In this article, we will be taking a look at the 10 best value dividend stocks to buy now.
Value investing, the investment strategy pioneered by American economist Benjamin Graham, and religiously heeded by some of the most successful investors today, like Warren Buffett, is a strategy that can very easily complement dividend investing. While dividend stocks like Medtronic plc (NYSE: MDT), Morgan Stanley (NYSE: MS), JPMorgan Chase & Co. (NYSE: JPM), and Abbott Laboratories (NYSE: ABT) are undoubtedly popular investment choices at present, value stocks are nothing if not a match for them in terms of their popularity. Perhaps this is because of major proponents of the strategy itself, like Buffett, who is currently the seventh-richest person in the world with a net value of over $100 billion.
The above is justifiable when we take a look at the performance of value stocks so far this year. According to a Reuters report from this April, for instance, the Russell 1000 value index was seen to have outperformed its growth counterpart as 2021 began. The outperformance broke the index’s performance records for the past 20 years at least, and popularity levels of value stocks skyrocketed and have done so since, as investors began picking up shares of these very companies.
This popularity may be due, in part, to the fact that value stocks are just cheaper than others oftentimes. For instance, according to Peter Berezin, who is the chief global strategist at BCA research, in 2021 as of April, value stocks were trading at about 74% cheaper than their growth counterparts, on the basis of stock price-to-book measures. This discount, so to speak, is at the end of the day the charm of a value stock. They have high intrinsic potential, yet despite it trade at unfair rates, giving investors the chance to snap them up while they can, and benefit in the aftermath.
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.
Without further ado, let’s take a look at the 10 best value dividend stocks to buy now.
Our Methodology
We have picked value dividend stocks with yields over 2% and going up to 6%. Insider Monkey tracks the data of about 873 hedge funds, and we have also used this data to pick dividend stocks that are highly popular among hedge funds today. For each stock we have mentioned its yield and the number of hedge funds holding a stake in it, ranking them from the lowest to the highest yield. 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 Value Dividend Stocks to Buy Now
10. Summit Industrial Income REIT (OTC: SMMCF)
Number of Hedge Fund Holders: N/A
Dividend Yield: 2.63%
Summit Industrial Income REIT (OTC: SMMCF), an unincorporated open-end REIT, deals with a portfolio of light industrial and other properties in Canada. The company ranks 10th on our list of the best value dividend stocks to buy now, and is based in Ontario.
RBC Capital’s Matt Logan raised the price target on Summit Industrial Income REIT (OTC: SMMCF) to $18 just this August, alongside reiterating a Sector Perform rating on the stock.
In the second quarter of 2021, Summit Industrial Income REIT (OTC: SMMCF) had an FFO of $0.12. The company’s revenue was $42.83 million, up 18.1% year over year and beating the previous quarter’s revenue of $42.32 million. Summit Industrial Income REIT (OTC: SMMCF) has gained 59.65% in the past 6 months and 65.55% year to date.
Like Medtronic plc (NYSE: MDT), Morgan Stanley (NYSE: MS), JPMorgan Chase & Co. (NYSE: JPM), and Abbott Laboratories (NYSE: ABT), Summit Industrial Income REIT (OTC: SMMCF) is a good stock to invest in.
9. Bristol-Myers Squibb Company (NYSE: BMY)
Number of Hedge Fund Holders: 73
Dividend Yield: 2.86%
Bristol-Myers Squibb Company (NYSE: BMY), a biopharmaceutical company, licenses and manufactures biopharmaceuticals for distribution globally. The company ranks 9th on our list of the best value dividend stocks to buy now.
This July, Robyn Karnauskas, an analyst at Truist, took over coverage of Bristol-Myers Squibb Company (NYSE: BMY) with a Buy rating and a $74 price target.
In the second quarter of 2021, Bristol-Myers Squibb Company (NYSE: BMY) had an EPS of $1.93, beating estimates by $0.03. The company’s revenue was $11.70 billion, up 15.54% year over year and beating estimates by $474.30 million. Bristol-Myers Squibb Company (NYSE: BMY) has gained 8.78% in the past 6 months and 10.05% year to date.
By the end of the second quarter of 2021, 73 hedge funds out of the 873 tracked by Insider Monkey held stakes in Bristol-Myers Squibb Company (NYSE: BMY) worth roughly $5.2 billion. This is compared to 81 hedge funds in the previous quarter with a total stake value of approximately $5 billion.
