In this article, we discuss 10 dividend stocks better than cryptocurrencies.
Cryptocurrencies took the finance world by storm in 2021, when pandemic-driven investing reached record highs and retail investors flocked to crypto trading. The crypto universe peaked in November 2021, reaching a valuation of more than $3 trillion. Elite hedge funds including Tudor Investment Corp, Hudson Bay Capital Management, and Brevan Howard have also shown growing interest in crypto trading, further legitimizing the practice in the finance world.
Crypto Crash 2022
Although crypto trading remains hot even today, the crypto crash of January 2022 resulted in the market valuation plummeting 40%, losing $1.2 trillion. Many investors posted massive losses, since their portfolios were exclusively focused on cryptocurrency investments. Amid these losses, the comparison between dividend paying companies and cryptocurrencies became the talk of Wall Street.
On February 24, the day of the Russian invasion of Ukraine, Bitcoin crashed – with price slumping below $35,000. This was a decline of 10% in just 24 hours. Other prominent coins such as Ethereum, Binance Coin, Solana, Cardano, and Ripple also faced similar fates. This further undermined the ability of digital currencies to act as a safe haven amid market crisis.
Finding Stability During Uncertain Times
On the other hand, dividend stocks have historically proven to be effective hedges in times of rampant inflation and market turbulence. Investor sentiment around dividend paying stocks like American Express Company (NYSE:AXP), Exxon Mobil Corporation (NYSE:XOM), and AbbVie Inc. (NYSE:ABBV) remains positive despite market uncertainty.
Photo by Mohamed Hadji on Unsplash
Our Methodology
After a careful assessment of the market, we chose income stocks that have been awarded positive analyst ratings, display strong business fundamentals, and have strong hedge fund sentiment. We picked companies that have increased their dividends consistently for at least 25 years, despite market uncertainty. These companies are most likely to continue their streak of raising dividend payouts, which makes them a safe investment option in the current market backdrop.
In addition, these stocks also have long-term growth potential, offering better options to investors who are looking for both consistent income and share price gains.
Data from 900+ elite hedge funds tracked by Insider Monkey in Q4 2021 was used to identify the number of hedge funds that hold stakes in each firm.
Dividend Stocks Better Than Cryptocurrencies
10. Atmos Energy Corporation (NYSE:ATO)
Dividend Yield as of March 24: 2.37%
Number of Hedge Fund Holders: 20
Atmos Energy Corporation (NYSE:ATO) is a Texas-based company that operates natural gas pipelines and storage facilities in the United States. The company serves commercial, residential, and industrial customers. On February 8, Atmos Energy Corporation (NYSE:ATO) reported earnings per share of $1.86 for Q4 2021, topping estimates by $0.01.
On February 8, Atmos Energy Corporation (NYSE:ATO) declared a quarterly dividend of $0.68 per share. The dividend was paid on March 7, to shareholders of record on February 21. The stock yields 2.37% as of March 24. The company has raised its dividend payouts for 37 consecutive years, and earnings per diluted share have also increased for 19 years in a row. This makes Atmos Energy Corporation (NYSE:ATO) a reliable income stock to hold on to even during market uncertainty.
Goldman Sachs analyst Insoo Kim on February 10 raised the price target on Atmos Energy Corporation (NYSE:ATO) to $113 from $112 and kept a Buy rating on the shares after the company announced Q1 earnings. The analyst expects 7% to 8% annual EPS and DPS growth owing to “robust” gas infrastructure investments. He observed that despite recent outperformance, the stock still trades at a 5% relative discount to regulated utility peers in the market.
Insider Monkey’s Q4 data suggests that 20 hedge funds were bullish on Atmos Energy Corporation (NYSE:ATO), compared to 16 funds in the prior quarter. Rajiv Jain’s GQG Partners is the leading shareholder of Atmos Energy Corporation (NYSE:ATO), with 3.5 million shares worth $375.2 million.
In addition to American Express Company (NYSE:AXP), Exxon Mobil Corporation (NYSE:XOM), and AbbVie Inc. (NYSE:ABBV), elite hedge funds are piling into Atmos Energy Corporation (NYSE:ATO).
9. Aflac Incorporated (NYSE:AFL)
Dividend Yield as of March 24: 2.48%
Number of Hedge Fund Holders: 31
Aflac Incorporated (NYSE:AFL) is a Georgia-based provider of supplemental health and life insurance products. The company operates in the United States and Japan. Posting solid Q4 results on February 2, Aflac Incorporated (NYSE:AFL) reported an EPS of $1.33, beating market estimates by $0.07. The $5.43 billion revenue also outperformed analysts’ predictions.
