In this article, we will be looking at the 10 best dividend stocks to buy in August according to hedge funds. To skip our detailed analysis of dividend investing and these stocks, you can go directly to see the 5 Best Dividend Stocks to Buy in August According to Hedge Funds.
As the global community rapidly grows accustomed to, and continues to navigate, a pandemic-stricken and economically weakened world, being smarter with your money in terms of when and where you invest it becomes ever more important. The same holds true for when one is trying to settle on a foolproof dividend investing strategy, which should include certain factors. For starters, a good dividend investment strategy should do three things, according to a report by Post Oak Private Wealth Advisors. Firstly, it should look for capital appreciation; secondly, it should be able to offer a reliable current income to the investor; and thirdly, it should be well-equipped to handle downside risk.
When a dividend investing strategy meets the above few criteria, it becomes easier for investors to benefit from dividend stocks that have proven to be valuable additions to investor portfolios for decades in any case. For instance, it has been estimated that the average annual total return among dividend stocks falling under the 4th quintile bracket, meaning those dividend stocks with yields just a little lower than the highest yielding stocks, was about 11.7% between 1928 and 2013. When compared to the same for those stocks that don’t pay dividends at all, it becomes evident that dividend stocks are the clear outperformers in the market. The average annual total return for non-dividend payers between 1928 and 2013 was estimated to be about 8.3%, after all. The above is why stocks like Target Corporation (NYSE: TGT) and Walmart Inc. (NYSE: WMT), among other dividend paying stocks, can prove to be just as valuable on investor portfolios as your typical blue chip stocks, like Microsoft Corporation (NASDAQ: MSFT) and Apple Inc. (NASDAQ: AAPL).
The above criteria are not the only ones investors should take into account when considering what dividend stock to add to their portfolio, however. There are a range of others, for instance, the tendency and ability of the dividend stock to grow its own yield in the past years. A Ned Davis Research that analyzed about 40 years’ worth of stock data of S&P 500 companies found, for instance, that the companies that consistently raised their dividends each year were able to return about 9.4% on average, annually. This is compared to a lower return of about 7% on an average annual basis during the same 40 years when dealing with companies that did not consistently raise their dividends. So just like dividend growth, many other factors like, for instance, hedge fund popularity, should be taken into account when designing a dividend investing strategy to last for the years.
Investing is becoming difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Photo by lucas Favre on Unsplash
Let’s now look at the 10 best dividend stocks to buy in August according to hedge funds.
Our Methodology
Using the data of about 866 hedge funds compiled by Insider Monkey, we have selected dividend stocks most popular among the hedge funds tracked today. Thus, the stocks on our list below are also ranked from the lowest to the highest number of hedge fund holders. The stocks also have mostly positive analysts’ ratings and strong fundamentals exhibiting core financial and business strengths. Finally, we have mentioned the dividend yields of each stock, ensuring each stock has a yield of at least 2%, alongside their hedge fund holders as well.
Best Dividend Stocks to Buy in August According to Hedge Funds
10. Unum Group (NYSE: UNM)
Number of Hedge Fund Holders: 33
Dividend Yield: 4.2%
Unum Group (NYSE: UNM) is a financial services company operating in the life and health insurance industry and based in Tennessee. The company offers financial protection benefit solutions in the US, the UK, and Poland, and ranks 10th on our list of the best dividend stocks to buy in August according to hedge funds.
This August, Unum Group (NYSE: UNM) raised its financial year 2021 outlook, bringing their after-tax adjusted operating income per share view to state a 1-3% decline rather than the previous 5-6% decline. Additionally, Barclays also raised its price target on shares of Unum Group (NYSE: UNM) this April from $23 to $26.
In the second quarter of 2021, Unum Group (NYSE: UNM) had an EPS of $1.39, beating estimates by $0.27. The company’s revenue was $2.99 billion, up 0.16% year over year and also beating estimates by $32.02 million. Unum Group (NYSE: UNM) has also gained 9.97% in the past 6 months and 20.33% year to date.
