In this article, we discuss the 10 blue chip dividend stocks with over 8% yield. If you want to skip our detailed analysis of these stocks, go directly to the 5 Blue Chip Dividend Stocks with Over 8% Yield.
In an era of stock volatility and soaring valuations, the advent of inflation fears has added a new twist to the overall investing environment, leaving even market experts scratching their heads. In the midst of this chaos, businesses with stable operations and impressive dividend histories continue to provide investors with a safe haven that is not found elsewhere. Contrary to popular opinion, these “value” stocks have outperformed their growth counterparts in the past few decades, posting annualized returns of 10% against the 8% returns of the S&P 500.
Supply chain problems, rising energy prices, and the dramatic rally in raw material cost has pushed inflation to record highs in the past few weeks. As investors scramble to shield their portfolios from the risk, some of the top dividend stocks to buy now include Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), The Coca-Cola Company (NYSE:KO), and Bristol-Myers Squibb Company (NYSE:BMY), among others discussed in detail below.
Another indication of the increased interest in value plays is the rise in investments in dividend exchange traded funds (ETFs). The Wall Street Journal reported earlier this year that the net inflows into dividend ETFs had jumped to more than $25 billion in July this year, up from $1.8 billion in July 2020. The post-pandemic recovery is a major theme in all of this. Figures from the Dow Jones Indices show that there has also been a 130% year-on-year increase in the number of common dividend increases reported by firms on the S&P 500 Index.
Other indexes show a similar triumph of value over growth. A report published by the Financial Times reveals that between September 2020 and April 2021, an important time period for the recovery, the Russell 1000 Value Index gained more than 31%. Meanwhile, the corresponding growth index only managed gains of around 14% during the time. Growth investors will also be surprised to hear that historically, 43% of the returns generated by dividend paying firms on the S&P 500 have come from dividends. 84% of the firms on the benchmark index pay dividends.
With inflation fears unlikely to subside in the near future, it may be prudent for investors to research on the best value plays. Companies that have a high dividend yield and an impressive dividend history are likely to provide investors with a steady gain through these difficult times. Sectors like the mortgage market, the tobacco industry, and mining companies jump to mind in this regard.
Photo by Dan Dennis on Unsplash
Our Methodology
These were picked based on their business fundamentals, analyst ratings, and dividend yields.
The hedge fund sentiment around each stock was calculated using the data of 867 hedge funds tracked by Insider Monkey.
Blue Chip Dividend Stocks with Over 8% Yield
10. Sibanye Stillwater Limited (NYSE:SBSW)
Number of Hedge Fund Holders: 9
Forward Dividend Yield: 12.54%
Sibanye Stillwater Limited (NYSE:SBSW) is a precious metals mining firm. It recently announced that it will be acquiring two Brazilian properties, the Santa Rita nickel mine and the Serrote copper mine, for around $1 billion from Appian Capital Advisory.
Deutsche Bank analyst Abhi Agarwal recently initiated coverage of Sibanye Stillwater Limited (NYSE:SBSW) stock with a Buy rating and a price target of $19, predicting that the firm would generate attractive free cash flow in the coming years.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm AQR Capital Management is a leading shareholder in Sibanye Stillwater Limited (NYSE: SBSW) with 7.7 million shares worth more than $95 million.
Just like Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), The Coca-Cola Company (NYSE:KO), and Bristol-Myers Squibb Company (NYSE:BMY), Sibanye Stillwater Limited (NYSE:SBSW) is one of the stocks on the radar of elite investors.
In its Q1 2021 investor letter, Desert Lion Capital, an asset management firm, highlighted a few stocks and Sibanye Stillwater Limited (NYSE:SBSW) was one of them. Here is what the fund said:
“Sibanye is a South African gold and platinum group metals (“PGM”) producer with mines in South Africa and the U.S. Established in 2012, it has since become one of South Africa’s largest gold producers and the largest PGM producer in the world. Sibanye also operate a PGM recycling facility and own a majority interest in DRDGOLD, a specialist in the recovery of gold and other precious metals from open pit tailings.
The investment thesis incorporates the following logic:
If central banks globally are going to continue printing money unabated, precious metals prices should rise.
The drive for cleaner and greener is accelerating. The market for platinum, palladium and rhodium is structurally attractive.
The company is generally mischaracterized. Ask around, and one will find that most people still refer to Sibanye as “a South African gold miner” with “lots of debt from that Stillwater acquisition.”
