Dividend Capture Strategy: 10 High-Yield Stocks to Buy in February

In this article, we discuss 10 high-yield stocks to buy in February.

Dividend capture strategy is one of the most popular techniques employed by short-term investors. The strategy involves buying dividend stocks before their ex-dividend dates and selling them after receiving the payouts. Investors often follow this technique because it offers the potential for price appreciation. If the stock price increases after the payout, the investor can sell the stock for a profit. Moreover, this strategy can be a source to generate stable income in a short time, especially if the dividends are above-average.

Dividend stocks’ returns over the years have shown their solid performance during inflationary periods. According to a report by AMG Funds, dividend payments of the S&P 500 Index have grown at an annual average rate of 6% over the past five decades, which is well above the inflation rate in the US. The report cited data from Ned Davis Research and mentioned that since 1979, dividend-payers outplayed non-dividend companies in periods where 10-year Treasury was rising.

When following a dividend investment strategy, investors seek stocks with healthy yields in order to supplement their income. Moreover, these securities also have a potential for capital appreciation and can help investors diversify their portfolios. In 2021, high-yield dividend stocks in the US Total Cap outperformed non-dividend payers by 39.6%, as reported by IHS Markit. Similarly, high-dividend stocks performed better than non-dividend stocks in developed Europe during the same year. In addition to dividend yields, shareholders also evaluate these stocks in light of the respective company’s financial health, growth prospects, and future dividend policy. With decades-long dividend growth streaks under their belt, dividend growers become investors’ top choices when the market is uncertain. Some examples of such stocks are The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG). Further in this article, we will discuss high-yield stocks to buy in February.

Our Methodology:

For this list, we selected dividend stocks that will trade ex-dividend in February and March. Ex-dividend date indicates the cutoff day to buy a stock to receive its upcoming dividend payment. These stocks have dividend yields above 3%, as of February 6. We also measured hedge fund sentiment around each stock, according to Insider Monkey’s Q3 2022 data of 920 elite funds. The list is ranked according to their ex-dividend dates.

Dividend Capture Strategy: 10 High-Yield Stocks to Buy in February

10. International Business Machines Corporation (NYSE:IBM)

Ex-Dividend Date: February 9

Dividend Yield as of February 6: 4.86%

International Business Machines Corporation (NYSE:IBM) is an American multinational tech company, based in New York. The company has operations in over 175 countries. On January 31, the company declared a quarterly dividend of $1.65 per share, which fell in line with its previous dividend. It has been raising its dividends consistently for the past 27 years. The stock has a dividend yield of 4.86%, as of February 6, which makes it one of the high-yield stocks to buy. IBM will be trading ex-dividend on February 9.

In addition to The Coca-Cola Company, Johnson & Johnson, and The Procter & Gamble Company, investors are also loading up on International Business Machines Corporation due to the company’s dividend growth streak.

In Q4 2022, International Business Machines Corporation reported revenue of $16.7 billion, consistent with revenue recorded during the same period last year. In FY22, the company generated $10.4 billion in operating cash flow and its free cash flow for the year came in at $9.3 billion.

Following the company’s Q4 earnings, BMO Capital raised its price target on International Business Machines Corporation to $155, with a Market Perform rating on the shares.

As of the close of Q3 2022, 40 hedge funds in Insider Monkey’s database owned stakes in International Business Machines Corporation, the same as in the previous quarter. The collective value of these stakes is over $868.7 million. With over 4.3 million shares, Arrowstreet Capital was the company’s leading stakeholder in Q3.

9. Exxon Mobil Corporation (NYSE:XOM)

Ex-Dividend Date: February 13

Dividend Yield as of February 6: 3.27%

Exxon Mobil Corporation (NYSE:XOM) specializes in the distribution of oil and natural gas. The company is headquartered in Texas, US. In FY22, the company’s cash position remained strong with an operating cash flow of $76.8 billion. Its free cash flow amounted to $62.1 billion, which was sufficient to fulfill nearly $30 billion of shareholder returns.