By the end of the first quarter of 2021, 33 hedge funds out of the 866 tracked by Insider Monkey held stakes in Unum Group (NYSE: UNM) worth roughly $282 million. This is compared to 25 hedge funds in the previous quarter with a total stake value of approximately $218 million.
Like Microsoft Corporation (NASDAQ: MSFT), Target Corporation (NYSE: TGT), Walmart Inc. (NYSE: WMT), and Apple Inc. (NASDAQ: AAPL), Unum Group (NYSE: UNM) is a good stock to invest in.
9. Lincoln National Corporation (NYSE: LNC)
Number of Hedge Fund Holders: 36
Dividend Yield: 2.8%
Lincoln National Corporation (NYSE: LNC) is an operator of insurance and retirement businesses across the US. The company ranks 9th on our list of the best dividend stocks to buy in August according to hedge funds and is based in Pennsylvania.
B. Riley’s Randy Binner holds a Neutral rating on shares of Lincoln National Corporation (NYSE: LNC), and also raised the price target on the stock this May. The new price target is $72, versus the previous $56 target.
In the second quarter of 2021, Lincoln National Corporation (NYSE: LNC) had an EPS of $3.17, beating estimates by $0.72. The company’s revenue was $4.90 billion, up 16.49% year over year and also beating estimates by $112.73 million. Lincoln National Corporation (NYSE: LNC) has also gained 28.89% in the past 6 months and 38.26% year to date.
By the end of the first quarter of 2021, 36 hedge funds out of the 866 tracked by Insider Monkey held stakes in Lincoln National Corporation (NYSE: LNC) worth roughly $715 million. This is compared to 36 hedge funds in the previous quarter with a total stake value of approximately $708 million.
Like Microsoft Corporation (NASDAQ: MSFT), Target Corporation (NYSE: TGT), Walmart Inc. (NYSE: WMT), and Apple Inc. (NASDAQ: AAPL), Lincoln National Corporation (NYSE: LNC) is a good stock to invest in.
8. Jefferies Financial Group Inc. (NYSE: JEF)
Number of Hedge Fund Holders: 38
Dividend Yield: 2.1%
Jefferies Financial Group Inc. (NYSE: JEF) is an investment banking and brokerage company that also works in the asset management business in the US, Europe, the Middle East, Africa, and Asia. The company provides a range of financial advisory, equity underwriting, debt underwriting, corporate lending, equities research, and related financial services. It ranks 8th on our list of the best dividend stocks to buy in August according to hedge funds.
Oppenheimer analyst Chris Kotowski holds an Outperform rating on shares of Jefferies Financial Group Inc. (NYSE: JEF). The analyst also raised his price target on the stock from $26 to $32 this year.
In the second quarter of 2021, Jefferies Financial Group Inc. (NYSE: JEF) had an EPS of $1.30, beating estimates by $0.40. The company’s revenue was $4.44 billion, up 286.68% year over year and also beating estimates by $2.86 billion. Jefferies Financial Group Inc. (NYSE: JEF) has also gained 26.23% in the past 6 months and 41.14% year to date.
By the end of the first quarter of 2021, 38 hedge funds out of the 866 tracked by Insider Monkey held stakes in Jefferies Financial Group Inc. (NYSE: JEF) worth roughly $700 million. This is compared to 33 hedge funds in the previous quarter with a total stake value of approximately $700 million.
Like Microsoft Corporation (NASDAQ: MSFT), Target Corporation (NYSE: TGT), Walmart Inc. (NYSE: WMT), and Apple Inc. (NASDAQ: AAPL), Jefferies Financial Group Inc. (NYSE: JEF) is a good stock to invest in.