On February 2, Aflac Incorporated (NYSE:AFL) declared a $0.40 per share quarterly dividend, which was paid to shareholders on March 1. The company has raised its dividend payments for 40 years back-to-back, which makes it a prudent investment in this volatile macro backdrop.
Raymond James analyst C. Gregory Peters raised the price target on Aflac Incorporated (NYSE:AFL) on February 7 to $67 from $60 and maintained an Outperform rating on the shares. The analyst contended that the stock is up 11% on a year-to-date basis, given the expectation of higher interest rates and the positive impact on future NII growth. He expects a slow but gradual recovery of new sales for the company.
According to the Q4 database of Insider Monkey, 31 hedge funds placed long bets on Aflac Incorporated (NYSE:AFL), compared to 34 funds in the prior quarter. John W. Rogers’ Ariel Investments is the leading Aflac Incorporated (NYSE:AFL) stakeholder, with 1.5 million shares worth approximately $90 million.
Here is what Madison Funds has to say about Aflac Incorporated (NYSE:AFL) in its Q2 2021 investor letter:
“This quarter we are highlighting Aflac (AFL) as a relative yield example in the Financial sector. AFL is a leading provider of life and supplemental medical insurance in Japan and the U.S. AFL products offer financial protection against loss of income for policyholders based on qualifying health events. Aflac Japan generates approximately 70% of total revenues, and the company has dominant market share in Japan. In the U.S., AFL provides voluntary insurance for policyholders at businesses with products sold through payroll deduction by its large sales force which sells primarily through face-to-face interactions. We believe AFL’s dominant market position in Japan and its large U.S. sales force create a sustainable competitive advantage for the company.
Our thesis on AFL is that its sales will recover from the impact of the COVID pandemic, and it will return a significant amount of capital to shareholders. Sales were negatively impacted in both Japan and the U.S. but appear to be in early stages of recovering. We believe sales will improve further as economies open and new products are introduced in Japan. In the U.S., agents will be able to return to face-to-face interactions as people get vaccinated, something that was restricted last year. (Click to read full text)
8. Chubb Limited (NYSE:CB)
Dividend Yield as of March 24: 1.50%
Number of Hedge Fund Holders: 34
Chubb Limited (NYSE:CB) is a Swiss-American company that offers a range of insurance solutions, including property, casualty, health, reinsurance, and life insurance policies. The stock yields 1.50% as of March 24.
Chubb Limited (NYSE:CB) reported solid Q4 results on February 1. The company disclosed earnings per share of $3.81, above consensus by $0.53. The Q4 revenue gained 9.61% year-over-year, reaching $8.52 billion, topping analysts’ predictions by $5.86 million.
On February 24, Chubb Limited (NYSE:CB) declared a quarterly dividend of $0.80 per share. The dividend will be paid on April 8, to shareholders of record on March 18. The company has raised its dividends consecutively for 29 years.
Argus analyst Kevin Heal raised the price target on Chubb Limited (NYSE:CB) to $230 from $210 and reiterated a Buy rating on the shares. He cited the Q4 earnings beat, noting Chubb Limited (NYSE:CB)’s operational advantage given its strong brand, experienced management, and a solid balance sheet. The analyst lifted his FY22 EPS expectations from $14.13 to $15.39, based on improving margins and expectations for meaningful stock buybacks.
Among the hedge funds tracked by Insider Monkey, 34 funds were bullish on Chubb Limited (NYSE:CB) in the fourth quarter, up from 30 funds in the prior quarter. Andreas Halvorsen’s Viking Global held the biggest stake in Chubb Limited (NYSE:CB), worth $713.6 million.
Here is what Davis Funds has to say about Chubb Limited (NYSE:CB) in their Q4 2020 investor letter:
“Chubb is now among the Fund’s largest P&C holdings at 5.2% and illustrates well why we thought there was an opportunity to add to our P&C names. Through September 30, 2020, Chubb had returned −24% for the year, reflecting investors’ fears that (1) the insurance industry would be compelled to cover substantial business interruption claims that were never intended as part of insured’s policies, (2) declining long-term rates would diminish the value of “float” (i.e., customers’ funds that insurers get to hold and invest until claims are paid), and (3) adverse trends (pre-dating the pandemic) in insured loss rates (e.g., rising litigation and settlement costs, increased frequency and severity of catastrophe losses, etc.).
