maximizes investors’ return on capital since profits from successful trades enable them to reinvest in stocks with higher growth potential.

To successfully implement this strategy, investors must look at certain factors in the companies they choose. These include share performance over a 12-month period, company profits, sales, debt, price-to-earnings ratio, and dividends. It also helps to consider companies’ revenue growth rates and payout ratios, in the case of dividend stocks like Johnson & Johnson (NYSE:JNJ), PepsiCo, Inc. (NASDAQ:PEP), and The Coca-Cola Company (NYSE:KO). With high revenue growth and low payout ratios, investors can actively ensure the companies they choose for medium-term trading are performing well and managing their earnings smartly in a way that enables their own growth while keeping shareholders satisfied.

One major reason to consider dividend stocks for medium-term trading is that these stocks offer passive income to investors for the short period they hold a position in them. However, another reason to consider these stocks is that dividend-paying companies are an effective investment in times of market uncertainty. According to a Lord Abbett report published in July, dividend stocks have outperformed the S&P 500 index between 1973 and 2022. Research has shown that dividends have contributed to over 40% of the S&P 500’s total return between December 1929 and May 2022. Within these stocks, those that grow their dividends have markedly outperformed all other dividend stocks. And when it comes to periods when market returns are below average, dividends have been seen to provide a cushion for investors that offsets a stock’s price depreciation. The research further indicates that in every decade where the market’s annualized returns fell below 10%, dividends contributed about 76% of the S&P 500’s total return. Resultantly, dividend stocks have proven themselves to be attractive stock picks for investors in times of market volatility, which is why we have recommended dividend-paying companies in our list below.

Photo by Vitaly Taranov on Unsplash

Let’s now take a look at the 10 best stocks to buy for medium term.

Our Methodology

We have selected dividend-paying stocks with payout ratios below 30% for our list below. They all have dividend yields over 2%. The information on these stocks’ yields and payout ratios are updated as of February 27. These companies have at least 10% revenue growth year-over-year, and they are highly popular among the 943 hedge funds tracked by Insider Monkey in the fourth quarter. They are ranked on the basis of the number of hedge funds holding stakes in them, from the lowest to the highest. We have mentioned analyst price targets, ratings, and upside potential for these stocks where applicable as well.

Best Stocks to Buy for Medium Term

10. Heartland Financial USA, Inc. (NASDAQ:HTLF)

Dividend Yield as of February 27: 2.42%

Number of Hedge Fund Holders: 8

Heartland Financial USA, Inc. (NASDAQ:HTLF) is a regional banking company based in Denver, Colorado. The company provides commercial, small-business, and consumer banking services to individuals and businesses. It also accepts checking and other demand deposit accounts certificates of deposit, and other time deposits, among more.

On December 12, Christopher McGratty placed a Market Perform rating on Heartland Financial USA, Inc. (NASDAQ:HTLF) shares alongside a $54 price target.

Heartland Financial USA, Inc. (NASDAQ:HTLF) has been raising its dividend yield for the past six years and has a dividend payout ratio of 21.41%. Company management expects to see earnings surge in 2023 in light of higher loan balances. In the fourth quarter, Heartland Financial USA, Inc. (NASDAQ:HTLF) reported revenues of $195.2 million, which demonstrated a revenue growth of 14.87% year-over-year.

Eight hedge funds were long Heartland Financial USA, Inc. (NASDAQ:HTLF) in the fourth quarter, with a total stake value of $15.5 million. AQR Capital Management was the largest shareholder in the company, holding 82,151 shares.

9. ConnectOne Bancorp, Inc. (NASDAQ:CNOB)

Dividend Yield as of February 27: 2.53%

Number of Hedge Fund Holders: 13

ConnectOne Bancorp, Inc. (NASDAQ:CNOB) is the bank holding company for ConnectOne Bank, which provides commercial banking products and services for small and mid-sized businesses and local professionals. The company is based in Englewood Cliffs, New Jersey. It offers products like personal and business checking, retirement, money market, and time and savings accounts.

Raymond James analysts Daniel Tamayo holds a Market Perform rating on ConnectOne Bancorp, Inc. (NASDAQ:CNOB) shares as of December 22.

For four years, ConnectOne Bancorp, Inc. (NASDAQ:CNOB) has been raising its dividend yield, and it has a payout ratio of 20.42%. The company also has a year-over-year revenue growth rate of 10.71%, and it reported revenues of $78.01 million in the fourth quarter. As of 2022, ConnectOne Bancorp, Inc. (NASDAQ:CNOB) had compound annual growth rates of 12.9% and 33% for growing its asset base and net income, respectively, over the preceding five years.

ConnectOne Bancorp, Inc. (NASDAQ:CNOB) was found among the 13F holdings of 13 hedge funds in the fourth quarter. Their total stake value was $38.3 million.

