In this episode, we discuss 10 high beta dividend stocks.
Investors with a high risk tolerance usually seek out volatile stocks with a high beta value, since stocks with a higher risk component also deliver higher returns. Investors looking to benefit from intraday price changes and short-term momentum strategies usually pick high beta securities. It is important to understand the concept of the beta value before investing in high beta stocks.
What is Beta?
Beta measures the volatility of a stock versus the overall market or an index that the stock tracks. The market always has a beta value of 1, and stocks are assigned a beta value according to their deviation from the market returns. If a stock is more volatile than the market, it receives a beta value of more than 1. Similarly, if a company displays lower than average market volatility, a beta value of less than 1 is allocated to it.
High beta stocks have historically outperformed the market, which is why they hold great significance for investors.
While beta values have been historically used to calculate stocks’ volatility, it is not wise to depend entirely on the beta alone to measure the potential of a company.
Brad Lineberger, president of the California-based Seaside Wealth Management, stated that stock market volatility is a healthy and common occurrence, and investors should readily embrace the market dips. Stocks will always be measured on the basis of earnings, dividend yields, and valuation, which is why a historically solid company should not be sold just because the market is presently volatile. He also advised investors to buy the market dips and hold their stocks during periods of weak performance, or else they might miss out on strong market rebounds.
Some of the most notable high beta dividend stocks include Best Buy Co., Inc. (NYSE:BBY), Exxon Mobil Corporation (NYSE:XOM), and Chevron Corporation (NYSE:CVX).
Our Methodology
We have selected dividend stocks with beta values of more than 1.
High Beta Dividend Stocks
10. International Flavors & Fragrances Inc. (NYSE:IFF)
Dividend Yield as of January 26: 2.37%
Number of Hedge Fund Holders: 46
Beta Value: 1.06
International Flavors & Fragrances Inc. (NYSE:IFF) is headquartered in New York City, with manufacturing plants in 47 countries, and the company creates fragrances, cosmetic actives, and flavors, which are marketed and distributed globally. International Flavors & Fragrances Inc. (NYSE:IFF)’s Q3 2021 earnings and revenue came in above market consensus.
On December 8, International Flavors & Fragrances Inc. (NYSE:IFF) declared a $0.79 per share quarterly dividend, in line with previous. The dividend was paid on January 7, to shareholders of record to December 28. As of January 26, International Flavors & Fragrances Inc. (NYSE:IFF) offers a dividend yield of 2.37%. A beta value of 1.06 is associated with International Flavors & Fragrances Inc. (NYSE:IFF).
Stifel analyst Mark Astrachan on January 24 upgraded International Flavors & Fragrances Inc. (NYSE:IFF) to Buy from Hold with a price target of $160, up from $155. The analyst sees the company’s sales growth ahead of its peers for the first time since Q2 of 2021 and he expects the trend to continue during 2022.
Among the hedge funds tracked by Insider Monkey, 46 funds were bullish on International Flavors & Fragrances Inc. (NYSE:IFF) in the third quarter of 2021, with stakes totaling $2.8 billion. Scott Ferguson’s Sachem Head Capital is the largest stakeholder of International Flavors & Fragrances Inc. (NYSE:IFF), owning 6.50 million shares worth $870.4 million. Carl Icahn, an American activist investor heading Icahn Capital LP, reported a 4% stake in International Flavors & Fragrances Inc. (NYSE:IFF) on January 20, 2022, and the shares rose 2.8% on this announcement.
Here is what Rhizome Partners has to say about International Flavors & Fragrances Inc. (NYSE:IFF) in its Q1 2021 investor letter:
“We are still getting used to the higher multiples that investors will pay for larger market cap and pure play companies such as IFF. We do understand the market’s rationale. IFF’s products account for a small percentage of the customers’ cost while playing critical roles in the products’ performance. With some operating leverage, the company can probably grow FCF at 4-6% a year. This brings the total return close to the long-term return of the S&P 500 index of 10%. Through trial and error, we have come to appreciate how scale, higher market share, route densities, switching costs, and collaborative relationships amongst major industry players can contribute to sustained high returns on invested capital.”
9. Sysco Corporation (NYSE:SYY)
Dividend Yield as of January 26: 2.44%
Number of Hedge Fund Holders: 29
Beta Value: 1.28
Sysco Corporation (NYSE:SYY) is a Texas-based multinational corporation that distributes food products, kitchen equipment, and tabletop items to restaurants, hospitality businesses, as well as healthcare and education sectors. The company is actively taking initiatives to enhance supplier diversity.