With industry economics already soft, it was only a matter of time before insurance pricing would have to adjust. In fact, P&C pricing had already begun to increase in a number of business lines before COVID hit, and that trend has only increased and broadened since then. Chubb disclosed in Q3 2020 that North American commercial P&C pricing increased by more than 15% in aggregate. Some of the price increase will go to cover rising insurance loss rates, but we certainly do anticipate some dropping into underwriting profit too. Admittedly, some of that increased underwriting profit will itself get offset by a decline in investment income owing to lower interest rates, but that is a “feature,” if you will, of P&C insurance companies. Unlike a bank, where the floor on its deposit funding costs practically speaking is zero, there is in theory no reason underwriting profit cannot increase to offset low interest rates, so it is feasible for its earnings to “normalize” far in advance of an eventual rise in long-term rates. (Click here to read full text)
7. Air Products and Chemicals, Inc. (NYSE:APD)
Dividend Yield as of March 24: 2.70%
Number of Hedge Fund Holders: 40
Air Products and Chemicals, Inc. (NYSE:APD) is a Pennsylvania-based company that provides atmospheric gases, specialty chemicals, and related equipment to industrial customers. As of March 24, the stock yields 2.70%.
On March 8, Air Products and Chemicals, Inc. (NYSE:APD) disclosed plans to build a green liquid hydrogen plant in Arizona, with the capacity to produce 10 metric tons per day. The company intends to distribute hydrogen in the mobility market across California and other locations that require clean, carbon-free hydrogen. The facility is expected to become operational in 2023.
Air Products and Chemicals, Inc. (NYSE:APD) on February 3 declared a $1.62 per share quarterly dividend, an 8% increase from its earlier dividend of $1.50. The dividend will be distributed on May 9, to shareholders of record on April 1. This was the 40th consecutive increase in quarterly dividends administered by the company.
JPMorgan analyst Jeffrey Zekauskas upgraded Air Products to Overweight from Neutral on March 21, keeping his price target unchanged at $275. The analyst expects the company’s EPS to be $10.45 in 2022, compared to $9.02 in 2021. He believes Air Products and Chemicals, Inc. (NYSE:APD)’s earnings strength in 2022 will likely be a result of the first stage of its Jazan project in Saudi Arabia, rather than its core industrial gas operations.
At the end of Q4, 40 hedge funds reported owning stakes in Air Products and Chemicals, Inc. (NYSE:APD), up from 32 funds in the prior quarter. Renaissance Technologies is the leading shareholder of the company, with 584,900 shares worth roughly $178 million.
6. Ecolab Inc. (NYSE:ECL)
Dividend Yield as of March 24: 1.15%
Number of Hedge Fund Holders: 42
Ecolab Inc. (NYSE:ECL) is a Minnesota-based provider of water, hygiene, and infection prevention solutions to customers across the United States and international markets. The hedge fund sentiment around the stock is positive. In Q4 2021, 42 funds were bullish on Ecolab Inc. (NYSE:ECL), up from 39 funds in the earlier quarter. The total stakes held in Q4 amounted to $2.8 billion.
On March 14, Ecolab Inc. (NYSE:ECL) announced a share repurchase program of common stock worth $500 million in 2022. With 268 million shares outstanding on February 28, the current repurchase reflects 1.1% of Ecolab Inc. (NYSE:ECL)’s total market cap.
BofA analyst Steve Byrne upgraded Ecolab Inc. (NYSE:ECL) to Buy from Neutral on March 22, but lowered the price target to $196 from $210. While raw material cost pressures will persist in the near-term, he expects Ecolab Inc. (NYSE:ECL) to outperform other peers owing to its resilient end markets and pricing power.
Ecolab Inc. (NYSE:ECL) declared a $0.51 per share quarterly dividend on February 24, in line with previous. The dividend will be distributed on April 15, to shareholders of the company as of March 15. The company has a rich dividend history, with 30 years of consecutively increasing annual dividends under its belt. This makes Ecolab Inc. (NYSE:ECL) a reliable investment, since the company is likely to keep increasing its dividend payouts despite market uncertainty.
According to the fourth quarter database of Insider Monkey, Bill & Melinda Gates Foundation Trust is the biggest shareholder of Ecolab Inc. (NYSE:ECL), with 4.3 million shares worth over $1 billion.
Emerson Electric Co. (NYSE:EMR) is gaining traction among institutional investors, just like American Express Company (NYSE:AXP), Exxon Mobil Corporation (NYSE:XOM), and AbbVie Inc. (NYSE:ABBV).
5. Emerson Electric Co. (NYSE:EMR)
Dividend Yield as of March 24: 2.10%
Number of Hedge Fund Holders: 43
Headquartered in Ferguson, Missouri, Emerson Electric Co. (NYSE:EMR) is a multinational corporation that offers complex engineered electrical equipment, such as process control systems, industrial automation tools, electric motors, and storage systems.