Like Medtronic plc (NYSE: MDT), Morgan Stanley (NYSE: MS), JPMorgan Chase & Co. (NYSE: JPM), and Abbott Laboratories (NYSE: ABT), Bristol-Myers Squibb Company (NYSE: BMY) is a good stock to invest in.
8. Lockheed Martin Corporation (NYSE: LMT)
Number of Hedge Fund Holders: 58
Dividend Yield:
Lockheed Martin Corporation (NYSE: LMT) is a security and aerospace company that researches, designs, develops, manufactures, integrates, and sustains technology systems and products worldwide. It ranks 8th on our list of the best value dividend stocks to buy now.
Susquehanna’s Charles Minervino this July reiterated a Positive rating and $446 price target on shares of Lockheed Martin Corporation (NYSE: LMT).
In the second quarter of 2021, Lockheed Martin Corporation (NYSE: LMT) had an EPS of $6.52, in line with estimates. The company’s revenue was $17.03 billion, up 4.99% year over year and beating estimates by $89.10 million. Lockheed Martin Corporation (NYSE: LMT) has gained 5.13% in the past 6 months and 4.23% year to date.
By the end of the second quarter of 2021, 58 hedge funds out of the 873 tracked by Insider Monkey held stakes in Lockheed Martin Corporation (NYSE: LMT) worth roughly $1.6 billion. This is compared to 50 hedge funds in the previous quarter with a total stake value of approximately $2.3 billion.
Like Medtronic plc (NYSE: MDT), Morgan Stanley (NYSE: MS), JPMorgan Chase & Co. (NYSE: JPM), and Abbott Laboratories (NYSE: ABT), Lockheed Martin Corporation (NYSE: LMT) is a good stock to invest in.
7. Merck & Company, Inc. (NYSE: MRK)
Number of Hedge Fund Holders: 79
Dividend Yield: 3.4%
Merck & Company, Inc. (NYSE: MRK), a healthcare company, provides a wide variety of medical products to its consumers. The company has collaborations with others like AstraZeneca PLC (NASDAQ: AZN). It ranks 7th on our list of the best value dividend stocks to buy now.
Mara Goldstein from Mizuho this July reiterated a Buy rating on shares of Merck & Company, Inc. (NYSE: MRK), alongside a $100 price target.
In the second quarter of 2021, Merck & Company, Inc. (NYSE: MRK) had an EPS of $1.31, missing estimates by $0.04. The company’s revenue was $11.40 billion, up 4.87% year over year and beating estimates by $208.55 million. Merck & Company, Inc. (NYSE: MRK) has gained 7.67% in the past 6 months.
By the end of the second quarter of 2021, 79 hedge funds out of the 873 tracked by Insider Monkey held stakes in Merck & Company, Inc. (NYSE: MRK) worth roughly $5.3 billion. This is compared to 79 hedge funds in the previous quarter with a total stake value of approximately $6.5 billion.
Like Medtronic plc (NYSE: MDT), Morgan Stanley (NYSE: MS), JPMorgan Chase & Co. (NYSE: JPM), and Abbott Laboratories (NYSE: ABT), Merck & Company, Inc. (NYSE: MRK) is a good stock to invest in.
6. Telephone and Data Systems, Inc. (NYSE: TDS)
Number of Hedge Fund Holders: 18
Dividend Yield: 3.5%
Telephone and Data Systems, Inc. (NYSE: TDS), a telecommunications company, operates through its UScellular, Wireline, and Cable segments to provide communications services in America. The company ranks 6th on our list of the best value dividend stocks to buy now.
Citigroup raised the price target on Telephone and Data Systems, Inc. (NYSE: TDS) from $27 to $29 this May, while also reiterating a Buy rating on it.
In the second quarter of 2021, Telephone and Data Systems, Inc. (NYSE: TDS) had an EPS of $0.17, missing estimates by $0.04. The company’s revenue was $1.31 billion, up 3.8% year over year and beating estimates by $4.64 million. Telephone and Data Systems, Inc. (NYSE: TDS) has gained 10.37% in the past 6 months and 6.78% year to date.
By the end of the second quarter of 2021, 18 hedge funds out of the 873 tracked by Insider Monkey held stakes in Telephone and Data Systems, Inc. (NYSE: TDS) worth roughly $160 million. This is compared to 20 hedge funds in the previous quarter with a total stake value of approximately $253 million.