On January 31, Exxon Mobil Corporation declared a quarterly dividend of $0.91 per share. The company holds a 40-year track record of consistent dividend growth. The stock’s dividend yield on February 6 came in at 3.27%. This high-yield dividend stock’s ex-dividend date is February 13.

In February, Argus raised its price target on Exxon Mobil Corporation to $133 with a Buy rating on the shares, highlighting the company’s recent quarterly earnings. The firm also appreciated the company’s overall performance in 2022.

As of the close of Q3 2022, 75 hedge funds tracked by Insider Monkey owned stakes in Exxon Mobil Corporation, up from 72 in the previous quarter. The collective value of these stakes is $5.5 billion. GQG Partners owned the largest stake in the company, worth nearly $3 billion.

8. ALLETE, Inc. (NYSE:ALE)

Ex-Dividend Date: February 14

Dividend Yield as of February 6: 4.38%

ALLETE, Inc. (NYSE:ALE) is a Minnesota-based company that specializes in electricity generation, transmission, and distribution assets. The company also has a water management business. In December, Mizuho lifted its price target on the stock to $65, appreciating the management’s greater transmission spending. The firm maintained a Neutral rating on the stock.

On February 3, ALLETE, Inc. declared a 4.23% hike in its quarterly dividend to $0.6775 per share. It has been making uninterrupted dividend payments to shareholders for the past 73 years. The stock will trade ex-dividend on February 14. The company is among the high-yield stocks on our list because of its dividend yield of 4.38%, as recorded on February 6.

At the end of Q3 2022, 19 hedge funds tracked by Insider Monkey owned stakes in ALLETE, Inc., worth roughly $60 million collectively. Among these hedge funds, Point72 Asset Management was the company’s leading stakeholder in Q3.

7. Chevron Corporation (NYSE:CVX)

Ex-Dividend Date: February 15

Dividend Yield as of February 6: 3.56%

An American energy company, Chevron Corporation (NYSE:CVX) is another high-yield dividend stock on our list. In January 2023, the company declared a 36th consecutive dividend hike which took its quarterly dividend to $1.51 per share. As of February 6, the stock has a dividend yield of 3.56% and has an ex-dividend date of February 15.

Truist raised its price target on Chevron Corporation in January to $179 and maintained a Hold rating on the shares, appreciating the company’s recently announced repurchase authorization worth $75 billion.

In the fourth quarter of 2022, Chevron Corporation reported revenue of $56.4 billion, which showed a 17.3% growth from the same period last year. In FY22, it reported an operating cash flow of $49.6 billion and its free cash flow came in at $37.6 billion.

The number of hedge funds tracked by Insider Monkey owning stakes in Chevron Corporation grew to 66 in Q3 2022, from 59 in the previous quarter. These stakes have a total value of over $27 billion.

Diamond Hill Capital mentioned Chevron Corporation in its Q1 2022 investor letter. Here is what the firm had to say:

“Other top contributors in Q1 included multinational energy company Chevron Corp. (NYSE:CVX). The company benefited from increased energy demand as COVID-related economic restrictions eased in tandem with concerns regarding supply interruptions related to Russia’s invasion of Ukraine.”

6. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)

Ex-Dividend Date: February 15

Dividend Yield as of February 6: 5.25%

Walgreens Boots Alliance, Inc. (NASDAQ:WBA) owns the retail pharmacy chains Walgreens and Boots and other pharmaceutical manufacturing companies. In January, Truist maintained a Hold rating on the stock with a $42 price target, following the company’s quarterly earnings. The firm also appreciated the company’s sales guidance for FY23.

On January 27, Walgreens Boots Alliance, Inc. declared a quarterly dividend of $0.48 per share, which fell in line with its previous dividend. The company has been raising its dividends consistently for the past 47 years. The stock’s dividend yield on February 6 came in at 5.25%, which makes it one of the high-yield stocks on our list. WBA will be trading ex-dividend on February 15. The company can be added to dividend portfolios alongside popular dividend stocks like The Coca-Cola Company, Johnson & Johnson, and The Procter & Gamble Company.