On February 2, Emerson Electric Co. (NYSE:EMR) declared a quarterly dividend of $0.515 per share. The dividend was paid on March 10. The company delivers a yield of 2.10% as of March 24. Emerson Electric Co. (NYSE:EMR) is a notable dividend king, having increased its dividend consistently for 65 years. This makes the stock a dependable investment for those who do not wish to dabble in the risky crypto universe.
Oppenheimer analyst Christopher Glynn upgraded Emerson Electric Co. (NYSE:EMR) on March 9 to Outperform from Perform with a $110 price target. The analyst cited the “excellent persistent capital preservation characteristics” in shares, Emerson Electric Co. (NYSE:EMR)’s “strong global leadership position” in automation solutions, and a “multi-faceted backdrop of cyclical and secular drivers” for the upgrade.
A total of 43 hedge funds held long positions in Emerson Electric Co. (NYSE:EMR) at the end of December 2021, up from 41 funds in the earlier quarter. Two Sigma Advisors held the largest stake in Emerson Electric Co. (NYSE:EMR), owning 2.6 million shares worth over $250 million.
4. Linde plc (NYSE:LIN)
Dividend Yield as of March 24: 1.48%
Number of Hedge Fund Holders: 45
Linde plc (NYSE:LIN) is a multinational chemical corporation that is a leading provider of industrial gasses such as oxygen, nitrogen, argon, carbon dioxide, hydrogen, helium, acetylene, and carbon monoxide, among others.
On March 9, Linde plc (NYSE:LIN) shares rose 8.5% as the CEO Sanjiv Lamba disclosed his purchase of 3,750 ordinary shares, priced between $268.54 to $269.27. The transaction was worth approximately $1 million.
Linde plc (NYSE:LIN), a reliable dividend aristocrat, announced on February 28 a $1.17 per share quarterly dividend, a 10% increase from its prior dividend of $1.06. The dividend is payable on March 25, to shareholders of record on March 11. The company also disclosed a share repurchase program of up to $10 billion common shares. The maximum share capital repurchase amount will be 15% of outstanding shares and the program’s expiration date is July 31, 2024.
HSBC analyst Martin Evans raised the price target on Linde plc (NYSE:LIN) to $382 from $366 and kept a Buy rating on the shares on February 18. The company reported a “strong increase” in Q4 performance and has strategic long-term contracts that will enable growth, the analyst told investors in a bullish thesis.
Of the 45 hedge funds that held long positions in Linde plc (NYSE:LIN), Impax Asset Management is the leading shareholder of the company, with approximately $3 million shares worth over $1 billion.
3. General Dynamics Corporation (NYSE:GD)
Dividend Yield as of March 24: 2.09%
Number of Hedge Fund Holders: 48
General Dynamics Corporation (NYSE:GD) is an American aerospace and defense company operating via four segments — Aerospace, Marine Systems, Combat Systems, and Technologies.
On March 2, General Dynamics Corporation (NYSE:GD) declared a $1.26 per share quarterly dividend, a 5.9% increase from its previous dividend of $1.19. The dividend is payable on May 6, to shareholders of the company as of April 8. 2022 marks the 25th year of consistent dividend hikes by General Dynamics Corporation (NYSE:GD), which should assure investors about the dependability of the income stock.
General Dynamics Information Technology, a business unit of General Dynamics Corporation (NYSE:GD), reported on March 18 that it has been assigned the User Facing and Data Center Services contract by the National Geospatial-Intelligence Agency. This contract has a budget of $4.5 billion and a 10-year timeline.
Wells Fargo analyst Matthew Akers on March 7 raised the price target on General Dynamics Corporation (NYSE:GD) to $282 from $235 and maintained an Overweight rating on the shares. The analyst expects valuation to remain high for the foreseeable future, given escalated geopolitical tensions.
In Q4 2021, General Dynamics Corporation (NYSE:GD) was found in 48 hedge fund portfolios as per Insider Monkey’s records, up from 36 funds in the prior quarter. Longview Asset Management is the biggest shareholder of the company, owning more than 30 million shares worth $6.2 billion.
Here is what Oakmark Global Fund has to say about General Dynamics Corporation (NYSE:GD) in their Q1 2021 investor letter:
“The second new U.S. equity purchase was General Dynamics, a leading U.S. defense contractor and owner of the world’s premier business jet franchise (Gulfstream). We were able to purchase this high-quality and durable business at a meaningful discount to our estimate of its intrinsic value after a series of near-term concerns hurt its share price. Taking a longer term view, the company’s business jet franchise should benefit from a multi-year investment program in new, differentiated products. Also, its free cash flow conversion is set to improve materially and the company is poised to benefit from a highly visible ramp up in revenue related to next generation nuclear-powered submarines. As these positives come into clearer view, we expect sentiment to improve, along with the company’s share price.”