8. Berkshire Hills Bancorp. Inc. (NYSE:BHLB)

Dividend Yield as of February 27: 2.45%

Number of Hedge Fund Holders: 13

Berkshire Hills Bancorp, Inc. (NYSE:BHLB) is the bank holding company for Berkshire Bank, and it is based in Boston, Massachusetts. The company offers banking products and services like deposit accounts and loans. It also provides wealth management services such as investment management, trust administration, and financial planning.

Berkshire Hills Bancorp, Inc. (NYSE:BHLB) has a dividend payout ratio of 24.55% and has increased its dividend for one year. As of the fourth quarter, the company has a year-over-year revenue growth rate of 29.61%, when it posted revenues of $117.58 million. According to TipRanks, the average price target placed on Berkshire Hills Bancorp, Inc. (NYSE:BHLB) is $34. The stock was trading at $29.34 on February 27. Based on this price target, the stock has an upside potential of 15.76%.

Out of the 943 hedge funds tracked by Insider Monkey in the fourth quarter, 13 funds were long Berkshire Hills Bancorp, Inc. (NYSE:BHLB), with a total stake value of $42.8 million. Driehaus Capital was the largest shareholder in the company, holding 669,663 shares.

7. Comstock Resources. Inc. (NYSE:CRK)

Dividend Yield as of February 27: 3.9%

Number of Hedge Fund Holders: 19

Comstock Resources, Inc. (NYSE:CRK) is an oil and gas exploration and production company based in Frisco, Texas. The company works to acquire, explore, develop, and produce oil and natural gas. It operates primarily in North Louisiana and East Texas in the US.

Stifel’s Derrick Whitfield holds a Buy rating on Comstock Resources, Inc. (NYSE:CRK) shares as of January 30, alongside a $21 price target.

The dividend payout ratio offered by Comstock Resources, Inc. (NYSE:CRK) is 3.34%. The company generated revenues of $922.38 million in the fourth quarter, which demonstrated a revenue growth rate of 40.74% year-over-year. Over the six months preceding February, natural gas prices have fallen by about 70%, resulting in Comstock Resources, Inc. (NYSE:CRK) shares also taking a hit. However, since the company has a geographical advantage by virtue of its location near the Gulf Coast corridor and near some large liquified natural gas terminals, it is still able to produce large amounts of free cash and stay afloat.

Our hedge fund data for the fourth quarter shows 19 funds long Comstock Resources, Inc. (NYSE:CRK). Their total stake value was $220.6 million.

6. CVR Energy, Inc. (NYSE:CVI)

Dividend Yield as of February 27: 6.33%

Number of Hedge Fund Holders: 20

CVR Energy, Inc. (NYSE:CVI) is an energy company based in Sugar Land, Texas. The company is engaged in petroleum refining and nitrogen fertilizer manufacturing activities. It operates through its Petroleum and Nitrogen Fertilizer segments.

Shares of CVR Energy, Inc. (NYSE:CVI) closed at $32.51 on February 27. According to TipRanks, the average price target on the stock is $34. Based on this price target, CVR Energy, Inc. (NYSE:CVI) has an upside potential of 4.5%. The company offers a payout ratio of 28.1%. It generated revenues of $2.68 billion in the fourth quarter, demonstrating a revenue growth rate of 26.85% year-over-year.

Two Sigma Advisors was the largest shareholder in CVR Energy, Inc. (NYSE:CVI) at the end of the fourth quarter, holding 252,000 shares. In total, 20 hedge funds were long the stock, with a total stake value of $2.3 billion.

CVR Energy, Inc. (NYSE:CVI), like Johnson & Johnson (NYSE:JNJ), PepsiCo, Inc. (NASDAQ:PEP), and The Coca-Cola Company (NYSE:KO), is a highly popular stock among hedge funds today.

5. Gray Television, Inc. (NYSE:GTN)

Dividend Yield as of February 27: 2.62%

Number of Hedge Fund Holders: 23

Gray Television, Inc. (NYSE:GTN) is a communication services company based in Atlanta, Georgia. The company owns and operates TV stations and digital assets in the US.

The stock has a payout ratio of 7.37%. The company reported revenues of $1.07 billion in the fourth quarter, demonstrating a revenue growth rate of 48.68% year-over-year. Gray Television, Inc. (NYSE:GTN) was trading at $12.20 on February 27. The average price target on the shares is $16.2, according to TipRanks. Based on this price target, the stock has an upside potential of 80.6%.

Out of the 943 hedge funds tracked by Insider Monkey in the fourth quarter, 23 hedge funds were long Gray Television, Inc. (NYSE:GTN). Their total stake value was $161 million.