Deutsche Bank analyst Brian Mullan on January 4 initiated coverage of Sysco Corporation (NYSE:SYY) with a Hold rating and a $82 price target. Following the stock’s rally of 15% in the month of December alone, the analyst views the risk/reward as relatively balanced at current levels.
According to Insider Monkey’s Q3 database, 29 hedge funds were long Sysco Corporation (NYSE:SYY), with stakes totaling $2.24 billion, as compared to 40 funds holding stakes worth $2.60 billion in Sysco Corporation (NYSE:SYY) in the preceding quarter. Nelson Peltz’s Trian Partners is the largest Sysco Corporation (NYSE:SYY) stakeholder as of Q3 2021, with 13.3 million shares amounting to over $1 billion.
Like Best Buy Co., Inc. (NYSE:BBY), Exxon Mobil Corporation (NYSE:XOM), and Chevron Corporation (NYSE:CVX), Sysco Corporation (NYSE:SYY) is a high beta dividend stock that is popular among elite hedge funds.
8. Baker Hughes Company (NASDAQ:BKR)
Dividend Yield as of January 26: 2.62%
Number of Hedge Fund Holders: 37
Beta Value: 1.38
Baker Hughes Company (NASDAQ:BKR) is an American industrial service company and one of the leading oil field services companies in the world. Baker Hughes Company (NASDAQ:BKR) supplies products and services for oil drilling, formation evaluation, completion, production, and reservoir consulting.
Barclays analyst J. David Anderson raised the price target on Baker Hughes Company (NASDAQ:BKR) on January 26 to $31 from $30 and kept an Overweight rating on the shares. The analyst says the “Big 3” in energy services all beat consensus in Q4 and are primed to outperform as upstream spending inflects and investors reward the operating leverage, building pricing power, and improving capital returns.
On October 22, Baker Hughes Company (NASDAQ:BKR) declared a quarterly dividend of $0.18 per share, in line with previous. The dividend was paid on November 12, to shareholders of record on November 2. As of January 25, Baker Hughes Company (NASDAQ:BKR) offers a dividend yield of 2.60%.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 37 funds were bullish on Baker Hughes Company (NASDAQ:BKR), with stakes totaling over $1 billion. Pzena Investment Management is the leading stakeholder of Baker Hughes Company (NASDAQ:BKR), owning more than 24 million shares worth $598.6 million.
Here is what Madison Funds has to say about Baker Hughes Company (NASDAQ:BKR) in its Q3 2021 investor letter:
“BKR is a leading oilfield services provider that helps its customers with oil and gas exploration and production. Its customers include companies that discover oil, energy data management firms, drilling companies, well construction, and production and completion firms. The firm is also synonymous with the U.S. rig count. BKR also helps make energy cleaner and more efficient, and is a leader in energy transition businesses, including carbon capture and hydrogen, along with being a market leader in supplying equipment for liquified natural gas (LNG) projects….”
7. Best Buy Co., Inc. (NYSE:BBY)
Dividend Yield as of January 26: 2.89%
Number of Hedge Fund Holders: 29
Beta Value: 1.48
Based in Minnesota, Best Buy Co., Inc. (NYSE:BBY) is a multinational consumer electronics retailer that operates in the United States, Canada, and Puerto Rico. As of January 26, Best Buy Co., Inc. (NYSE:BBY) offers a dividend yield of 2.89%. The company delivered above consensus estimates for earnings and revenue in the third quarter of 2021.
Best Buy Co., Inc. (NYSE:BBY) declared on November 24 a $0.70 per share quarterly dividend, in line with previous. The dividend was paid on January 4, to shareholders of record on December 14.
Truist analyst Scot Ciccarelli initiated coverage of Best Buy Co., Inc. (NYSE:BBY) on January 12 with a Hold rating and a $108 price target. According to the analyst, the company’s sales surged during the pandemic but the multi-year replacement cycle for these products will likely work against the company and result in a short growth cycle.
Among the hedge funds tracked by Insider Monkey in the third quarter of 2021, AQR Capital Management is the biggest stakeholder of the company, holding 1.6 million shares worth approximately $177 million. Overall, 29 hedge funds reported owning stakes equaling roughly $680 million in Best Buy Co., Inc. (NYSE:BBY) in Q3 2021.
6. Boston Properties, Inc. (NYSE:BXP)
Dividend Yield as of January 26: 3.42%
Number of Hedge Fund Holders: 21
Beta Value: 1.11
Boston Properties, Inc. (NYSE:BXP) is a publicly traded real estate investment trust that invests primarily in office spaces across Boston, Los Angeles, New York City, San Francisco, and Washington.
