In this article, we discuss 10 dividend stocks for beginners. If you want to see more income stocks for investors starting out their investment journey, click 5 Dividend Stocks For Beginners.
Some traders begin their investment journey in hopes of share price gains, but most retail and novice investors are interested in the stock market for dividend payments. Dividends are an effective hedge against rising inflation, and during the wide market sell off in growth stocks, investors poured into stable businesses that make cash payments to shareholders, including banks, oil companies, and telecoms.
Dividends are a significant factor in controlling overall portfolio risk and volatility. In terms of lowering risk, dividend payments help navigate losses that are incurred from a drop in stock price. Investors who seek passive income but cannot afford expensive income stocks like Microsoft Corporation (NASDAQ:MSFT), Johnson & Johnson (NYSE:JNJ), and Apple Inc. (NASDAQ:AAPL) usually go for cheaper names that pay dividends.
Our Methodology
We ensured that the selected dividend stocks yield over 2% as of May 6, received positive analyst ratings recently, and have strong hedge fund sentiment surrounding them. Since beginners do not have a high budget for investments, we picked stocks priced under $30 as of May 6.
Dividend Stocks For Beginners
10. Kinder Morgan, Inc. (NYSE:KMI)
Dividend Yield as of May 6: 5.75%
Number of Hedge Fund Holders: 39
Kinder Morgan, Inc. (NYSE:KMI) was founded in 1936 and is headquartered in Houston, Texas. Kinder Morgan, Inc. (NYSE:KMI) is an energy infrastructure company that operates through four segments – Natural Gas Pipelines, Products Pipelines, Terminals, and CO2.
On April 20, Kinder Morgan, Inc. (NYSE:KMI) announced its financial results for the first fiscal quarter of 2022, posting an EPS of $0.32, beating Street estimates by $0.04. The $4.29 billion revenue surpassed market consensus forecasts by $546.32 million.
Kinder Morgan, Inc. (NYSE:KMI) declared on April 20 a $0.2775 per share quarterly dividend, a 2.8% increase from its prior dividend of $0.27. The dividend is payable on May 16, to shareholders of the company as of May 2. This marks the company’s fifth consecutive annual dividend increase, and Kinder Morgan, Inc. (NYSE:KMI)’s dividend yield on May 6 came in at 5.75%.
Truist analyst Neal Dingmann assumed coverage of Kinder Morgan, Inc. (NYSE:KMI) on May 2 with a Buy rating and a $22 price target as he took over the firm’s Midstream Oil and Gas coverage.
According to the fourth quarter database of Insider Monkey, 39 hedge funds held long positions in Kinder Morgan, Inc. (NYSE:KMI), with collective stakes worth about $999 million. Bob Peck and Andy Raab’s FPR Partners is the leading shareholder of the company, with 17.8 million shares worth $282.7 million.
In addition to Microsoft Corporation (NASDAQ:MSFT), Johnson & Johnson (NYSE:JNJ), and Apple Inc. (NASDAQ:AAPL), elite investors are piling into Kinder Morgan, Inc. (NYSE:KMI).
9. Berry Corporation (NASDAQ:BRY)
Dividend Yield as of May 6: 2.18%
Number of Hedge Fund Holders: 15
Berry Corporation (NASDAQ:BRY) is a Texas-based upstream energy company, operating conventional oil reserves located in the western United States. Berry Corporation (NASDAQ:BRY)’s dividend yield on May 6 stood at 2.18%. On March 11, Berry Corporation (NASDAQ:BRY) declared a $0.06 per share quarterly dividend, in line with previous. The dividend was paid to shareholders on April 15.
Berry Corporation (NASDAQ:BRY) reported on May 4 earnings for the first quarter of 2022. The company announced a Q1 non-GAAP EPS of $0.51, ahead of analysts’ estimates by $0.04. The revenue of $210.35 million climbed 55.5% year-over-year, exceeding market consensus by $16.05 million. The company generated discretionary free cash flow of $17 million, including working capital of $37 million.
