In this article, we discuss the 11 safe dividend stocks for a retirement stock portfolio.
Across the world, investors have been scrambling to find ways to strengthen their portfolios and reduce risk as stock markets become more volatile due to rising inflation and interest rate hikes aimed at combating inflation. Ordinary people are also exploring possible investments in dividend stocks for their retirement portfolios. In this context, there has been a flurry of activity in safe dividend plays like Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), and The Home Depot, Inc. (NYSE:HD).
It is pertinent to mention that it is not always easy to set up a retirement portfolio. A study by GOBankingRates claims that 64% of workers in the United States have less than $10,000 saved for the exit from full-time employment. Among those aged 55 and older, almost 40% have no savings at all. These figures highlight the importance that an ordinary citizen must place on a retirement portfolio. Considering the present volatility of the markets, it is prudent to invest in safe dividend stocks for such a portfolio.
Our Methodology
The companies that have solid dividend profiles were selected for the list. The firms with impressive yields and a consistent history of payouts stretching back over more than a decade were preferred for the list. In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks are also discussed. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
Photo by Sharon McCutcheon on Unsplash
Retirement Stock Portfolio: Safe Dividend Stocks to Consider
11. ONEOK, Inc. (NYSE:OKE)
Number of Hedge Fund Holders: 29
Dividend Yield as of November 28: 5.72%
ONEOK, Inc. (NYSE:OKE) engages in the gathering, processing, storage, and transportation of natural gas in the United States. It is one of the best dividend stocks for a retirement stock portfolio. On October 24, Guidewire, a software company which supports the entire insurance life cycle for leading insurers in 38 countries, announced that it has formed a strategic partnership with ONEOK to provide digital experiences for payments that deliver agility and flexibility throughout the insurance lifecycle from quote to claim payments.
On October 19, Morgan Stanley analyst Robert Kad maintained an Equal Weight rating on ONEOK, Inc. stock and lowered the price target to $70 from $74, noting that fewer significant profit beats are predicted than in the second quarter.
Among the hedge funds being tracked by Insider Monkey, Chicago-based firm Citadel Investment Group is a leading shareholder in ONEOK, Inc. with 1 million shares worth more than $52.7 million.
Just like Johnson & Johnson, The Procter & Gamble Company, and The Home Depot, Inc., ONEOK, Inc. is one of the best dividend stocks for a retirement portfolio.
In its Q3 2021 investor letter, Miller Howard Investments, an asset management firm, highlighted a few stocks and ONEOK, Inc. was one of them. Here is what the fund said:
“In late August, we increased the portfolio’s cyclical exposure by trimming utilities after a period of relative outperformance and reallocating the capital to midstream energy, which had pulled back over the summer. We added ONEOK, Inc. with the expectation that it will benefit from increasing natural gas and natural gas liquids (NGL) recovery in the Bakken region.”
10. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 47
Dividend Yield as of November 28: 8.40%
Altria Group, Inc. (NYSE:MO) manufactures and sells smokable and oral tobacco products in the United States. It is one of the top dividend stocks for a retirement stock portfolio. On October 27, Altria Group revealed a strategic alliance with Japan tobacco, a leading international tobacco product manufacturer, with a global pursuit of a global smoke-free partnership to accelerate harm reduction.
At the end of the third quarter of 2022, 47 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in Altria Group, Inc., compared to 48 in the preceding quarter worth $1.8 billion.
In its Q2 2021 investor letter, Broyhill Asset Management, an asset management firm, highlighted a few stocks and Altria Group, Inc. was one of them. Here is what the fund said:
“Altria Group, Inc. 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.”
9. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 51
Dividend Yield as of November 28: 7.56%
Devon Energy Corporation (NYSE:DVN) is an independent energy company that primarily engages in the exploration, development, and production of oil, natural gas, and natural gas liquids. It is one of the premier dividend stocks for a retirement stock portfolio. On November 1, Devon Energy Corp posted earnings for the third quarter of 2022, reporting earnings per share of $2.18, beating market estimates by $0.05. The revenue over the period was $5.43 billion, up 56.5% compared to the revenue over the same period last year and beating market estimates by $640 million.
On October 21, investment advisory Citi maintained a Buy rating on Devon Energy Corporation stock and raised the price target to $80 from $77. Analyst Scott Gruber issued the ratings update.
