In this article, we discuss 10 high yield dividend kings for 2022.
Dividend kings are companies that have consistently increased their dividends for at least 50 years. These companies have withstood periods of inflation, recessions, market crashes, political instability, changing customer trends, and critical technology advancements.
The major indices announced double-digit returns in 2021, once the economy started to recover from the COVID-19 headwinds and pressures in 2020. The Federal Reserve supported the US equity markets by implementing lenient fiscal and monetary policies, and the S&P 500 gained 26.89% in 2021, marking its third consecutive positive year, and the Dow and Nasdaq also clocked in at 18.73% and 21.39% in 2021, respectively.
However, as the Fed tried to cope with the budget deficit in 2020, it started printing more money to fund the government’s excessive spending. This quantitative easing will only result in increasing inflation in the future, and many analysts have stated that dividend stocks are the real hedges against the stock market that is to come in the next few years.
Analysts and successful Wall Street investors have gone on record to state that diversifying portfolios with dividend stocks is the right call in the current stock market. Investors should pick companies that have been known to weather the fiscal and economic turndowns in the past, and have still consistently increased their dividend payments. A company’s management, cash flow position, and the resilience of their balance sheet should be of interest to investors, rather than solely focusing on higher yields. This is why dividend kings are some of the top stock picks of traders with a long-term investment horizon.
Over the years, hedge funds have been bullish on Johnson & Johnson (NYSE:JNJ), Altria Group, Inc. (NYSE:MO), and The Coca-Cola Company (NYSE:KO), given strong company fundamentals and a rich dividend history.
Photo by Vitaly Taranov on Unsplash
Our Methodology
We chose dividend kings with the highest yields to compile this list, ensuring that the companies have growth prospects and positive hedge fund sentiment. We have also mentioned available analyst ratings for each stock.
High Yield Dividend Kings for 2022
10. Johnson & Johnson (NYSE:JNJ)
Dividend Yield as of January 21: 2.57%
Number of Years of Dividend Increases: 59
Number of Hedge Fund Holders: 88
Johnson & Johnson is a New Jersey-based multinational company offering consumer health products, medical devices, and pharmaceutical products worldwide. On November 12, Johnson & Johnson announced its intent to separate its Consumer Health business, thus creating a new publicly traded company. The new company would continue to deliver brands like Neutrogena, AVEENO, Tylenol, Listerine, JOHNSON’s, and BAND-AID to consumers.
Johnson & Johnson on January 4 declared a $1.06 per share quarterly dividend, in line with previous. The dividend is payable on March 8, to shareholders of record on February 22. As of January 21, the company offers a 2.57% yield, with 59 consecutive years of dividend growth.
Credit Suisse analyst Matt Miksic reiterated an Outperform rating and a $200 price target on Johnson & Johnson on December 29.
Among the hedge funds monitored by Insider Monkey’s database of 867 elite funds, 88 funds were bullish on Johnson & Johnson in the third quarter of 2021, holding stakes totaling $6.8 billion. Fundsmith LLP is the largest stakeholder of Johnson & Johnson as of Q3, with 7.20 million shares worth $1.16 billion.
Distillate Capital mentioned Johnson & Johnson in its Q2 2021 investor letter. Here is what the firm has to say:
“The largest additions in the rebalance, Johnson & Johnson was around 50 and 40 basis points incrementally. J&J underperformed in the quarter while its normalized free cash flows held steady and so its position size was topped off to match the stable cash flows.”
9. The Coca-Cola Company (NYSE:KO)
Dividend Yield as of January 21: 2.78%
Number of Years of Dividend Increases: 59
Number of Hedge Fund Holders: 61
The Coca-Cola Company is a multinational beverage corporation that supplies non-alcoholic and alcoholic drinks worldwide, with recognized brands including Minute Maid, Dasani, Nestea, Relentless, Sprite, and Fanta, among others. The Coca-Cola Company has a rich history of dividend payments, with the company successively increasing its dividends for 59 years.
The Coca-Cola Company declared a $0.42 per share quarterly dividend on October 27, which was paid on December 15, to shareholders of record on December 1. As of January 21, The Coca-Cola Company’s dividend yield stands at 2.78%.