It is not quick and easy to ramp up PGM supply in response to higher demand and prices. Favorable supply-demand characteristics will likely remain favorable for longer.
Bad capital allocation decisions, corporate excesses, and resultant tarnished reputations from the previous boom period are still fresh in the minds of most mining executives. Neal Froneman has proven himself a disciplined capital allocator. His approach to capital allocation is straightforward: deploy capital at expected returns that enhances value to shareholders or distribute it via dividends and buybacks.
The company is debt-free and generating heaps of cash.
The valuation is cheap. At current metal prices, Sibanye is trading at about 5 times after-tax cash profits.
Sibanye is effectively a call option on a potential commodity super cycle. In the meantime, the value of our “option” is unlikely to deteriorate as we are rewarded with healthy dividend flows.”
9. Two Harbors Investment Corp. (NYSE:TWO)
Number of Hedge Fund Holders: 31
Forward Dividend Yield: 11.26%
Two Harbors Investment Corp. (NYSE:TWO) is a real estate investment trust based in Minnesota. It recently released earnings for the third quarter, reporting earnings per share of $0.24 and a net interest income of $14 million.
Two Harbors Investment Corp. (NYSE:TWO) has a market cap of $2 billion and was founded in 2009. It has an impressive dividend history. In September, it declared a quarterly dividend of $0.17 per share, in line with previous.
At the end of the third quarter of 2021, 31 hedge funds in the database of Insider Monkey held stakes worth $155 million in Two Harbors Investment Corp. (NYSE:TWO), up from 30 in the preceding quarter worth $160 million.
8. Annaly Capital Management, Inc. (NYSE:NLY)
Number of Hedge Fund Holders: 15
Forward Dividend Yield: 10.50%
Annaly Capital Management, Inc. (NYSE:NLY) is a mortgage real estate investment trust. It recently beat market expectations on earnings per share for the third quarter by $0.01. The stock stands to benefit from a rise in the mortgage rates as inflation bites.
Investment advisory Barclays has an Equal Weight rating on Annaly Capital Management, Inc. (NYSE:NLY) stock with a price target of $9. Mark DeVries, an analyst at the advisory, is covering the shares.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Annaly Capital Management, Inc. (NYSE:NLY) with 2.2 million shares worth more than $18 million.
7. Omega Healthcare Investors, Inc. (NYSE:OHI)
Number of Hedge Fund Holders: 15
Forward Dividend Yield: 9.24%
Omega Healthcare Investors, Inc. (NYSE:OHI) is a real estate investment trust that focuses solely on healthcare facilities, especially in the skilled nursing and assisted living sector. The company has solid fundamentals and a decent dividend history.
Baird analyst Amanda Sweitzer recently initiated coverage of Omega Healthcare Investors, Inc. (NYSE:OHI) stock with an Outperform rating and a price target of $36, noting that there long-time upside potential in the shares as the firm was a market consolidator.
At the end of the third quarter of 2021, 15 hedge funds in the database of Insider Monkey held stakes worth $112 million in Omega Healthcare Investors, Inc. (NYSE:OHI), down from 20 in the previous quarter worth $142 million.
6. Dynex Capital, Inc. (NYSE:DX)
Number of Hedge Fund Holders: 7
Forward Dividend Yield: 9.02%
Dynex Capital, Inc. (NYSE:DX) is a mortgage real estate investment trust based in Virginia. It recently declared a monthly dividend of $0.13 per share, in line with previous. In earnings for the third quarter, the firm beat market estimates on net interest income.
Dynex Capital, Inc. (NYSE:DX) was founded in 1987 and has a market cap of $933 million. The firm has a 21% cumulative shareholder total return since December 2019, an industry-leading record, according to Byron Boston, the CEO of the firm.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Marshall Wace LLP is a leading shareholder in Dynex Capital, Inc. (NYSE:DX) with 296,649 shares worth more than $5.1 million.
Alongside Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), The Coca-Cola Company (NYSE:KO), and Bristol-Myers Squibb Company (NYSE:BMY), Dynex Capital, Inc. (NYSE:DX) is one of the stocks that hedge funds are buying.
Click to continue reading and see 5 Blue Chip Dividend Stocks with Over 8% Yield.
Suggested Articles:
Disclosure. None. 10 Blue Chip Dividend Stocks with Over 8% Yield is originally published on Insider Monkey.