Piper Sandler analyst Mark Lear on April 7 upgraded Berry Corporation (NASDAQ:BRY) to Overweight from Neutral, raising the price target to $14 from $11. With Western sanctions extending to the Russian energy sector, Piper’s Energy Macro team believes that the U.S. is one of the few regions to deliver long-term supply growth in crude oil. In the first season of the post-COVID recovery, the analyst believes supply chain issues will ultimately drive crude prices higher, which has positive implications for the equities despite the robust performance year-to-date.
According to the database of Insider Monkey, Berry Corporation (NASDAQ:BRY) was found in the public stock portfolios of 15 hedge funds at the end of Q4 2021, compared to 14 funds in the earlier quarter. Howard Marks’ Oaktree Capital Management is the leading shareholder of the company, with approximately 13 million shares worth $108.73 million.
Here is what Heartland Value Fund has to say about Berry Corporation (NASDAQ:BRY) in its Q4 2021 investor letter:
“Uncertainty about economic growth in the coming quarters weighed on Energy companies in the broader market. Longer term, we believe the capital discipline oil producers have shown over the past few years will provide support for energy prices as increased incremental demand will continue to absorb modest production increases. The Fund’s holdings in the sector fared better, and the portfolio owns well managed producers with strong balance sheets. Longtime holding Berry Corporation (BRY) fits this profile.
We highlighted Berry in the third quarter commentary praising its seasoned management team and financial strength. The company maintained its record of shareholder-friendly policies during the most recent quarter.
The move, along with compelling valuations—shares trade at just 4.7X EV/EBITDA—makes Berry, in our view, an attractive opportunity. Management remains disciplined in allocating capital, reining in debt, and focusing on high-margin production. This approach, along with aggressive efforts to return capital to shareholders through share repurchases and increased dividends, should attract additional investor interest.”
8. Global Ship Lease, Inc. (NYSE:GSL)
Dividend Yield as of May 6: 4.34%
Number of Hedge Fund Holders: 17
Global Ship Lease, Inc. (NYSE:GSL) was founded in 2007 and is based in London, leasing containerships under fixed-rate charters to container shipping companies. Global Ship Lease, Inc. (NYSE:GSL)’s dividend yield on May 6 stood at 4.34%, above the average industrials yield of 2.36%.
On February 10, Global Ship Lease, Inc. (NYSE:GSL) declared a quarterly dividend of $0.25 per share. The dividend was paid on March 4, to shareholders of record on February 22.
In 2021, Global Ship Lease, Inc. (NYSE:GSL)’s full-year revenue came in at $402.5 million, compared to a revenue of $282.3 million in 2020. Net income for 2021 grew 312.61% to $171.5 million from $41.6 million in the prior year.
Riley analyst Liam Burke on March 3 reiterated a Buy recommendation on Global Ship Lease, Inc. (NYSE:GSL) and raised the firm’s price target on the shares to $38 from $33 after the Q4 results were published. The company saw the full benefit of the accretive acquisition of additional fleet assets that brought its vessel count to 65, the analyst told investors in a bullish thesis.
According to Insider Monkey’s Q4 data, 17 hedge funds were long Global Ship Lease, Inc. (NYSE:GSL), with collective stakes worth about $150 million, compared to 14 funds in the last quarter, holding stakes in the company valued at $100.2 million. David Salanic’s Whitefort Capital is the leading shareholder of the company, with 963,226 shares worth over $22 million.
Here is what Massif Capital has to say about Global Ship Lease, Inc. (NYSE:GSL) in its Q4 2021 investor letter:
“We initiated a 6% position in GSL, bringing total maritime transit exposure up to ~9% of the portfolio when combined with our 3% SBLK position. GSL is a containership owner, leasing ships to container companies (such as Maersk) at fixed rates. As owners, they own and manage the vessels (responsible for crews, maintenance, insurance) but do not have fuel costs. GSL focuses on mid-size to smaller containerships, which serve the faster-growing inter-regional trade routes that represent ~70% of global containerized trade volume.
As they own its containers, their business is both pro-cyclical (chartered tonnages used as growth platform by liner shipping companies) and counter-cyclical (with the sale and leaseback structures used by liner companies as a balance sheet management tool). GSL has a track record that includes both organic acquisitions and a strategic combination in Q4 2018 that doubled the size of the fleet.
