In this article, we discuss 10 best dividend stocks under $50 according to hedge funds. You can skip our detailed analysis of dividend stocks and their historic returns, and go directly to read 5 Best Dividend Stocks Under $50 According to Hedge Funds.
As global financial markets suffered heavy losses this year, institutional and individual investors are flocking toward dividend stocks to survive through this uncertainty. Famous hedge fund managers like Warren Buffett earn millions in dividends every year, prompting other investors to follow suit. Dividend companies are mainly favored by investors because their regular passive income is rewarding for them in the current inflationary environment. According to Hartford Funds, in seven out of eight inflationary periods since the 1970s, dividend companies outperformed their non-dividend peers. This has resulted in steady dividend hikes through the first two quarters of this year.
In a recent report, Bloomberg revealed that dividend payments in the US grew by 8.3% in the second quarter of 2022, reaching $144.4 billion. This marked the dividend payments’ all-time quarterly high. The report further mentioned that 94% of the companies raised their dividends after recovering from the pandemic of 2020. Janus Henderson now expects dividend payments to reach $1.56 trillion in 2022, up from its original consensus of $1.54 trillion.
According to a report by Ameriprise Financial, dividend income represented nearly 40% of the S&P 500 Index returns over the past 90 years. Matt Peron, director of research at Janus Henderson, said in his Bloomberg interview that investors are paying attention to dividend companies with strong free cash flow generation due to uncertain market conditions. He further mentioned that even though a slowdown in economic growth is expected next year, many companies would refrain from trimming their dividends. In this regard, dividend stocks like The Coca-Cola Company (NYSE:KO), PepsiCo, Inc. (NASDAQ:PEP), and Johnson & Johnson (NYSE:JNJ) are popular among investors because of their extended dividend growth histories. In this article, we will discuss 10 best dividend stocks under $50 according to hedge funds.
Our Methodology:
For this list, we used the data of 895 elite funds in Insider Monkey’s database as of the end of the second quarter of 2022 to select the most popular dividend stocks among these hedge funds, with share prices under $50. The stocks are ranked according to hedge fund positions.
Photo by Dan Dennis on Unsplash
Best Dividend Stocks Under $50 According to Hedge Funds
10. Verizon Communications Inc. (NYSE:VZ)
Share Price as of August 30: $42.6
Number of Hedge Fund Holders: 58
Verizon Communications Inc. (NYSE:VZ) is an American multinational telecommunications company that has one of the largest LTE networks. In the first half of 2022, the company’s cash flow from operating activities stood at $17.7 billion and its free cash flow was over $5.7 billion. The company’s total revenue for the quarter came in at $33.8 billion while its net income stood at $5.3 billion.
Verizon Communications Inc. (NYSE:VZ) pays a quarterly dividend of $0.64 per share, raising it by 2% in September 2021. This was the company’s 15th consecutive year of dividend growth. Its dividend payments are safe with a payout ratio of 51.4%. As of August 30, the stock’s dividend yield came in at 6.00%.
In August, Morgan Stanley mentioned Verizon Communications Inc. (NYSE:VZ) in its investors’ note, expecting the company to raise its dividend for the 16th consecutive year. In addition to this, the firm also appreciated the company’s secure dividend payments.
At the end of Q2 2022, 58 hedge funds in Insider Monkey’s database owned stakes in Verizon Communications Inc. (NYSE:VZ), compared with 69 in the previous quarter. These stakes have a total value of nearly $2.3 billion. Fisher Asset Management was the company’s leading stakeholder in Q2.
In addition to The Coca-Cola Company (NYSE:KO), PepsiCo, Inc. (NASDAQ:PEP), and Johnson & Johnson (NYSE:JNJ), Verizon Communications Inc. (NYSE:VZ) is also favored by income investors due to the company’s solid financials.
9. CSX Corporation (NASDAQ:CSX)
Share Price as of August 30: $31.7
Number of Hedge Fund Holders: 63
CSX Corporation (NASDAQ:CSX) is a Florida-based transportation company that focuses on rail transportation and real estate in North America. The company maintains one of the longest track records of dividend growth in the transport sector, extending to 17 years. It currently pays a quarterly dividend of $0.10 per share and has a yield of 1.26%, as of August 30.
In Q2 2022, CSX Corporation (NASDAQ:CSX) reported an operating cash flow of over $1.2 billion, consistent with the previous quarter. The company’s cash flow for the quarter stood at $751 million, 21.5% of which represented the dividend payments. In addition to this, its revenue of $3.8 billion presented a 27.8% year-over-year growth.
In July, Cowen set a $37 price target on CSX Corporation (NASDAQ:CSX) with a Market Perform rating on the shares, highlighting the company’s strong coal pricing and stable volumes.
As of the close of Q2 2022, 63 hedge funds in Insider Monkey’s database owned stakes in CSX Corporation (NASDAQ:CSX), worth over $5.1 billion.
ClearBridge Investments mentioned CSX Corporation (NASDAQ:CSX) in its Q4 2021 investor letter. Here is what the firm has to say:
“On a regional basis, the U.S. and Canada was the top contributor to quarterly performance, of which U.S. rail operators CSX was among the lead performers. CSX is one of five leading North American rail companies, with over 21,000 miles of rail, covering 23 states and 40+ ports. CSX is engaged in the transportation of rail freight in the Southeast, East, and Midwest via interchange with other rail carriers, to and from the rest of the U.S. and Canada. CSX performed well during the quarter after the company beats market expectations on its third-quarter results. The beats were largely driven by strong pricing, which could be hitting record highs, and healthy commodity/coal volume driven by the current energy crisis.”