Laurent Grandet, an analyst from Guggenheim, upgraded The Coca-Cola Company to Buy from Neutral, elevating the price target to $66 from $61. The company is exiting the fiscal 2021 transition year “stronger”, the analyst tells investors in a research note, with a “compelling” valuation at current share levels and expected 12% annual earnings growth through fiscal 2023.
In the third quarter of 2021, 61 hedge funds were bullish on The Coca-Cola Company, with stakes valued at over $25 billion. Warren Buffett’s Berkshire Hathaway is a long-time stakeholder of The Coca-Cola Company, holding 400 million shares, worth approximately $21 billion. Buffett’s fund is the largest stakeholder of the company.
8. National Fuel Gas Company (NYSE:NFG)
Dividend Yield as of January 21: 3.08%
Number of Years of Dividend Increases: 51
Number of Hedge Fund Holders: 19
Headquartered in New York, National Fuel Gas Company (NYSE:NFG) is a diversified energy company that operates in five business segments via its subsidiaries, including Exploration and Production, Pipeline and Storage, Gathering, Utility, and Energy Marketing.
On December 3, National Fuel Gas Company declared a quarterly dividend of $0.455 per share, in line with previous. The dividend was paid on January 14, to shareholders on record since December 31. With 51 years of consecutive dividend increases, National Fuel Gas Company is one of the top high yield dividend kings for 2022.
BofA analyst John Abbott reinstated coverage of National Fuel Gas Company on January 10 with an Underperform rating and a $66 price target. National Fuel Gas Company’s position as a diversified energy company with four segments limits it upside, and the analyst has a relative preference for higher beta “oil” names given greater exposure to what he sees as a more constructive outlook versus the U.S. gas sector.
GAMCO Investors holds the largest stake in National Fuel Gas Company as of Q3 2021, owning 1.26 million shares worth $66.6 million. Overall, 19 hedge funds were bullish on National Fuel Gas Company at the end of September 2021, up from 12 funds in the prior quarter.
Here is what Heartland Value Fund has to say about National Fuel Gas Company in its Q1 2021 investor letter:
“The ho-hum Utilities sector isn’t typically a place to hunt for strong growth prospects. However, for investors willing to do their homework, opportunities do exist. Portfolio holding National Fuel Gas Company (NFG) is a prime example.
NFG is a dividend aristocrat—50 consecutive years of dividend increases. Although the business is lumped in with run-of-the-mill power companies, it is much more diverse. In addition to its utility operations, a pipeline and storage division produces almost a quarter of its profits, and the company generates nearly 40% of its bottom line from natural gas exploration and production.
Shares of National Fuel Gas Company (NFG) are trading at a mid-teens discount to their historic average based on price/book. Given the state of the energy industry over the past few years, we believe the company’s gas unit could be an overlooked source of growth. Additionally, the utility recently received regulatory approval on a natural gas pipeline expansion in Pennsylvania, which is expected to produce a windfall in free cash flow.”
7. 3M Company (NYSE:MMM)
Dividend Yield as of January 21: 3.43%
Number of Years of Dividend Increases: 63
Number of Hedge Fund Holders: 46
Headquartered in Minnesota, 3M Company (NYSE:MMM) is an American multinational conglomerate that operates in multiple sectors, focusing on worker safety, healthcare, and consumer goods.
3M Company on November 9 declared a quarterly dividend of $1.48 per share, in line with previous. The dividend was paid on December 12, to shareholders on record as of November 12. 3M Company has regularly increased its dividends for 63 years.
On January 11, Bernstein analyst Brendan Luecke initiated coverage of 3M Company with a Market Perform rating and a $175 price target, citing inflation. 3M Company stumbled in 2019, and still hasn’t recovered, the analyst contends, adding that he does “not lose sleep” over its macro driven topline but is concerned about margins.
According to Insider Monkey’s Q3 database, 46 hedge funds were bullish on 3M Company, with stakes totaling $1.62 billion, as compared to 42 funds in the preceding quarter, holding stakes worth $1.58 billion in 3M Company. Fisher Asset Management is the leading stakeholder of 3M Company as of Q3 2021, owning 5.60 million shares worth $983.2 million.