Walgreens Boots Alliance, Inc. posted a revenue of $33.3 billion, which beat Street estimates by $340 million. The company also raised its healthcare fiscal 2025 sales target to $14.5 billion to $16 billion, up from $11 billion to $12 billion.

As of Q3 2022, 39 hedge funds tracked by Insider Monkey owned stakes in Walgreens Boots Alliance, Inc., compared with 40 in the previous quarter. These stakes are collectively worth over $712.6 million. With nearly 6 million shares, Arrowstreet Capital was the company’s leading stakeholder.

5. Shell plc (NYSE:SHEL)

Ex-Dividend Date: February 16
Dividend Yield as of February 6: 3.89%

Shell plc (NYSE:SHEL) is a London-based multinational oil and gas company that also specializes in petrochemicals. On February 2, the company declared a 15% hike in its quarterly dividend to $0.575/ADS per share. The stock will be trading ex-dividend on February 16. As of February 6, the stock has a dividend yield of 3.89%, coming through as one of the high-yield stocks on our list.

In December, Piper Sandler maintained an Overweight rating on Shell plc (NYSE:SHEL) with a $70 price target, appreciating the company’s outperformance in the last two years.

In Q4 2022, Shell plc (NYSE:SHEL) reported revenue of $101.3 billion, up 18.8% from the same period last year. The company’s operating cash flow for the quarter came in at $22.4 billion and its free cash flow stood at $15.4 billion. It returned $6.3 billion to shareholders in dividends during the quarter.

As of the close of Q3 2022, 39 hedge funds in Insider Monkey’s database owned stakes in Shell plc (NYSE:SHEL), the same as in the previous quarter. The collective value of these stakes is over $3.1 billion. Fisher Asset Management owned the largest stake in the company, worth over $1 billion.

Harding Loevner mentioned Shell plc (NYSE:SHEL) in its Q1 2022 investor letter. Here is what the firm has to say:

“While risks of unforeseen consequences arising from the Ukraine conflict are high, on this front we are cautiously optimistic that China will work hard to maintain its neutrality in a credible way, as it is a huge beneficiary of trade with the rest of the world, especially the rich developed nations. We think it likely that China, along with India, will continue to buy oil and gas from Russia (just as Europe, at least for now, plans to keep its gas pipelines open), and do not expect that fact to alter China’s trade relations with the West much. Nevertheless, we must contemplate that our optimism is misplaced on the importance of membership in the global network of exchange. If our central and optimistic case—admittedly an educated guess—is wrong, then we’d need to greatly modify our views of which companies in our opportunity set will face new barriers to profitable growth, and which might stand to benefit, relatively, from a further receding of globalization. (Global trade, after all, has never matched the peak share of GDP it reached in 2008, before the Global Financial Crisis.) We’d expect such a world to be less efficient, as the cold logic of comparative advantage is demoted as a determinant of which goods or services are produced and where. That would lead to a less prosperous world, since exploiting comparative advantage is a cornerstone of wealth creation. If regional blocs began to raise limits on the movement of capital as well as goods, we’d need to parse which of our multi-national companies were at risk of declining sales from increasingly hostile, siloed countries. Royal Dutch Shell (NYSE:SHEL) has found its Siberian oil and gas joint venture assets stranded by the combination of sanctions and the public opprobrium of Russia’s actions.”

4. Brookfield Renewable Partners L.P. (NYSE:BEP)

Ex-Dividend Date: February 27
Dividend Yield as of February 6: 4.72%

Brookfield Renewable Partners L.P. (NYSE:BEP) is a Bermuda-based renewable energy company that owns related power assets. In January, JonesResearch initiated its coverage of the stock with a Buy rating and a $37 price target. The firm mentioned that the company has ‘abundant growth ahead’.

On February 3, Brookfield Renewable Partners L.P. declared a quarterly dividend of $0.3375 per share, having raised it by 5.5%. This was the company’s 12th consecutive year of dividend growth. This high-yield dividend stock’s yield came in at 4.72% on February 6. The stock will be trading ex-dividend on February 27.