We like GSL because they do not have as much operational leverage as a company like ZIM (which leases on both sides of the trade), and they sign 2–5-year contracts. Liners have been eager to secure that capacity for extended durations spanning multiple years, significantly longer than has been the case historically and well-aligned with GSL’s strategic preference to lock in value over time and provide forward visibility on cash flows…” (Click here to see the full text)
7. CI Financial Corp. (NYSE:CIXX)
Dividend Yield as of May 6: 4.51%
Number of Hedge Fund Holders: 17
CI Financial Corp. (NYSE:CIXX) is a Canadian asset management holding company that specializes in equity, fixed income, alternative investments, mutual funds, hedge funds, and fund of funds. While the average dividend yield for the financial sector stands at 3.18%, CI Financial Corp. (NYSE:CIXX) yields 4.51% as of May 6.
CI Financial Corp. (NYSE:CIXX) declared on February 25 a $0.18 per share quarterly dividend, a 26.8% increase from its earlier dividend of $0.14. The dividend is distributable on July 15, to shareholders of record on June 30.
On April 29, CI Financial Corp. (NYSE:CIXX) reported preliminary assets under management of C$145 billion as of March 31, 2022, compared to C$138.5 billion in the prior-year quarter. The wealth management assets of C$224.7 billion also increased from C$102.1 billion in the earlier year.
BMO Capital analyst Tom MacKinnon reiterated an Outperform rating on CI Financial Corp. (NYSE:CIXX) but lowered the firm’s price target on the shares to C$26 from C$32 on May 5.
According to the fourth quarter database of Insider Monkey, CI Financial Corp. (NYSE:CIXX) was part of the public stock portfolios of 17 hedge funds, compared to 13 funds in the last quarter. The total stakes held in Q4 2021 amounted to $203.6 million, up from $186.2 million in Q3. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the biggest shareholder of CI Financial Corp. (NYSE:CIXX), with 1.95 million shares worth roughly $41 million.
Like Microsoft Corporation (NASDAQ:MSFT), Johnson & Johnson (NYSE:JNJ), and Apple Inc. (NASDAQ:AAPL), institutional investors are pouring into CI Financial Corp. (NYSE:CIXX) for dividend income.
6. Enterprise Products Partners L.P. (NYSE:EPD)
Dividend Yield as of May 6: 6.90%
Number of Hedge Fund Holders: 21
Enterprise Products Partners L.P. (NYSE:EPD) is an American midstream energy company that operates via NGL Pipelines & Services, Crude Oil Pipelines & Services, Natural Gas Pipelines & Services, and Petrochemical & Refined Products Services segments.
Enterprise Products Partners L.P. (NYSE:EPD)’s dividend yield on May 6 was 6.90%. The company has raised its dividends for 26 years in a row. On April 7, Enterprise Products Partners L.P. (NYSE:EPD) declared a $0.465 per share quarterly dividend, in line with previous. The dividend is payable on May 12, for shareholders of record on April 29.
On May 2, Enterprise Products Partners L.P. (NYSE:EPD) announced earnings for Q1 2022, posting an EPS of $0.60, above market consensus by $0.07. Revenue for the period grew 42% year-over-year to $13.01 billion, outperforming analysts’ predictions by $2.54 billion.
Truist analyst Neal Dingmann on May 3 maintained a Buy recommendation on Enterprise Products Partners L.P. (NYSE:EPD) and raised the firm’s price target on the stock to $30 from $27. The analyst cited Enterprise Products Partners L.P. (NYSE:EPD)’s “outsized” Q1 earnings beat and its new growth projects announced at analyst day.
Insider Monkey’s database suggests that 21 hedge funds were long Enterprise Products Partners L.P. (NYSE:EPD) at the end of December 2021, compared to 25 funds in the last quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the largest shareholder of the company, with more than 3 million shares worth $69 million.
Here is what ClearBridge Investments has to say about Enterprise Products Partners L.P. (NYSE:EPD) in its Q1 2021 investor letter:
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names (including) Enterprise Products Partners LP. We are positive on this company’s strong balance sheets, competitive positions and exposure to an economic recovery.”
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Disclosure: None. 10 Dividend Stocks For Beginners is originally published on Insider Monkey.