Like Medtronic plc (NYSE: MDT), Morgan Stanley (NYSE: MS), JPMorgan Chase & Co. (NYSE: JPM), and Abbott Laboratories (NYSE: ABT), Telephone and Data Systems, Inc. (NYSE: TDS) is a good stock to invest in.
5. Lazard Ltd (NYSE: LAZ)
Number of Hedge Fund Holders: 18
Dividend Yield: 3.98%
Lazard Ltd (NYSE: LAZ), a financial advisory and asset management firm, operates in North America, Europe, Asia, Australia, and Central and South America. The company ranks 5th on our list of the best value dividend stocks to buy now.
This April, Morgan Stanley’s Manan Gosalia upgraded shares of Lazard Ltd (NYSE: LAZ) from Equal Weight to Overweight. The analyst also raised his price target on the stock from $52 to $61.
In the second quarter of 2021, Lazard Ltd (NYSE: LAZ) had an EPS of $1.28, beating estimates by $0.40. The company’s revenue was $821.45 million, up 51.30% year over year and beating estimates by $163.27 million. Lazard Ltd (NYSE: LAZ) has gained 20.08% in the past 6 months and 14.83% year to date.
By the end of the second quarter of 2021, 18 hedge funds out of the 873 tracked by Insider Monkey held stakes in Lazard Ltd (NYSE: LAZ) worth roughly $785 million. This is compared to 19 hedge funds in the previous quarter with a total stake value of approximately $770 million.
Third Avenue Management, an investment management firm, mentioned Lazard Ltd (NYSE: LAZ) in its fourth-quarter 2020 investor letter. Here’s what they said:
“Lazard Ltd. (“Lazard”) – During the quarter, the Fund initiated a position in Lazard, which houses two distinct businesses – financial advisory and asset management. Lazard is one of the formidable competitors in the global financial advisory industry, though Lazard is not involved in investment banking lines of business which are balance sheet-intensive or those which take on credit risk. Lazard’s advisory business is the world’s fifth largest by revenues, putting the company’s advisory business on par with those of far larger companies, such as Bank of America and Citi. Meanwhile, Lazard’s advisory revenues are meaningfully larger than the likes of Credit Suisse and UBS. While advisory revenues represent a low single-digit percentage of revenues for those peers, the figure is slightly more than 50% for Lazard. One further point of attraction for Lazard’s advisory business is its sterling reputation in restructuring advisory, which often shines in challenging environments in which insolvencies and near-insolvencies rise. The remaining portion of Lazard’s revenue is derived from the company’s asset management business, which operates completely independent of the advisory business and at last report had approximately $248 billion of assets under management. Lazard’s assets under management are focused on several niches in active management commanding management fees at the higher end of the industry, and the performance of its strategies has been sufficiently strong to have generated inflows of late, an unusual accomplishment for an active manager. The company in total is very well-capitalized and has a long history of controlling the relationship between compensation, its primary expense, and revenue. We believe that our purchase price implies a modest multiple of current operating earnings and that the operating environment can certainly improve, most likely as M&A activity continues to accelerate, but from other sources as well. External to the company however, it is clear that there are a number of companies that would almost certainly be very eager to purchase one or both of Lazard’s businesses. Consolidation is rampant in the asset management industry and several purchases of asset management companies of similar size to Lazard, though arguably of lower quality, have been announced recently. Separately, several European investment banks, including ones named earlier in this paragraph, have publicly declared a desire to grow their advisory businesses, especially in cross-border M&A capabilities, which is a core competency within Lazard. Using conservative estimates of prices we believe could be realized in the sale of Lazard’s businesses, the current share price appears to meaningfully undervalue the company.”
4. AltaGas Ltd. (OTC: ATGFF)
Number of Hedge Fund Holders: N/A
Dividend Yield: 4.03%
AltaGas Ltd. (OTC: ATGFF) is an energy infrastructure company operating through its Utilities and Midstream segments. The company mainly has a presence in North America and ranks 4th on our list of the best value dividend stocks to buy now.
National Bank has raised its price target on AltaGas Ltd. (OTC: ATGFF) to $22.73 as of this July, and the firm has also reiterated its Outperform rating on the shares.
In the second quarter of 2021, AltaGas Ltd. (OTC: ATGFF) had an EPS of $0.063, beating estimates by $0.055. The company’s revenue was $1.58 billion, up 89.6% year over year and beating estimates by $807 million. AltaGas Ltd. (OTC: ATGFF) has gained 27.20% in the past 6 months and 35.68% year to date.
