In this article, we discuss 10 dividend stocks Redditors buy for early retirement. If you want to skip our detailed analysis of these stocks, go directly to 5 Dividend Stocks Redditors Buy for Early Retirement.
With the outcome of the Russia-Ukraine war looking uncertain at the moment, the stock market is quite turbulent. In addition to high inflation, the Fed is expected to increase rates in March. To build a defensive portfolio amid the market uncertainty, investors turn towards dividend payers, owing to strong performance over the years, steady cash flow, and the fact that most of the dividend payers are mature companies that have weathered many market storms.
Passive income is essential for early retirement. In this market, investors gravitate towards sectors that are benefiting from inflation and war, such as the hot housing market, booming energy stocks, commodities, and renewables. Instead of buying property and flipping houses, investors passively gain income from buying REIT stocks, which are known for monthly payments and high yields. An early retirement portfolio includes dividend growth stocks and safe dividend payers, so that investors can benefit from high yielding companies and preserve their wealth by adding stable stocks to their income portfolio.
In 2021, dividend payouts amounted to $1.47 trillion, a strong recovery from the pandemic dividend cuts that were imposed in 2020. A handful of sectors were responsible for the solid dividend recovery last year, including mining and banks, which delivered three-fifths of the increase to payouts. The rebound came as a relief for retirees, who were almost entirely dependent on income portfolios.
Some of the most notable dividend paying companies in 2022 are Microsoft Corporation (NASDAQ:MSFT), Visa Inc. (NYSE:V), and JPMorgan Chase & Co. (NYSE:JPM), among others discussed in detail below.
Photo by Esther Tuttle on Unsplash
Our Methodology
We scoured Reddit threads to gain extensive insights into the income portfolio composition of early retirees. While most Redditors recommend a healthy mix of dividend ETFs and individual stocks, we selected securities that were discussed repeatedly by the users.
We have also mentioned the hedge fund sentiment around each stock. Data from 924 elite hedge funds tracked by Insider Monkey in Q4 2021 was used to identify the number of hedge funds that hold stakes in each firm.
Dividend Stocks Redditors Buy for Early Retirement
10. Western Asset Mortgage Capital Corporation (NYSE:WMC)
Number of Hedge Fund Holders: 9
Dividend Yield as of March 11: 13.79%
Western Asset Mortgage Capital Corporation (NYSE:WMC) is a California-based real estate investment trust that manages a portfolio of agency and non-agency residential mortgage-backed securities, commercial mortgage-backed securities, asset-backed securities, residential whole-loans, residential bridge loans, securitized commercial loans, and other financial investment vehicles.
Western Asset Mortgage Capital Corporation (NYSE:WMC) made the cut to several early retirement portfolios owned by Redditors, owing to the high dividend yield of 13.79%. Western Asset Mortgage Capital Corporation (NYSE:WMC) declared on December 21 a $0.06 per share quarterly dividend, in line with previous. The dividend was paid on January 26, to shareholders of record on December 31.
Among the 924 hedge funds monitored by Insider Monkey in the fourth quarter of 2021, 9 funds held long positions in Western Asset Mortgage Capital Corporation (NYSE:WMC), with combined stakes amounting to $6.6 million. Beach Point Capital Management is a prominent shareholder of the company, owning 1.13 million shares worth $2.3 million.
In addition to Microsoft Corporation (NASDAQ:MSFT), Visa Inc. (NYSE:V), and JPMorgan Chase & Co. (NYSE:JPM), Western Asset Mortgage Capital Corporation (NYSE:WMC) is a notable pick of Redditors for a diversified income portfolio.
9. Sabra Health Care REIT, Inc. (NASDAQ:SBRA)
Number of Hedge Fund Holders: 18
Dividend Yield as of March 11: 8.61%
Sabra Health Care REIT, Inc. (NASDAQ:SBRA) is a California-based real estate investment trust that invests primarily in healthcare properties across the United States and Canada. Sabra Health Care REIT, Inc. (NASDAQ:SBRA)’s dividend yield on March 11 came in at 8.61%.
On February 1, Sabra Health Care REIT, Inc. (NASDAQ:SBRA) declared a quarterly per share dividend of $0.30, in line with previous. The dividend was paid on February 28, for shareholders of record on February 11.
BofA analyst Joshua Dennerlein upgraded Sabra Health Care REIT, Inc. (NASDAQ:SBRA) on March 11 to Neutral from Underperform with a $15 price target. While still cautious on the outlook for skilled nursing facilities, he believes Sabra Health Care REIT, Inc. (NASDAQ:SBRA) will have fewer tenant issues over the next 12 months relative to peers, the analyst told investors in a research note.