Boston Properties (NYSE:BXP) disclosed its Q1 2022 guidance on January 26 and sees Q1 2022 FFO of $1.72-$1.74 versus $1.73 in the third quarter of 2021, and expects overall 2022 FFO of $7.30-$7.45, compared with $7.25-$7.45 in the prior view, citing enhanced portfolio performance.
Mizuho analyst Vikram Malhotra on January 20 raised the price target on Boston Properties (NYSE:BXP) to $120 from $115 and kept a Neutral rating on the shares. After outperforming the S&P 500 Index in 2021, the real estate investment trust sector faces a “tricky macro set-up” in 2022, Malhotra tells investors in a research note.
Chris Hohn’s TCI Fund Management is the largest Boston Properties (NYSE:BXP) stakeholder from the third quarter of 2021, with approximately 13 million shares worth $1.40 billion. Overall, 21 hedge funds were bullish on Boston Properties (NYSE:BXP) in Q3 2021, with stakes totaling $1.47 billion.
In addition to quality dividend names like Best Buy Co., Inc. (NYSE:BBY), Exxon Mobil Corporation (NYSE:XOM), and Chevron Corporation (NYSE:CVX), hedge funds are piling into Boston Properties (NYSE:BXP).
5. Ventas, Inc. (NYSE:VTR)
Dividend Yield as of January 26: 3.51%
Number of Hedge Fund Holders: 23
Beta Value: 1.15
Ventas, Inc. (NYSE:VTR) is a Chicago-based real estate investment trust that owns and manages healthcare establishments in the United States, Canada, and the United Kingdom. Ventas, Inc. (NYSE:VTR) delivers a dividend yield of 3.51% as of January 26.
On December 7, Ventas, Inc. (NYSE:VTR) declared a $0.45 per share quarterly dividend, in line with previous. The dividend was paid on January 19, to shareholders of record on January 3.
Mizuho analyst Vikram Malhotra on January 20 upgraded Ventas, Inc. (NYSE:VTR) to Buy from Neutral with a price target of $61, up from $45. Ventas, Inc. (NYSE:VTR) is a longer-term value play on senior housing with upside in its operating segment via growth on revenue per occupied room basis, Malhotra tells investors in a research note.
In its Q4 guidance published on January 20, Ventas, Inc. (NYSE:VTR) expects Q4 normalized FFO per share to be at the high end of its previously issued guidance range before the benefit of approximately $6 million of HHS proceeds received in Q4 2021. In November, the REIT issued guidance for Q4 normalized FFO per share of $0.67-$0.71 while the consensus was $0.70.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 23 funds were long Ventas, Inc. (NYSE:VTR), with stakes totaling $464.6 million. Zimmer Partners is the largest stakeholder of the company, owning 3.6 million Ventas, Inc. (NYSE:VTR) shares worth $203.5 million.
4. Chevron Corporation (NYSE:CVX)
Dividend Yield as of January 26: 4.28%
Number of Hedge Fund Holders: 51
Beta Value: 1.08
Chevron Corporation (NYSE:CVX), an American multinational energy company supplying gasoline, natural gas, and petrochemicals, made it to our list of the high beta dividend stocks since a beta value of 1.08 is associated with the company.
Chevron Corporation (NYSE:CVX) declared on January 25 a $1.42 per share quarterly dividend, which is a 6% increase from its prior dividend of $1.34. The dividend is payable on March 10, to shareholders of record on February 16. Chevron Corporation (NYSE:CVX) delivers a dividend yield of 4.28% as of January 26.
On January 14, Truist analyst Neal Dingmann raised the price target on Chevron Corporation (NYSE:CVX) to $167 from $150 and kept a Buy rating on the shares as part of a broader research note updating his Exploration & Production group model. While he increases his price estimates for oil-weighted energy names in 2022 and 2023, the analyst observes that the current natural gas strip has “largely flattened out”, driving price target declines across most of his covered natural gas names.
Of the 51 hedge funds that were bullish on Chevron Corporation (NYSE:CVX) in Q3 2021, Ric Dillon’s Diamond Hill Capital is the leading Chevron Corporation (NYSE:CVX) stakeholder, holding 5.1 million shares worth $523.8 million.
