In this article, we discuss 10 dividend stocks with over 2% yield.
After two consecutive quarters of economic contraction, fears of a potential economic slowdown, and rising inflation, the stock market’s volatility has increased and the markets have declined substantially year to date.
With the Federal Reserve expected to raise interest rates further, the markets could decline if economic data fails to meet expectations. Given the uncertainty, diversifying into different sectors and different stocks could be a good idea.
One set of stocks, dividend stocks, have also fallen with the market given the weak economic conditions. With the lower valuations, however, there could be an opportunity for long term investors who buy quality stocks.
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Our Methodology:
For our list, we selected 10 blue chip stocks with dividend yields exceeding 2% as of September 27 and we sorted them based on the number of hedge fund holders in our database that owned shares in the same stock as of the end of Q2 2022. We also used the total value of hedge fund holdings as a tiebreaker in case the numbers of hedge fund holders were the same.
Best Dividend Stocks With Over 2% Yield
10. BlackRock, Inc. (NYSE:BLK)
Dividend Yield as of September 27: 3.37%
Number of Hedge Funds Holders: 50
Total Value of Hedge Fund Holdings: 1.56 billion
Based in New York, BlackRock, Inc. (NYSE:BLK) is a multinational investment management company, which focuses on asset management and provides risk management strategy. Given its earnings power and past earnings per share growth, BlackRock, Inc. has raised its dividend for 12 consecutive years. In the last five years, the company raised its dividends at a CAGR of 13.90%. As a result, it pays a quarterly dividend of $4.88 per share. As of September 27, BlackRock, Inc.’s stock also yields 3.37%.
Some analysts are also bullish on the firm’s prospects. On August 12, Deutsche Bank analyst Brian Bedell kept a Buy rating on BlackRock, Inc. stock and raised the price target to $860 from $720.
At the end of the second quarter, 50 hedge funds tracked by Insider Monkey owned stakes in BlackRock, Inc.. The total value of these stakes is $1.56 billion. Harris Associates is the largest stakeholder in BlackRock, Inc. as of September, with a $549.93 million position in the company.
Alongside Wells Fargo & Company, Bank of America Corporation (NYSE:BAC), and JPMorgan Chase & Co., BlackRock, Inc. is a dividend stock with a yield of over 2% that many hedge funds in our database own as of Q2 2022.
9. McDonald’s Corporation (NYSE:MCD)
Dividend Yield as of September 27: 2.33%
Number of Hedge Funds Holders: 50
Total Value of Hedge Fund Holdings: 2.30 billion
McDonald’s Corporation is a multinational fast food chain. Given its scale and the brand name, McDonald’s Corporation has been consistently profitable despite economic challenges. The company has raised its dividends consistently for the past 45 years and the stock currently offers a quarterly dividend of $1.38 per share. As of September 27, the company has a dividend yield of 2.33%.
Despite the Federal Reserve raising interest rates, some analysts are bullish on the stock. On September 7, Piper Sandler analyst Nicole Miller Regan kept an Overweight rating on the stock and raised the price target to $270.
At the end of Q2, 50 hedge funds in our database had a position in McDonald’s Corporation. Our data shows that Bridgewater Associates is the biggest stakeholder of McDonald’s Corporation, with almost 2.71 million shares worth $511.43 million.
8. Lowe’s Companies, Inc. (NYSE:LOW)
Dividend Yield as of September 27: 2.24%
Number of Hedge Funds Holders: 53
Total Value of Hedge Fund Holdings: 4.98 billion
Lowe’s Companies, Inc. is an American retail company specializing in home improvement.
Given its earnings growth, Lowe’s Companies, Inc. has raised its annual dividend for 48 consecutive years. As a result of the dividend increases, the company has a quarterly dividend of $1.05 per share, giving it a dividend yield of 2.24% as of September 27.
Although the economy could slow further, analysts expect Lowe’s Companies, Inc.’s earnings to continue to grow next year. The stock trades at a forward P/E ratio of 12.94 as of September 27.
53 hedge funds in Insider Monkey’s database had Lowe’s Companies, Inc. in a bullish position at the end of the second quarter of 2022. These hedge funds held shares in the firm worth about $4.98 billion. Pershing Square, with a position worth $1.78 billion, stood as the most significant shareholder of Lowe’s Companies, Inc..