Among the hedge funds tracked by Insider Monkey, 18 funds were bullish on Sabra Health Care REIT, Inc. (NASDAQ:SBRA) as of December 2021, up from 11 funds in the quarter earlier. AQR Capital Management held 1.41 million shares of Sabra Health Care REIT, Inc. (NASDAQ:SBRA) in Q4, worth $19.20 million.
8. Medical Properties Trust, Inc. (NYSE:MPW)
Number of Hedge Fund Holders: 20
Dividend Yield as of March 11: 5.76%
Medical Properties Trust, Inc. (NYSE:MPW) is a real estate investment trust that facilitates acquisitions and recapitalizations, and allows operators of medical establishments to fund facility improvements, technology upgrades, and other operational investments.
On February 17, Medical Properties Trust, Inc. (NYSE:MPW) declared a $0.29 per share quarterly dividend, a 3.6% increase from its prior dividend of $0.28. The dividend is payable on April 14, for shareholders of record on March 17.
Medical Properties Trust, Inc. (NYSE:MPW) announced above consensus Q4 results on February 3, as the REIT’s hospital tenants reported strong operating and financial performance. The fourth quarter revenue of $409.3 million exceeded the $403.7 million consensus, and revenue rose from $333.8 million in the prior-year quarter.
According to the Q4 database of Insider Monkey, 20 hedge funds were bullish on Medical Properties Trust, Inc. (NYSE:MPW), up from 18 funds in the prior quarter. Cardinal Capital held the leading stake in the company, with 5.3 million shares worth $127.50 million.
7. STAG Industrial, Inc. (NYSE:STAG)
Number of Hedge Fund Holders: 22
Dividend Yield as of March 11: 3.69%
STAG Industrial, Inc. (NYSE:STAG) is a real estate investment trust that is based in Boston, Massachusetts. The REIT acquires and manages single-tenant, industrial properties throughout the United States.
On February 16, STAG Industrial, Inc. (NYSE:STAG) announced its fourth quarter results, reporting a Q4 core FFO per share of $0.51 that matched the consensus estimate, falling from $0.53 in Q3 but increasing from $0.49 in Q4 2020. Total revenue of $147.6 million was above the $147.3 million consensus, and increased from $142.1 million in Q3 and $129.8 million in the preceding-year quarter.
STAG Industrial (NYSE:STAG) declared on January 10 a $0.1217 per share monthly dividend, a 0.7% increase from prior its dividend of $0.1208. The dividend was paid on February 15, and is set to be distributed on March 15 and April 15, to shareholders of record on February 28 and March 31, respectively.
STAG Industrial (NYSE:STAG) was a popular choice of Redditors for an early retirement income portfolio. Elite hedge funds are also bullish on the stock. In Q4 2021, 22 hedge funds reported owning stakes worth $525.3 million in STAG Industrial (NYSE:STAG). Zimmer Partners is the leading shareholder of the company, with 2.85 million shares worth $136.6 million.
6. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 30
Dividend Yield as of March 11: 4.53%
Realty Income Corporation (NYSE:O) is a dependable monthly income stock that was one of the top picks of Redditors for an early retirement portfolio. The California-based real estate investment trust manages a portfolio of single-tenant commercial properties in the United States, Spain, and the United Kingdom.
Mizuho analyst Vikram Malhotra on January 20 lowered the price target on Realty Income Corporation (NYSE:O) to $76 from $82 but kept a Buy rating on the shares after assuming coverage of the name. The analyst reported that “lofty” valuations and “resilient, but modestly decelerating” fundamentals imply multiple contraction risk. He emphasized on stock selectivity, favoring pricing power and duration.
On February 15, Realty Income Corporation (NYSE:O) announced a $0.2465 per share monthly dividend, in line with previous. The dividend is payable on March 15, for shareholders of record March 1. The stock yields 4.53% as of March 11.
A total of 30 hedge funds were bullish on Realty Income Corporation (NYSE:O) in the fourth quarter of 2021, up from 22 funds in the quarter prior. Glendon Capital Management is the biggest shareholder of the company, with 1.85 million shares worth roughly $139 million.
On February 22, Realty Income Corporation (NYSE:O)’s Q4 earnings topped the average analyst estimates and the REIT invested a record $2.6 billion in real estate during Q4, bringing 2021 property-level acquisitions to $6.4 billion and setting an annual record for the company.
Hedge funds are pouring into Realty Income Corporation (NYSE:O), just like Microsoft Corporation (NASDAQ:MSFT), Visa Inc. (NYSE:V), and JPMorgan Chase & Co. (NYSE:JPM).
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Disclosure: None. 10 Dividend Stocks Redditors Buy for Early Retirement is originally published on Insider Monkey.