At the end of the third quarter of 2022, 51 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in Devon Energy Corporation, compared to 57 in the previous quarter worth $1.5 billion.
In its Q2 2022 investor letter, GoodHeaven Capital Management, an asset management firm, highlighted a few stocks and Devon Energy Corporation was one of them. Here is what the fund said:
“Our biggest dollar gainer within this period was Devon Energy Corporation, a position which emanated from a takeover in early 2021 of our long-time holding WPX Energy. We are sitting on a material (unrealized) gain from our cost and are now receiving material dividends thanks to Devon’s thoughtful fixed/variable dividend policy. Energy is now a hot sector for investors but we have had material exposure for a long time. We remember a bit too well $40 oil, NEGATIVELY PRICED front-month oil contract, and what it’s like to own a company with leverage and negative free cash flow during such periods. Our desire to have our biggest portfolio exposures be high-return, growing, reasonably predictable and moderately levered companies lead us to reduce our Devon exposure in the past. When the recent facts and circumstances for the industry changed and appeared supportive of healthy oil prices, we decided to maintain a sizable holding and more recently added to the position. At Devon’s Q1 dividend rate, which is most variable in nature, the shares now yield approximately 10% and our yield on our average cost is materially higher. In addition, we maintain additional energy exposure through our long-term (and successful) holding in Hess Midstream and less directly through TerraVest and Berkshire Hathaway’s energy investments.”
8. Gilead Sciences, Inc. (NASDAQ:GILD)
Number of Hedge Fund Holders: 56
Dividend Yield as of November 28: 3.39%
Gilead Sciences, Inc. (NASDAQ:GILD) a biopharmaceutical company that discovers, develops, and commercializes medicines. It is one of the elite dividend stocks for a retirement stock portfolio. On November 2, the US Food and Drug Administration approved the expanded use of Vemlidy of Gilead Sciences to treat chronic hepatitis B virus infection in patients of 12 years age and older with compensated liver disease.
On October 31, Maxim analyst Jason McCarthy maintained a Buy rating on Gilead Sciences, Inc. stock and raised the price target to $92 from $84, noting that the company’s third quarter results were strong due to the Veklury and HIV franchise.
Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrow Street Capital is a leading shareholder in Gilead Sciences, Inc. with 12 million shares worth more than $742.5 million.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Gilead Sciences, Inc. was one of them. Here is what the fund said:
“Other pharma companies are providing solutions as well. Biopharmaceutical company Gilead Sciences, Inc.’s remdesivir, sold under the brand name Veklury, is a broad-spectrum antiviral medication administered by intravenous infusion; it can shorten the time to recovery in hospitalized patients and reduce the risk of hospitalization and death in non-hospitalized patients.”
7. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 59
Dividend Yield as of November 28: 2.81%
The Coca-Cola Company (NYSE:KO) is a beverage company that manufactures, markets, and sells various non-alcoholic beverages worldwide. It is one of the major dividend stocks for a retirement stock portfolio. On September 29, Molson Coors Beverage said it has expanded its exclusive agreement with The Coca-Cola Company to commercialize and develop the Topo Chico Spirited beverage. This deal is said to mark another milestone in the relationship between Molson Coors and Coca-Cola.
On October 26, UBS analyst Peter Grom maintained a Buy rating on The Coca-Cola Company stock and raised the price target to $68 from $63, noting that the company beat third quarter expectations.
At the end of the third quarter of 2022, 59 hedge funds in the database of Insider Monkey held stakes worth $25 billion in The Coca-Cola Company, compared to 60 in the preceding quarter worth $28.4 billion.
In its Q2 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and The Coca-Cola Company was one of them. Here is what the fund said:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like consumer staples (The Coca-Cola Company). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”
6. Lowe’s Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 61
Dividend Yield as of November 28: 2.00%
Lowe’s Companies, Inc. (NYSE:LOW) operates as a home improvement retailer in the United States and internationally. It is one of the prominent dividend stocks for a retirement stock portfolio. On November 3, Lowe’s Companies declared that it would sell its Canadian retail business to Sycamore Partners, a private equity firm, for $400 million, as the home improvement retailer targets a larger market share in the US.