Just like Johnson & Johnson, Altria Group, Inc., and The Coca-Cola Company, 3M Company is a notable dividend king heading into 2022.
6. Federal Realty Investment Trust (NYSE:FRT)
Dividend Yield as of January 21: 3.47%
Number of Years of Dividend Increases: 54
Number of Hedge Fund Holders: 21
Federal Realty Investment Trust (NYSE:FRT) is a real estate investment trust headquartered in Maryland, that holds a number of shopping centers in the Northeastern United States, the Mid-Atlantic states, California, and South Florida.
Federal Realty Investment Trust offers a dividend yield of 3.47% as of January 21, and has been consistently paying dividends for 54 years. On August 5, Federal Realty Investment Trust declared a quarterly dividend of $1.07 per share, which is a 0.9% increase from the prior dividend of $1.06. The dividend was paid on October 15.
JPMorgan analyst Michael Mueller on December 20 upgraded Federal Realty Investment Trust to Overweight from Neutral with a price target of $142, up from $135. According to the analyst, Federal Realty Investment Trust could post “outsized” funds from operations growth over the next few years relative to the strip center group. Federal Realty Investment Trust’s portfolio was disproportionately hit during the heights of COVID-19 but has “turned the corner and is recovering”.
Among the hedge funds tracked by Insider Monkey, 21 funds were bullish on Federal Realty Investment Trust in Q3 2021, up from 16 funds in the preceding quarter. Waterfront Capital Partners is the biggest stakeholder of Federal Realty Investment Trust, with 605,515 shares worth $71.4 million.
Federal Realty Investment Trust has a rich dividend history, just like Johnson & Johnson, Altria Group, Inc., and The Coca-Cola Company.
5. Black Hills Corporation (NYSE:BKH)
Dividend Yield as of January 21: 3.56%
Number of Years of Dividend Increases: 51
Number of Hedge Fund Holders: 16
Black Hills Corporation (NYSE:BKH) is an electric utility and gas company that supplies power throughout the western United States. Black Hills Corporation is a notable dividend king, with a rich history of consistently increasing dividends and a yield of 3.56%. The stock offers a dividend payout ratio of 59.02%.
Black Hills Corporation declared on October 26 a $0.595 per share quarterly dividend, which is a 5.3% increase from its prior dividend of $0.565. The dividend was paid on December 1, for shareholders of record on November 17.
Mizuho analyst Paul Fremont raised the price target on Black Hills Corporation to $67 from $60 and kept a Neutral rating on the shares on September 22.
In the third quarter of 2021, 16 hedge funds reported owning stakes in Black Hills Corporation, equaling $55.9 million, as compared to 14 funds in the preceding quarter, holding stakes worth $62.5 million in Black Hills Corporation. Royce & Associates is one of the leading Black Hills Corporation stakeholder, with an $11 million stake.
4. Northwest Natural Holding Company (NYSE:NWN)
Dividend Yield as of January 21: 4.06%
Number of Years of Dividend Increases: 66
Number of Hedge Fund Holders: 9
Northwest Natural Holding Company (NYSE:NWN) is a natural gas and energy company operating in the Pacific Northwest region. Northwest Natural Holding Company provides clean energy and uses advanced technology to create a sustainable supply of gas for the future.
Northwest Natural Holding Company on January 13 declared a $0.4825 per share quarterly dividend, which is a 0.5% increase from its prior dividend of $0.4800. The dividend is payable on February 15, to shareholders of record on January 31. The company offers a 4.06% yield as of January 21, and has increased dividends constantly for 66 years.
Guggenheim analyst Shahriar Pourreza upgraded Northwest Natural Holding Company on January 20 to Neutral from Sell with a $49 price target.
Among the hedge funds tracked by Insider Monkey in the third quarter of 2021, billionaire Ken Griffin’s Citadel Investment Group is the largest Northwest Natural Holding Company stakeholder, with 48,951 shares worth $2.2 million. Overall, 9 hedge funds reported owning stakes in Northwest Natural Holding Company in Q3 2021, valued at $8.91 million.
3. Leggett & Platt, Incorporated (NYSE:LEG)
Dividend Yield as of January 21: 4.30%
Number of Years of Dividend Increases: 50
Number of Hedge Fund Holders: 16
Leggett & Platt, Incorporated is a company manufacturing bedding products, furniture, flooring, and textile products. Leggett & Platt, Incorporated supplies its products to big box and e-commerce retailers, bedding brands, department stores, and home improvement centers.