2. Exxon Mobil Corporation (NYSE:XOM)
Dividend Yield as of March 24: 4.21%
Number of Hedge Fund Holders: 71
Exxon Mobil Corporation (NYSE:XOM) is headquartered in Irving, Texas. The company operates as a producer and supplier of crude oil, natural gas, petroleum products, and petrochemicals. Exxon Mobil Corporation (NYSE:XOM) delivers a dividend yield of 4.21%.
On January 26, Exxon Mobil Corporation (NYSE:XOM) declared a quarterly dividend of $0.88 per share, in line with previous. The dividend was distributed among shareholders on March 10. This is the 39th year of dividend increases for Exxon Mobil Corporation (NYSE:XOM) shareholders, and the oil crisis makes it a hot investment in the current environment for income investors.
Exxon Mobil Corporation (NYSE:XOM) announced on March 24 a pilot program that will utilize natural gas from North Dakota oil wells to power cryptocurrency mining activities. The company also entered an agreement with Crusoe Energy Systems to access gas from a location in the Bakken shale basin to supply power for generators used to mine Bitcoin on site. This program might be expanded to four countries by Exxon Mobil Corporation (NYSE:XOM).
Barclays analyst Jeanine Wai lifted the price target on Exxon Mobil Corporation (NYSE:XOM) on March 9 to $98 from $91 and maintained an Overweight rating on the shares. The analyst updated her model to reflect the current gas prices and account for Permian production/capex assumptions.
Elite hedge funds were exceedingly bullish on Exxon Mobil Corporation (NYSE:XOM). In Q4 2021, 71 funds were long Exxon Mobil Corporation (NYSE:XOM), up from 64 funds in the previous quarter. GQG Partners is the biggest shareholder of the company, with 32.3 million shares worth close to $2 billion.
Here is what First Eagle Investment Management has to say about Exxon Mobil Corporation (NYSE:XOM) in its Q2 2021 investor letter:
“Leading contributors in the First Eagle Global Fund this quarter included Exxon Mobil Corporation. The continued recovery in oil prices as economies reopen helped fuel another strong performance across the energy complex, including shares of Exxon Mobil. Exxon Mobil recently lost a proxy fight with an activist investor that took three of the company’s 12 board seats. While the press was focused on the investor’s concerns over Exxon Mobil’s long term energy transformation strategy, other factors fundamental to shareholder returns—like capital discipline and balance sheet management—were also at play.”
1. AbbVie Inc. (NYSE:ABBV)
Dividend Yield as of March 24: 3.52%
Number of Hedge Fund Holders: 82
AbbVie Inc. (NYSE:ABBV) is an American pharmaceutical retailer, focusing on multiple therapeutic areas including immunology, oncology, neuroscience, and virology. The stock yields 3.52% as of March 24.
On February 17, AbbVie Inc. (NYSE:ABBV) declared a quarterly per share dividend of $1.41. The dividend will be paid on May 16, to shareholders of record on April 15. AbbVie Inc. (NYSE:ABBV) has increased its dividend by more than 250 percent since its inception in 2013, and the company is a notable dividend aristocrat.
Citi analyst Andrew Baum on March 1 raised the price target on AbbVie Inc. (NYSE:ABBV) to $170 from $155 and reiterated a Buy rating on the shares. The analyst boosted estimates given higher optimism for AbbVie Inc. (NYSE:ABBV)’s Rinvoq across all indications and the projected delay of generic biosimilars in the U.S. until at least 2032.
According to the Q4 database of Insider Monkey, 82 hedge funds were bullish on AbbVie Inc. (NYSE:ABBV), compared to 81 funds in the earlier quarter. Diamond Hill Capital is a significant shareholder of the company, with 2.2 million shares worth $299.4 million.
Here is what Miller Howard Investments had to say about AbbVie Inc. (NYSE:ABBV) in its Q3 2021 investor letter:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We hold three pharmaceutical companies, (which includes) AbbVie (ABBV). All three have strong cash flows and balance sheets, making their high dividends reasonably safe. The investment controversy surrounding these pharma companies is whether they can develop or acquire new products to replace their current blockbuster drugs. The low valuations on these stocks reflects what we believe to be undue pessimism by investors on the prospects for new drugs.”
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Disclosure: None. 10 Dividend Stocks Better Than Cryptocurrencies is originally published on Insider Monkey.