Here is what Goehring & Rozencwajg Associates has to say about Chevron Corporation (NYSE:CVX) in its Q3 2021 investor letter:
“After successfully replacing 25% of Exxon’s board of directors despite owning just 0.02% of the outstanding equity, Engine No. 1, the climate-focused activist hedge fund, met with Chevron’s management late last summer. In discussions that were later described as “cordial,” Chevron executives shared their plan to reduce carbon emissions. Subsequently, Chevron announced new plans to further reduce carbon output, along with their intention to appoint a new director with “environmental expertise.” Although it remains unclear exactly what Engine No. 1 is planning, rumors suggest the fund has contacted other investors, strongly suggesting they intend to launch a second campaign in the not-too-distant future.
What should Chevron expect?
It was recently reported by The Wall Street Journal that Exxon was considering abandoning two massive natural gas projects: the 75 trillion cubic foot (tcf ) Rovuma LNG project (capital cost $30 bn) and the 5 tcf Ca Voi Xanh offshore-Vietnam gas project (capital cost $10 bn). Exxon board members (most likely including the three supported by Engine No. 1) have publicly expressed concerns about both projects. According to internal reports, these projects are among the highest CO2 producers in Exxon’s pipeline; it is no surprise these projects have been called into question. However, we find the plight of both fields to be perplexing since production would almost certainly be used to displace coal in electricity generation, cutting CO2 emissions by nearly 50%. This fact seems to be lost on the new Exxon board members.”
3. Exxon Mobil Corporation (NYSE:XOM)
Dividend Yield as of January 26: 4.75%
Number of Hedge Fund Holders: 64
Beta Value: 1.07
Exxon Mobil Corporation (NYSE:XOM), a Texas-based multinational oil and gas corporation, has a rich dividend history and offers a yield of 4.75%. Exxon Mobil Corporation (NYSE:XOM) supplies crude oil, oil products, natural gas, and petrochemicals.
On January 26, Exxon Mobil Corporation (NYSE:XOM) declared a quarterly dividend of $0.88 per share, in line with previous. The dividend is payable on March 10, to shareholders of record on February 10.
RBC Capital analyst Biraj Borkhataria on January 19 upgraded Exxon Mobil Corporation (NYSE:XOM) to Sector Perform from Underperform with a price target of $90, up from $70.
In the third quarter of 2021, 64 hedge funds reported owning stakes in Exxon Mobil Corporation (NYSE:XOM), worth $4.64 billion. GQG Partners is the largest stakeholder of the company, owning 26.5 million shares valued at $1.56 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.”
2. Culp, Inc. (NYSE:CULP)
Dividend Yield as of January 26: 5.17%
Number of Hedge Fund Holders: 9
Beta Value: 1.05
Culp, Inc. (NYSE:CULP) is an American company supplying mattress and upholstery fabrics worldwide. Culp, Inc. (NYSE:CULP) has distribution and manufacturing facilities across the United States, Canada, and China, and the company is a global partner of leading home furnishing retailers and manufacturers.
On January 7, Culp, Inc. (NYSE:CULP) declared a $0.115 per share quarterly dividend, which reflects a 4.5% increase from the prior dividend of $0.110. The dividend was paid on January 19, to shareholders of record on January 11. Culp, Inc. (NYSE:CULP) delivers a dividend yield of 5.17% as of January 26.
Among the hedge funds monitored by Insider Monkey in Q3 2021, 9 funds reported owning stakes in Culp, Inc. (NYSE:CULP), totaling $25.2 million. Renaissance Technologies is the biggest Culp, Inc. (NYSE:CULP) stakeholder, with 848,517 shares worth approximately $11 million.
1. Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR)
Dividend Yield as of January 26: 6.7%
Number of Hedge Fund Holders: 23
Beta Value: 1.44
Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) is a multinational state-owned oil and gas corporation based in Brazil, supplying a product portfolio that includes petroleum, petroleum products, natural gas, lubricant, petrochemicals, fertilizers, and biofuels. Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) offers a dividend yield of 15% and a beta value of 1.44 as of January 26.
On August 16, Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) declared a $0.616 per share dividend, which was paid on September 1. Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) stock has returned almost 32% in the last 12 months.
Goldman Sachs analyst Bruno Amorim upgraded Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) on December 15 to Buy from Neutral with a $14.20 price target. The analyst said he now sees a better risk/reward for Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) despite the existing risks of a change in the fuel pricing policy and capital allocation strategy going into the 2022 presidential election in Brazil.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 23 funds were long Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR), with collective stakes exceeding $3 billion. Fisher Asset Management is one of the largest Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) stakeholders, with 43.7 million shares worth $452.8 million.
You can also take a look at Warren Buffett’s Performance in 2021: 10 Best Stock Picks and 10 ESG Dividend Stocks to Buy.
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Disclosure: None. 10 High Beta Dividend Stocks is originally published on Insider Monkey.