8. Marvell Technology, Inc. (NASDAQ:MRVL)
Share Price as of August 30: $48.09
Number of Hedge Fund Holders: 63
Marvell Technology, Inc. (NASDAQ:MRVL) is a California-based manufacturing company that produces and develops semiconductors and related technology. According to Insider Monkey’s data, 63 hedge funds owned stakes in the company in Q2, the same as in the previous quarter. These stakes hold a collective value of roughly $1.6 billion. Among these hedge funds, Marshall Wace LLP owned the largest stake in the company, worth $214 million.
In its recently announced Q2 results, Marvell Technology, Inc. (NASDAQ:MRVL) reported revenue of $1.52 billion, which showed a 41% year-over-year growth. The company’s operating cash flow came in at $331.5 million, up from $194.8 million in the previous quarter. Its free cash flow also jumped to $256.3 million, from $156 million in the preceding quarter.
Marvell Technology, Inc. (NASDAQ:MRVL) currently pays a quarterly dividend of $0.06 per share and has a yield of 0.50%, as of August 30. The company’s payout ratio stands at 11.01%.
Following the company’s strong quarterly earnings, BofA raised its price target on Marvell Technology, Inc. (NASDAQ:MRVL) in August to $65, while maintaining a Buy rating on the shares.
ClearBridge Investments mentioned Marvell Technology, Inc. (NASDAQ:MRVL) in its Q4 2021 investor letter. Here is what the firm had to say:
“The ClearBridge Mid Cap Growth Strategy continued to deliver strong absolute and relative returns as our focus on de-risking investments prior to purchase and managing position sizes has made a difference through recent market turbulence. Marvell Technology, a leader in semiconductor manufacturing, is in the second-largest position in the Strategy but just one of three stocks with a weighting of over 3% in a diversified growth portfolio of over 70 names. With a wide range of exposure to fast-growing IT subsectors, including 5G telecommunications, data centers, cloud computing, and electric vehicles, Marvell’s ability to secure a crucial supplier position at the nexus of these technologies leaves it well-positioned to participate in their long-term growth. Strength in companies like Marvell offset weakness in higher multiple growth names that were dragged down by negative sentiment or short-term execution issues.”
7. Cisco Systems, Inc. (NASDAQ:CSCO)
Share Price as of August 30: $45.3
Number of Hedge Fund Holders: 63
Cisco Systems, Inc. (NASDAQ:CSCO) is an American multinational technology company that provides cloud and security solutions to its consumers. In August, Cowen raised its price target on the stock to $60 with an Outperform rating on the shares, appreciating the company’s solid quarterly earnings.
In fiscal Q4 2022, Cisco Systems, Inc. (NASDAQ:CSCO) reported $3.7 billion in cash flow from operating activities while its free cash flow came in at $3.5 billion. The company returned nearly $4 billion to shareholders during the quarter, $1.6 billion of which was paid in dividends. In addition to this, it ended the quarter with $19.3 billion available in cash and cash equivalents.
Cisco Systems, Inc. (NASDAQ:CSCO) has been raising its dividends consistently for the past 11 years. It currently offers a quarterly payout of $0.38 per share, with a dividend yield of 3.36%, as recorded on August 30. The company’s payout ratio is safe at 53.1%.
At the end of Q2 2022, 63 hedge funds tracked by Insider Monkey were bullish on Cisco Systems, Inc. (NASDAQ:CSCO), compared with 66 in the previous quarter. These stakes are collectively valued at around $2 billion.
Carillon Tower Advisers mentioned Cisco Systems, Inc. (NASDAQ:CSCO) in its Q1 2022 investor letter. Here is what the firm has to say:
“Cisco Systems (NASDAQ:CSCO) traded lower as investors weighed how supply chain concerns would impact sales growth. The company has been upgrading its switching and routing offerings, which should lead to strong demand as on-site locations upgrade infrastructure.”
6. Intel Corporation (NASDAQ:INTC)
Share Price as of August 30: $32.4
Number of Hedge Fund Holders: 65
Intel Corporation (NASDAQ:INTC) provides services in cloud computing and data center and also manufactures semiconductor chips. The company has been raising its dividends consistently for the past seven years. It currently pays a quarterly dividend of $0.365 per share, with a dividend yield of 4.53%, as of August 30.
Though Intel Corporation (NASDAQ:INTC) missed analysts’ estimates on various accounts in Q2 2022, the company’s cash position remained stable. The company ended the quarter with $4.4 billion available in cash and cash equivalents, while its total assets stood at $50.5 billion. It generated $809 million in cash from operations with net revenue of $15.3 billion. Intel Corporation (NASDAQ:INTC) remained committed to shareholder returns, paying $1.5 billion in dividends during the quarter.
As of the end of June 2022, 65 hedge funds tracked by Insider Monkey owned stakes in Intel Corporation (NASDAQ:INTC), with a total value of over $2.5 billion. Generation Investment Management was the company’s leading stakeholder in Q2.
Intel Corporation (NASDAQ:INTC) can be a good addition to dividend portfolios in addition to other dividend stocks like The Coca-Cola Company (NYSE:KO), PepsiCo, Inc. (NASDAQ:PEP), and Johnson & Johnson (NYSE:JNJ).
Baron Funds mentioned Intel Corporation (NASDAQ:INTC) in its Q1 2022 investor letter. Here is what the firm had to say:
“Intel’s (NASDAQ:INTC) capital spending process is guided by a process they appropriately named “copy exactly.” This means that they attempt to “copy exactly” what they have already built and attempt to improve tried and true processes iteratively.”
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Disclosure. None. 10 Best Dividend Stocks Under $50 According to Hedge Funds is originally published on Insider Monkey.