Pershing Square Capital Management mentioned Lowe’s Companies, Inc. in its Q4 2021 investor letter. Here is what the firm has to say:
Lowe’s is a high-quality business with significant long-term earnings growth potential
Supportive macroeconomic backdrop
-Aging housing stock, lack of new inventory, robust home equity values, and unprecedented pro project backlog
-COVID-19 causing millennials to enter the housing marketPositioned to grow EPS largely independent of market conditions
-Idiosyncratic revenue opportunities driving share gains
-Self-help initiatives catalyzing operating margin expansion
-Buybacks representing ~8% of current market capitalization planned for 2022Multi-year business transformation with substantial earnings upside
-Margin target of 13% has substantial upside; Home Depot at ~15.3% and increasing
-Potential to generate high-teens EPS growth over the next several years.Lowe’s continues to trade at a significantly discounted P/E multiple relative to Home Depot despite materially higher prospective EPS growth. LOW’s share price including dividends increased 63% in 2021 and has decreased 10% year-to-date in 2022.
7. Lockheed Martin Corporation (NYSE:LMT)
Dividend Yield as of September 27: 2.8%
Number of Hedge Funds Holders: 55
Total Value of Hedge Fund Holdings: 2.56 billion
Based in America, Lockheed Martin Corporation (NYSE:LMT) is an aerospace company, which focuses on arms, defense, information and security technologies. Lockheed Martin Corporation is a giant in the industry. The company employs approximately 115,000 employees worldwide, including about 60,000 engineers and scientists.
Given its scale and the necessity of national security, Lockheed Martin Corporation has been consistently profitable despite economic challenges. The company has increased its dividend for 19 straight years and has a dividend yield of 2.8% as of September 27.
In August, Lockheed Martin Corporation was also awarded $121.57 million contract by the US Army.
The number of hedge funds tracked by Insider Monkey owning stakes in Lockheed Martin Corporation were 55 in Q2 2022. The collective value of these stakes was over $2.56 billion. GQG Partners, with a position worth $877.88 million, was the largest shareholder of Lockheed Martin Corporation.
6. Union Pacific Corporation (NYSE:UNP)
Dividend Yield as of September 27: 2.64%
Number of Hedge Funds Holders: 65
Total Value of Hedge Fund Holdings: 6.36 billion
Headquartered in Nebraska, Union Pacific Corporation (NYSE:UNP) is a railroad holding company. Given its strong position in the transport sector, Union Pacific Corporation has both economies of scale and earnings power.
In the second fiscal quarter, Union Pacific Corporation reported a normalized EPS of $2.93, beating analyst estimates by $0.09. The company’s revenue in the second quarter came in at $6.27 billion, and beat revenue estimates by $170.15 million. As of September 27, the stock has a dividend yield of 2.64%.
Hedge funds appreciate the growth profile of Union Pacific Corporation. 65 hedge funds in the database of Insider Monkey were long Union Pacific Corporation at the end of September with stakes worth $6.36 billion.
When looking at the institutional investors followed by Insider Monkey at the end of Q2, Fisher Asset Management, holds the biggest position in Union Pacific Corporation. Fisher Asset Management has over a $1.12 billion position in the stock, comprising 0.79% of its 13F portfolio.
Like Union Pacific Corporation, Wells Fargo & Company, Bank of America Corporation, and JPMorgan Chase & Co. are dividend stocks with a yield over 2% as of September 27 that many hedge funds in our database own as of Q2 2022.
5. The Goldman Sachs Group, Inc. (NYSE:GS)
Dividend Yield as of September 27: 3.43%
Number of Hedge Funds Holders: 69
Total Value of Hedge Fund Holdings: 4.61 billion
Headquartered in New York, The Goldman Sachs Group, Inc. (NYSE:GS) is a financial company that offers a variety of financial services to consumers, corporations, governments, and financial organizations around the world.
Given its strong position in the capital market, The Goldman Sachs Group, Inc., has the potential to grow earnings in the long term. On July 2022, The Goldman Sachs Group, Inc. declared a quarterly dividend of $2.50 per share. As of September 27, the stock had a dividend yield of 3.43%.