Miller/Howard Investments, an investment management firm, mentioned Jefferies Financial Group Inc. (NYSE: JEF) in its first-quarter 2021 investor letter. Here’s what they said:
“We bought two new financials this quarter (including), Jefferies (JEF). Both were selling at a discount to book value and should benefit from the improving economy, in our opinion.”
7. The PNC Financial Services Group, Inc. (NYSE: PNC)
Number of Hedge Fund Holders: 39
Dividend Yield: 2.8%
The PNC Financial Services Group, Inc. (NYSE: PNC) is a diversified financial services company operating in the US through its Retail Banking, Corporate & Institutional Banking, and Asset Management Group segment. The company ranks 7th on our list of the best dividend stocks to buy in August according to hedge funds.
RBC Capital’s Gerard Cassidy just this July raised his price target on shares of The PNC Financial Services Group, Inc. (NYSE: PNC). The new price target stands at $200, up $10 from the previous $190 target. Cassidy also reiterated an Outperform rating on the shares at the same time.
In the second quarter of 2021, The PNC Financial Services Group, Inc. (NYSE: PNC) had an EPS of $2.43, missing estimates by $0.28. The company’s revenue was $4.67 billion, up 14.5% year over year and beating estimates by $244.38 million. The PNC Financial Services Group, Inc. (NYSE: PNC) has also gained 18.67% in the past 6 months and 27.4% year to date.
By the end of the first quarter of 2021, 39 hedge funds out of the 866 tracked by Insider Monkey held stakes in The PNC Financial Services Group, Inc. (NYSE: PNC) worth roughly $418 million. This is compared to 35 hedge funds in the previous quarter with a total stake value of approximately $188 million.
Like Microsoft Corporation (NASDAQ: MSFT), Target Corporation (NYSE: TGT), Walmart Inc. (NYSE: WMT), and Apple Inc. (NASDAQ: AAPL), The PNC Financial Services Group, Inc. (NYSE: PNC) is a good stock to invest in.
6. Citizens Financial Group, Inc. (NYSE: CFG)
Number of Hedge Fund Holders: 41
Dividend Yield: 3.7%
Citizens Financial Group, Inc. (NYSE: CFG), a bank holding company, works to provide retail and commercial banking products in the US. The company is behind the Citizens Bank, National Association and operates through its Consumer Banking and Commercial Banking segments. It ranks 6th on our list of the best dividend stocks to buy in August according to hedge funds.
Compass Point holds a Buy rating on shares of Citizens Financial Group, Inc. (NYSE: CFG) as of this May, while in July, Keefe Bruyette’s David Konrad began covering the stock with an Outperform rating as well.
In the second quarter of 2021, Citizens Financial Group, Inc. (NYSE: CFG) had an EPS of $1.46, beating estimates by $0.32. The company’s revenue was $1.61 billion, but missing estimates by $20.36 million. Citizens Financial Group, Inc. (NYSE: CFG) has however gained 8.69% in the past 6 months and 23.54% year to date.
By the end of the first quarter of 2021, 41 hedge funds out of the 866 tracked by Insider Monkey held stakes in Citizens Financial Group, Inc. (NYSE: CFG) worth roughly $579 million. This is compared to 38 hedge funds in the previous quarter with a total stake value of approximately $453 million.
Like Microsoft Corporation (NASDAQ: MSFT), Target Corporation (NYSE: TGT), Walmart Inc. (NYSE: WMT), and Apple Inc. (NASDAQ: AAPL), Citizens Financial Group, Inc. (NYSE: CFG) is a good stock to invest in.
Click to continue reading and see the 5 Best Dividend Stocks to Buy in August According to Hedge Funds.
Suggested articles:
- 10 Best Dividend Stocks for Long Term
- 10 Best Dividend Stocks to Buy According to Billionaire Howard Marks
- 10 Best Dividend Stocks for Passive Income
Disclosure: None. 10 Best Dividend Stocks to Buy in August According to Hedge Funds is originally published on Insider Monkey.