4. Bread Financial Holdings Inc. (NYSE:BFH)

Dividend Yield as of February 27: 2.12%

Number of Hedge Fund Holders: 23

Bread Financial Holdings Inc. (NYSE:BFH) is a consumer finance company based in Columbus, Ohio. The company offers tech-forward payment and lending solutions.

An Overweight rating was reiterated on Bread Financial Holdings Inc. (NYSE:BFH) shares on January 26 by Stephens analyst Vincent Caintic. The analyst also holds a $64 price target on the stock.

Bread Financial Holdings Inc. (NYSE:BFH) has raised its dividend yield for a year now. In the fourth quarter, the company’s revenue came in at $1.03 billion, representing a revenue growth rate of 10.01% year-over-year.

Our hedge fund data for the fourth quarter shows 23 funds long Bread Financial Holdings Inc. (NYSE:BFH), with a total stake value of $238 million.

3. Avnet, Inc. (NYSE:AVT)

Dividend Yield as of February 27: 2.54%

Number of Hedge Fund Holders: 31

Avnet, Inc. (NYSE:AVT) is an information technology company based in Phoenix, Arizona. The company markets, sells, and distributes electronic components.

Jim Suva at Citigroup holds a Neutral rating on Avnet, Inc. (NYSE:AVT) shares as of February 2. The analyst also raised his price target on the stock from $45 to $50.

Avnet, Inc. (NYSE:AVT) is a strong dividend stock that has raised its yield for the past eight years. The company has a low payout ratio of about 13.38%. In the fiscal second quarter of 2023, the company generated $6.72 billion in revenue, representing a revenue growth rate of 14.53% year-over-year.

A total of 31 hedge funds were long Avnet, Inc. (NYSE:AVT) in the fourth quarter. Their total stake value was $688 million.

2. CONSOL Energy Inc. (NYSE:CEIX)

Dividend Yield as of February 27: 8.06%

Number of Hedge Fund Holders: 32

CONSOL Energy Inc. (NYSE:CEIX) is an energy company based in Canonsburg, Pennsylvania. It produces and exports bituminous coal in the US.

Riley’s Lucas Pipes reiterated a Buy rating on CONSOL Energy Inc. (NYSE:CEIX) shares on January 17 and placed an $84 price target on the stock.

CONSOL Energy Inc. (NYSE:CEIX) has a dividend payout ratio of 16.21%. The company generated revenues of $637.15 million in the fourth quarter, representing a revenue growth rate of 32.57% year-over-year. As of this February, company management has also paid off almost all of the company’s debt, and has committed to returning about 35%-50% of its free cash flow to shareholders.

There were 32 hedge funds long CONSOL Energy Inc. (NYSE:CEIX) in the fourth quarter, with a total stake value of $298 million.

Greenlight Capital, an investment management company, mentioned CONSOL Energy Inc. (NYSE:CEIX) in its fourth-quarter 2022 investor letter. Here’s what the firm said:

“As CONSOL Energy Inc. (NYSE:CEIX) rode a surge in coal prices, the shares soared from $22.71 to $65.00 and the company paid $2.05 per share in dividends. In 2022, part of the higher coal prices were absorbed by hedges and forward contracts at what turned out to be below-market prices. Even so, we believe the company ended the year with no net debt. From here, with the below market contracts mostly behind, we expect the higher prices to translate directly into much higher earnings, with most of the free cash flow to be returned to shareholders. Much of the pricing in 2023 and some of the pricing in 2024 is locked in. As a result, we believe that the company will generate free cash flow over the next two years equal to its current market capitalization. While thermal coal will probably never be cool to own, we believe the returns for owning CEIX should continue to be hot.”

1. Discover Financial Services (NYSE:DFS)

Dividend Yield as of February 27: 2.14%

Number of Hedge Fund Holders: 52

Discover Financial Services (NYSE:DFS) is a consumer finance company based in Riverwoods, Illinois. It provides digital banking products and services, among more.

Moshe Orenbuch at Credit Suisse holds an Outperform rating on Discover Financial Services (NYSE:DFS) shares as of January 20, alongside a $120 price target.

After continuously raising its dividend for the past 12 years, Discover Financial Services (NYSE:DFS) now has a payout ratio of 14.85%. In the fourth quarter, the company’s revenue was $3.73 billion. This represented a revenue growth rate of 27.11% year-over-year.

Discover Financial Services (NYSE:DFS) was found among the 13F holdings of 52 hedge funds in the fourth quarter. Their total stake value was $1.3 billion.

See also 10 Best March Dividend Stocks to Buy and 10 Dividend Stocks that George Soros Owns.

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Disclosure: None. 10 Best Stocks to Buy for Medium Term is originally published on Insider Monkey.