At the end of Q3 2022, 19 hedge funds in Insider Monkey’s database owned stakes in Brookfield Renewable Partners L.P., worth $161.2 million. With nearly 2 million shares, Select Equity Group was the company’s leading stakeholder in Q3.

3. Gilead Sciences, Inc. (NASDAQ:GILD)

Ex-Dividend Date: March 14
Dividend Yield as of February 6: 3.47%

Gilead Sciences, Inc. (NASDAQ:GILD) is an American biopharmaceutical company, based in California. The company specializes in the research and development of antiviral drugs. In February, Piper Sandler raised its price target on the stock to $112 with an Overweight rating on the shares, noting the company’s commercial business.

Gilead Sciences, Inc. started paying dividends in 2015 and has raised its payouts every year since then. It currently pays a quarterly dividend of $0.75 per share, raising it by 2.7% on February 2. The stock’s dividend yield on February 6 came in at 3.47% and it will go ex-dividend on March 14.

At the end of Q3 2022, 56 hedge funds tracked by Insider Monkey owned stakes in Gilead Sciences, Inc., valued at $3.63 billion collectively.

Ariel Investments mentioned Gilead Sciences, Inc. in its Q3 2022 investor letter. Here is what the firm has to say:

“At the stock level, biopharmaceutical company Gilead Sciences, Inc. (NASDAQ:GILD) was the top contributor in the quarter based on positive data released in a study evaluating Trodelvy versus comparative chemotherapy in patients with metastatic breast cancer. The detailed findings increased investor confidence the drug would receive incremental approvals for a broader range of breast cancer treatments. Shares also received a boost on news the TAF patent portfolio for HIV drugs will be extended from the middle of this decade through the early 2030s, thereby lengthening the company’s long-term opportunity in the virology market.”

2. UGI Corporation (NYSE:UGI)

Ex-Dividend Date: March 14
Dividend Yield as of February 6: 3.55%

UGI Corporation (NYSE:UGI) is an American natural gas and electric power distribution company. The company has been raising its dividends consistently for the past 35 years and maintains a dividend-paying streak of 138 years. It currently offers a quarterly dividend of $0.36 per share with a dividend yield of 3.55%, as of February 6. The stock will go ex-dividend on March 14.

In fiscal Q1 2023, UGI Corporation reported revenue of $2.76 billion, which saw a 3.4% growth from the same period last year. The company had available liquidity of approximately $1.2 billion.

At the end of Q3 2022, 26 hedge funds tracked by Insider Monkey reported owning stakes in UGI Corporation, up from 24 in the previous quarter. These stakes are worth over $152 million collectively.

Diamond Hill Capital mentioned UGI Corporation in its Q3 2022 investor letter. Here is what the firm has to say:

“UGI Corporation (NYSE:UGI), a natural gas and electric power utility, generates approximately one-third of its revenue through its European propane distribution business. The European energy market dislocation and subsequent inflation have raised fears of significant volume and price contraction, pressuring UGI’s share price. Longer term, we believe UGI’s investments into renewable/alternative energy sources position it well. In the nearer term, it should continue to have an advantage delivering fuel to rural locations that are not easily served by gas pipelines — whether that fuel is propane, liquified petroleum gas (LPG), renewable natural gas (RNG) or other alternative fuels.”

1. BCE Inc. (NYSE:BCE)

Ex-Dividend Date: March 14
Dividend Yield as of February 6: 6.31%

A Canadian communications company, BCE Inc. (NYSE:BCE) tops our list of high-yield dividend stocks to buy. The company pays a quarterly dividend of C$0.9675 per share and has a dividend yield of 6.31%, as of February 6. It has been rewarding shareholders with increased dividends for over five years. The stock will be trading ex-dividend on March 14.

As of the close of Q3 2022, 10 hedge funds owned stakes in BCE Inc., as per Insider Monkey’s database. The collective value of these stakes is over $82 million. Among these hedge funds, Renaissance Technologies was the company’s leading stakeholder in Q3.

You can also take a look at 10 Best February Dividend Stocks To Buy and 13 Cheap DRIP Stocks To Buy Now

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This article is originally published at Insider Monkey.