On November 9, Leggett & Platt, Incorporated declared a $0.42 per share quarterly dividend, which is a 5% increase from its prior dividend of $0.40. The dividend was paid on January 14, to shareholders of record on December 15. Leggett & Platt, Incorporated delivers a dividend yield of 4.30% as of January 21.
In its third quarter earnings report, published by Leggett & Platt, Incorporated on November 1, the company posted earnings per share of $0.71, missing estimates by $0.06. Revenue over the period jumped 9.24% year-over-year to $1.32 billion, outperforming estimates by $3.02 million.
According to Insider Monkey’s Q3 database, 16 hedge funds were long Leggett & Platt, Incorporated, with stakes totaling $56.1 million. Balyasny Asset Management is the largest stakeholder of Leggett & Platt, Incorporated, owning 229,919 shares worth $10.3 million.
2. Universal Corporation (NYSE:UVV)
Dividend Yield as of January 21: 5.51%
Number of Years of Dividend Increases: 51
Number of Hedge Fund Holders: 8
Universal Corporation (NYSE:UVV) is one of the leading tobacco companies worldwide, based in Richmond, Virginia. Universal Corporation procures, finances, processes, packs, stores, and supplies leaf tobacco to manufacturers of consumer tobacco products.
Universal Corporation on November 3 declared a $0.78 per share quarterly dividend, in line with previous. It is payable on February 7, for shareholders of record on January 10. As of January 21, Universal Corporation delivers a 5.51% dividend yield, making it one of the top high yield dividend kings for 2022.
Among the hedge funds tracked by Insider Monkey, 8 funds were bullish on Universal Corporation in the third quarter of 2021, with stakes equaling $75.6 million. Pzena Investment Management is the biggest Universal Corporation shareholder as of Q3, with 862,152 shares worth $41.6 million.
1. Altria Group, Inc. (NYSE:MO)
Dividend Yield as of January 21: 7.15%
Number of Years of Dividend Increases: 51
Number of Hedge Fund Holders: 45
Altria Group, Inc. is one of the largest producers of tobacco and cigarettes in the world, in addition to supplying cigars, wine, and moist smokeless tobacco products. Altria Group, Inc. sells its tobacco products to wholesalers, distributors, and large retail organizations.
On December 8, Altria Group, Inc. declared a $0.90 per share quarterly dividend, in line with previous. The dividend was paid on January 10, for shareholders of record on December 23. Altria Group, Inc. is one of the highest yielding dividend kings heading into 2022, offering a yield of 7.15%.
BofA analyst Lisa Lewandowski downgraded Altria Group, Inc. to Neutral from Buy with a price target of $50, down from $56. According to the analyst, Altria Group, Inc. is likely to remain a “steady” earnings performer with limited input inflation and margin expansion, but her expectations of regulatory news flow may be an overhang on the stock in 2022.
As of the third quarter of 2021, Harris Associates is the largest Altria Group, Inc. stakeholder, with 5.1 million shares worth $232.6 million. Overall, 45 hedge funds were long Altria Group, Inc. in Q3 2021, with stakes totaling $829.7 million.
Here is what Broyhill Asset Management has to say about Altria Group, Inc. in its Q2 2021 investor letter:
“Altria (MO) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 20%. We shared our thoughts on these regulations during the quarter, which are available here.
MO Valuation. MO is up ~ 18% YTD (even accounting for the recent sell-off). We expect MO to generate close to $5 in annual FCF per share over the next few years, putting the stock at ~ 10x, which is less than half the market’s multiple today. Over the last decade, shares have traded at an average multiple of 15x and within a range of ~ 10x – 20x (+/-1 standard deviation). The stock yields 7.2% at the current price, close to a 6% premium to treasuries. Historically, shares have traded closer to a 3% premium to the 10Y, which would imply a ~ $75 share price.”
You can also take a look at 10 Dividend Stocks to Buy According to Ken Fisher and 11 Best Crypto Stocks To Buy Now.
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This article is originally published at Insider Monkey.