Overall, the company remained a popular stock among hedge funds. At the end of the second quarter of 2022, 69 hedge funds in the database of Insider Monkey held stakes worth $4.61 billion in The Goldman Sachs Group, Inc.. As of September 12, Eagle Capital Management owned more than 3 million shares in The Goldman Sachs Group, Inc.. The hedge fund’s total stake in the company stood at over $1 billion, which accounted for 4.37% of its 13F portfolio.
Here is what GoodHaven Capital Management specifically said about The Goldman Sachs Group, Inc. in its Q2 2022 investor letter:
We also initiated a position in Goldman Sachs at an inexpensive valuation and are attracted by the potential durability of the company’s ability to generate high returns on equity driven in part by the growth in their existing and new franchises.
4. The Home Depot, Inc. (NYSE:HD)
Dividend Yield as of September 27: 2.83%
Number of Hedge Funds Holders: 80
Total Value of Hedge Fund Holdings: 5.35 billion
Based in Georgia, The Home Depot, Inc. (NYSE:HD) is a home improvement retail corporation that operates globally. The company has more than 2300 stores and also has a strong presence in the e-commerce industry.
Given the growth in its earnings, The Home Depot, Inc. has increased its annual dividend for 12 straight years. As a result, the company has a dividend yield of 2.83% and a forward P/E ratio of 15.49 as of September 27.
80 hedge funds in Insider Monkey’s database had The Home Depot, Inc. in a bullish position at the end of the second quarter of 2022. These hedge funds held shares in the firm worth about $5.35 billion. Fisher Asset Management, with a position worth $2.29 billion, stood as the largest shareholder of Home Depot, Inc..
3. Wells Fargo & Company (NYSE:WFC)
Dividend Yield as of September 27: 3%
Number of Hedge Funds Holders: 83
Total Value of Hedge Fund Holdings: 5.16 billion
Based in San Francisco, Wells Fargo & Company offers financial services internationally.
On July 26 2022, Wells Fargo & Company declared a quarterly dividend of $0.30 per share, an increase of 20% from the previous. As a result of the increase, the stock has a dividend yield of 3% as of September 27.
83 hedge funds in Insider Monkey’s database had Wells Fargo & Company in a bullish position at the end of the second quarter of 2022. These hedge funds held shares in the firm worth about $5.2 billion. Eagle Capital Management, with a position worth $709 million, was the largest shareholder of Wells Fargo & Company.
2. Bank of America Corporation (NYSE:BAC)
Dividend Yield as of September 27: 2.88%
Number of Hedge Funds Holders: 99
Total Value of Hedge Fund Holdings: 35.9 billion
Bank of America Corporation is a multinational investment bank that also offers multiple financial services. As of September 27, the stock has a dividend yield of 2.88%.
Among the hedge funds tracked by Insider Monkey in Q2 2022, 99 funds were bullish on Bank of America, with stakes equaling $35.9 billion. Warren Buffett’s Berkshire Hathaway is the largest Bank of America stakeholder, with shares worth $31.4 billion.
Here is what ClearBridge Dividend Strategy has to say about Bank of America Corporation in its Q2 2022 investor letter:
In the second quarter we made a sizable add to our position in Bank of America as our bank holdings have significant leverage to rising interest rates. The Fed, unfortunately, was late to realize inflation’s magnitude, maintaining for far too long that inflationary pressures were merely transitory. This mistake caused inflation to accelerate, necessitating a larger intervention than if the Fed had moved sooner.
1. JPMorgan Chase & Co. (NYSE:JPM)
Dividend Yield as of September 27: 3.78%
Number of Hedge Funds Holders: 104
Total Value of Hedge Fund Holdings: 5.8 billion
Headquartered in New York, JPMorgan Chase & Co. is an investment banks and financial services holdings company. As of September 27, the stock has a dividend yield of 3.78%.
Given its growing earnings, JPMorgan Chase & Co. has increased its annual dividend for 10 consecutive years. Given the decline in its stock this year, JPMorgan Chase & Co. has a forward P/E ratio of 8.38 as of September 27.
At the end of Q2, 104 hedge funds in our database had a position in JPMorgan Chase & Co.. Our data shows that Fisher Asset Management is the biggest stakeholder of JPMorgan Chase & Co., with almost 8 million shares worth $8.9 billion.
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This article is originally published at Insider Monkey.