Like Merck & Co., Inc. (NYSE: MRK), Pfizer Inc. (NYSE: PFE), NextEra Energy, Inc. (NYSE: NEE), and Moody’s Corporation (NYSE: MCO), AltaGas Ltd. (OTC: ATGFF) is a good stock to invest in.
3. Algonquin Power & Utilities Corp. (NYSE: AQN)
Number of Hedge Fund Holders: 24
Dividend Yield: 4.34%
Algonquin Power & Utilities Corp. (NYSE: AQN) is a utility and energy company that operates regulated and non-regulated utility assets in Canada, the US, Chile, and Bermuda. The company also provides electrical energy through its non-regulated renewable energy power generation facilities. It ranks 3rd on our list of the best value dividend stocks to buy now.
As of this May, Credit Suisse has a price target of $12.95 on Algonquin Power & Utilities Corp. (NYSE: AQN). The firm also holds a Neutral rating on the stock.
In the second quarter of 2021, Algonquin Power & Utilities Corp. (NYSE: AQN) had an EPS of $0.15, beating estimates by $0.02. The company’s revenue was $527.5 million, up 53.52% year over year and beating estimates by $64.29 million. Algonquin Power & Utilities Corp. (NYSE: AQN) has gained 13.11% in the past year.
By the end of the second quarter of 2021, 24 hedge funds out of the 873 tracked by Insider Monkey held stakes in Algonquin Power & Utilities Corp. (NYSE: AQN) worth roughly $310 million. This is compared to 10 hedge funds in the previous quarter with a total stake value of approximately $172 million.
2. TELUS Corporation (NYSE: TU)
Number of Hedge Fund Holders: 13
Dividend Yield: 4.44%
TELUS Corporation (NYSE: TU), a communication services company, is next on our list of the best value dividend stocks to buy now and ranks 2nd. The company operates through its Wireless and Wireline segments to provide communications services in Canada.
Desjardins just this August raised the price target on shares of TELUS Corporation (NYSE: TU) to $23.54 while reiterating a Buy rating on the stock.
In the second quarter of 2021, TELUS Corporation (NYSE: TU) had an EPS of $0.21, beating estimates by $0.01. The company’s revenue was $3.29 billion, up 18.35% year over year and beating estimates by $29.01 million. TELUS Corporation (NYSE: TU) has gained 12.86% in the past 6 months and 15.02% year to date.
By the end of the second quarter of 2021, 13 hedge funds out of the 873 tracked by Insider Monkey held stakes in TELUS Corporation (NYSE: TU) worth roughly $215 million. This is compared to 18 hedge funds in the previous quarter with a total stake value of approximately $200 million.
1. Enbridge Inc. (NYSE: ENB)
Number of Hedge Fund Holders: 19
Dividend Yield: 6.82%
Enbridge Inc. (NYSE: ENB) is an energy company that operates through its Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution and Storage, Renewable Power Generation, and Energy Services segments. It ranks 1st on our list of the best value dividend stocks to buy now.
BMO Capital just this August raised the price target on shares of Enbridge Inc. (NYSE: ENB) to $43.15, alongside reiterating an Outperform rating on the stock.
In the second quarter of 2021, Enbridge Inc. (NYSE: ENB) had an EPS of $0.54, beating estimates by $0.08. The company’s revenue was $8.77 billion, up 47.12% year over year and beating estimates by $1.61 billion. Enbridge Inc. (NYSE: ENB) has gained 11.03% in the past 6 months and 21.49% year to date.
By the end of the second quarter of 2021, 19 hedge funds out of the 873 tracked by Insider Monkey held stakes in Enbridge Inc. (NYSE: ENB) worth roughly $166 million. This is compared to 22 hedge funds in the previous quarter with a total stake value of approximately $144 million.
ClearBridge Investments, an investment management firm, mentioned Enbridge Inc. (NYSE: ENB) in its first-quarter 2021 investor letter. Here’s what they said:
“Enbridge owns and operates one of the largest oil and gas pipeline networks in North America. The company also owns regulated gas distribution utilities in Ontario, Canada. The first quarter saw the market giving the energy sector credit for its leverage to the eventual economic recovery as COVID-19 vaccines get rolled out through 2021.”
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Disclosure: None. 10 Best Value Dividend Stocks to Buy Now is originally published on Insider Monkey.