On October 31, investment advisory Citi maintained a Neutral rating on Lowe’s Companies, Inc. stock and lowered the price target to $215 from $217. Analyst Steven Zaccone issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Pershing Square is a leading shareholder in Lowe’s Companies, Inc. with 10.4 million shares worth more than $1.95 billion.
In addition to Johnson & Johnson, The Procter & Gamble Company, and The Home Depot, Inc., Lowe’s Companies, Inc. is one of the best dividend stocks for a retirement portfolio.
In its Q4 2021 investor letter, Pershing Square Capital Management, an asset management firm, highlighted a few stocks and Lowe’s Companies, Inc. was one of them. Here is what the fund said:
“Lowe’s Companies, Inc. 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 market
Positioned to grow EPS largely independent of market conditions
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Idiosyncratic revenue opportunities driving share gains
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Self-help initiatives catalyzing operating margin expansion
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Buybacks representing ~8% of current market capitalization planned for 2022 (…read more)”
5. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 61
Dividend Yield as of November 28: 5.81%
AT&T Inc. provides telecommunications, media, and technical services worldwide.
On October 24, Raymond James analyst Frank Louthan upgraded AT&T Inc. stock to Strong Buy from Outperform with an unchanged price target of $24, highlighting that the company will outpace Verizon over the next few months based on the current operating performance of the two businesses.
At the end of the third quarter of 2022, 61 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in AT&T Inc., compared to 55 in the preceding quarter worth $1.7 billion.
In its Q2 2022 investor letter, Argosy Investors, an asset management firm, highlighted a few stocks and AT&T Inc. was one of them. Here is what the fund said:
“I purchased shares of AT&T Inc. prior to its spin-off of Warner Brothers Discovery (WBD). Most people are probably familiar with AT&T. They are a major cellular service provider, and until recently owner of the Time Warner media assets, which include HBO, CNN, TNT, TBS, Cartoon Network, DC Comics and Batman content brands, and more. At the time of my purchase, I estimated that the combined T/WBD assets traded at a 15% levered FCF yield, or 6x FCF. I also believe that WBD, which now has HBO Max, has future growth in front of it which was previously in doubt when Discovery was primarily tied to the declining cable television bundle. Since then, Netflix reported disappointing subscriber growth, which threw all streaming companies into disarray. WBD followed that news with a disappointing outlook on its business during its quarterly earnings.
As a result, shares of WBD have declined nearly 40% since the spin-off. WBD now trades for 7x 2023E FCF and there is great potential for returns over the next few years as WBD pays down debt used to finance its merger combining Warner Brothers and Discovery and grows. We do not own a large position in WBD at present, but we may add to it over time.”
4. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 63
Dividend Yield as of November 28: 5.17%
Philip Morris International Inc. (NYSE:PM) operates as a tobacco company working to deliver a smoke-free future and evolving portfolio for the long term to include products outside of the tobacco and nicotine sector. It is one of the elite dividend stocks for a retirement stock portfolio. On November 6, Elliot Management is said to put its support behind Philip Morris International’s increased $15.7 billion offer for Swedish Match, which will allow the deal to cross the finish line. Philip Morris’ offer is said to have received 80% of acceptance of Swedish Match.
On November 2, Morgan Stanley analyst Pamela Kaufman maintained an Overweight rating on Philip Morris International Inc. stock and raised the price target to $109 from $102, noting that the company’s recent agreement with Altria Group to regain control of IQOS distribution will allow it to introduce IQOS in the US by 2024.
Among the hedge funds being tracked by Insider Monkey, Fort Lauderdale, Florida-based investment firm GQG Partners is a leading shareholder in Philip Morris International Inc. with 17.4 million shares worth more than $1.4 billion.
In its Q2 2022 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Philip Morris International Inc. was one of them. Here is what the fund said:
“On the positive side of the ledger, our top contributor was Swedish Match, a Swedish tobacco and nicotine products maker. The company received an all-cash takeover offer from rival Philip Morris International Inc., which we also held in the portfolio, for SEK 106 per share—a 35% premium to Swedish Match’s prior closing share price. The deal is a good fit for PM as it reduces PM’s dependence on cigarettes—a category in steady decline—and accelerates the company’s transition to smokeless “reduced-risk” products (RRPs)—a category that has experienced rapid growth over the past five years. PM can also leverage its global scale to generate significant revenue synergies from these complementary product sets, as well as quickly gain access to the US market—the world’s largest market for RRPs and one where regulators have embraced RRPs and other less harmful nicotine products. We exited our position in Swedish Match as shares approached the takeout price.”
3. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 66
Dividend Yield as of November 28: 3.09%
Chevron Corporation (NYSE:CVX) engages in integrated energy and chemical operations worldwide. It is one of the premier dividend stocks for a retirement stock portfolio. On October 5, the Biden administration was preparing to scale down the sanctions on Venezuela to allow Chevron to resume pumping oil in the country, marking a milestone in the reopening of the US and European markets to oil exports in Venezuela.
On October 31, Cowen analyst Charles Ryhee maintained an Outperform rating on Chevron Corporation stock and raised the price target to $185 from $160, noting that the company reiterated a disciplined approach to M&A and buyback despite an ever-improving balance sheet.
At the end of the third quarter of 2022, 66 hedge funds in the database of Insider Monkey held stakes worth $27 billion in Chevron Corporation, compared to 59 in the preceding quarter worth $26 billion.
In its Q1 2022 investor letter, Diamond Hill, an asset management firm, highlighted a few stocks and Chevron Corporation was one of them. Here is what the fund said:
“Other top contributors in Q1 included multinational energy company Chevron Corp.. 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.”
2. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 85
Dividend Yield as of November 28: 2.55%
Johnson & Johnson researches and develops, manufactures, and sells various products in the healthcare field. It is one of the top dividend stocks for a retirement stock portfolio. On November 1, according to CNBC’s David Faber, Johnson and Johnson approached Abiomed, a medical device technology company, to start talks regarding a merger. On October 25, reports had indicated that the firm had agreed to acquire Abiomed for an upfront payment of $380 per share in cash.
On October 19, Bernstein analyst Lee Hambright maintained a Market Perform rating on Johnson & Johnson stock and lowered the price target to $190 from $194, noting that the company reported strong third quarter results as sales grew 8.2% organic to $23.8 billion.
Among the hedge funds being tracked by Insider Monkey, Camas, Washington-based firm Fisher Asset Management is a leading shareholder in Johnson & Johnson with 5.9 million shares worth more than $967.3 million.
In its Q2 2022 investor letter, Mayar Capital, an asset management firm, highlighted a few stocks and Johnson & Johnson was one of them. Here is what the fund said:
“Johnson & Johnson is currently our largest position and a long-standing holding. The majority of the group’s sales come from its collection of pharmaceutical franchises, but a large majority (~45%) comes from its collection of medical device businesses and its consumer brands.
Here’s how JNJ make and spends a dollar of revenues: As of 2021, about 55 cents of that dollar comes from its pharmaceutical sales – sales of drugs to pharmacies and distributors – while 30 cents come from the sale of medical devices, such as surgery equipment and orthopaedics. The rest of that dollar in sales comes from sales of JNJ’s consumer brands such as Listerine mouthwash, Nicorette nicotine tablets and Neutrogena cosmetics (…read more)
1. The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 89
Dividend Yield as of November 28: 2.33%
Home Depot, Inc. operates as a home improvement retailer. It is one of the major dividend stocks for a retirement stock portfolio. On October 24, after the announcement of Cause For Alarm, Home Depot joined hands with Kidde, provider of healthy, safe and sustainable building solutions, and other businesses to donate fire safety products to the New York City Fire Department Foundation and Habitat for Humanity.
On October 31, Citi analyst Steven Zaccone maintained a Buy rating on The Home Depot, Inc. stock and lowered the price target to $340 from $348, noting that the macro fears are high for his hardline retail coverage heading into the third quarter earnings season.
Among the hedge funds being tracked by Insider Monkey, Camas, Washington-based firm Fisher Asset Management is a leading shareholder in The Home Depot, Inc. with 8.1 million shares worth more than $2.3 billion.
In its Q1 2022 investor letter, Diamond Hill Capital, an asset management firm, highlighted a few stocks and The Home Depot, Inc. was one of them. Here is what the fund said:
“The Home Depot, Inc. shares underperformed as continued solid fundamental results were outweighed by concerns about the impact rising mortgage rates may have on the housing market and general inflationary pressures potentially leading to a consumer spending slowdown. We view the long-term prospects and multi-year fundamental outlook as unchanged.”
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This article is originally published at Insider Monkey.
