In this article, we discuss the 10 dividend stocks with over 5% yield. If you want to skip our detailed analysis of dividend investing and these stocks, go directly to the 5 Dividend Stocks With Over 5% Yield.
Dividend investing is one of the best investment strategies that provide an inflation hedge to investors. Dividend assets diversify income investors’ portfolios by paying regular dividends and capital appreciation in the stock price. Yet, the stability of some dividend stocks was tested during the strike of the COVID-19 pandemic in 2020. Dividend payers such as General Motors Company (NYSE:GM), Delta Air Lines, Inc. (NYSE:DAL), and The Walt Disney Company (NYSE:DIS) had to suspend dividend payments to shareholders. Other companies had cut their payout by as much as 75%. Dividends did not begin to stabilize until the end of 2020 when the economy began to recover.
With the projected growth that comes with an improving global economy, dividend-paying companies are garnering greater attention from investors and market analysts this year. According to a report by analytics and solutions provider IHS Markit, global dividend payouts decreased by 8% in 2020 but improved by 21% in 2021. Total dividend distributions are likely to continue their upward trend in 2022, rising by 6% to $2.09 trillion from $1.97 trillion in 2021, according to IHS Markit. The report also stated that dividends in the United States are anticipated to grow 5.4% in 2022 to $670 billion, led by the technology and healthcare sectors.
Some of the well-known companies that have a long history of paying dividends are Altria Group, Inc. (NYSE:MO), Enterprise Products Partners L.P. (NYSE:EPD), and Rio Tinto Group (NYSE:RIO). As of February 22, these dividend stocks yield more than 5%, and we’ll go over other high-yielding stocks in our list below.
Our Methodology
We searched for stocks with a dividend yield of more than 5% and chose 10 with long-term growth catalysts, strong business fundamentals, and recent positive analyst ratings.
In addition, we included hedge fund sentiment on each high-yielding dividend stock using Insider Monkey’s Q4 2021 data.
Dividend Stocks With Over 5% Yield
10. International Business Machines Corporation (NYSE:IBM)
Dividend yield as of February 27: 5.28%
Number of Hedge Fund Holders: 44
Tech dividend aristocrat International Business Machines Corporation (NYSE:IBM) offers a dividend yield of 5.28%. The New York-based information technology giant has raised its dividend every year for the past 26 years. International Business Machines Corporation (NYSE:IBM) reported strong Q4 results where its revenue jumped by 6.5% year over year to $16.7 billion. In the fourth quarter of 2021, the cloud computing firm saw revenue growth across all business segments, including software, consulting, infrastructure, and hybrid cloud.
Boston-based investment firm Arrowstreet Capital is International Business Machines Corporation’s (NYSE:IBM) biggest shareholder as of the end of December 2021. The hedge fund owned 3.29 million shares of International Business Machines Corporation (NYSE:IBM) worth $441 million. In Q4 2021, more hedge funds became bullish on the tech dividend aristocrat, bringing the total number of shareholders to 44, up from 41 in Q3.
Here is what St. James Investment Company has to say about International Business Machines Corporation in its Q4 2021 investor letter:
“IBM was not the first company to build computers. The distinction belongs to Sperry-Rand’s subsidiary UNIVAC, which introduced the first commercially successful computers in the early 1950s. In this era, IBM did possess the largest research and development department of the business machines industry and quickly caught up, introducing cost-competitive computers a few years after UNIVAC. By the late 1950s, IBM held the dominant market share in computers. IBM also touted a vastly superior sales organization, which used a sales tactic called “paper machines” (the equivalent of today’s “vaporware”). If a competitor’s product was selling well in a market segment that IBM had yet to penetrate, the company would announce a competing product and start taking orders for the “paper machine” long before it was available.
One cannot overstate how powerful IBM was in the computer industry in the 1950s and 1960s. Every competitor rightly worried that if their product worked too well for too long, it was only a matter of time before an army of IBM salesforce representatives mobilized. In their easily recognizable uniforms of starched white shirts, red ties, and blue suits, IBM marketers marched on their customers and offered a more expensive, but much more defensible, choice. “Nobody gets fired for buying IBM” was a common phrase. Even competitors acknowledged that the company excelled at sales. As a UNIVAC executive once complained, ‘It doesn’t do much good to build a better mousetrap if the other guy selling mousetraps has five times as many salesmen.’” (Click here to see the full text)
9. The Williams Companies, Inc. (NYSE:WMB)
Dividend yield as of February 27: 5.54%
Number of Hedge Fund Holders: 38
Just like Altria Group, Inc. (NYSE:MO) and Enterprise Products Partners L.P. (NYSE:EPD), The Williams Companies, Inc. (NYSE:WMB) also offers a dividend yield of over 5%. The Oklahoma-based crude and natural gas midstream company recently increased its quarterly dividend by 3.7% to $0.425 per share in early February. The Williams Companies, Inc. (NYSE:WMB) is the largest interstate natural gas supplier in the US, with assets in the deepwater Gulf of Mexico, the Rockies, the Pacific Northwest, and the Eastern Seaboard.
According to Insider Monkey’s Q4 13F data, 38 out of 924 funds had stakes in The Williams Companies, Inc. (NYSE:WMB) at the end of December 2021, compared to 40 in the previous quarter. Mason Hawkins’ Southeastern Asset Management is the biggest shareholder of The Williams Companies, Inc. (NYSE:WMB), owning 7.24 million shares of the stock worth $189 million.
On February 15, Mizuho analyst Gabriel Moreen kept his Buy rating on The Williams Companies, Inc. (NYSE:WMB) ahead of the company’s release of Q4 results. Moreen increased his price target for the stock to $33 from $31. The company’s total revenue in 2021 came in at $10.63 billion, up 38% from a year ago. As of February 22, shares of The Williams Companies, Inc. (NYSE:WMB) are up 33% in the past twelve months.
Here is what ClearBridge Investments has to say about The Williams Companies, Inc. in its Q3 2021 investor letter:
“We are meaningfully overweight energy, particularly within North American energy infrastructure. Enbridge and Williams, our two infrastructure holdings, possess crown jewel infrastructure assets. They each deliver meaningful proportions of the overall energy produced and consumed in North America. Their revenues are backed by long-term contracts with high-quality counterparties and have little direct commodity price exposure. Their growth has been driven by the increasing production of North American energy. The advent of unconventional oil and gas production (oil sand and shale) has made North America a low-cost competitor on a global basis. We expect strong North American production to be an enduring feature of global energy supply for decades to come.”
8. Enbridge Inc. (NYSE:ENB)
Dividend yield as of February 27: 6.34%
Number of Hedge Fund Holders: 21
Another high-yielding dividend stock from the energy sector is Enbridge Inc. (NYSE:ENB), a Canadian energy infrastructure company. Enbridge Inc. (NYSE:ENB) is a good investment option for income investors looking to diversify their portfolio as the energy company has consistently increased its dividend payout over the last 27 years. The Calgary-based company boasts itself as the third-largest natural gas utility in North America, transporting nearly 20% of the US natural gas consumption.
Enbridge Inc. (NYSE:ENB) invested $10 billion in growth projects across its businesses, including the gas transmission and distribution segments, in 2021. Furthermore, the energy infrastructure firm completed its $3 billion acquisition of logistics company Moda Midstream Operating LLC, gaining North America’s largest export terminal in Texas. On February 14, TD Securities analyst Linda Ezergailis increased her price target for Enbridge Inc. (NYSE:ENB) to C$59 from C$57, maintaining a Buy rating on the shares. As of the fourth week of February, Enbridge Inc. (NYSE:ENB) stock gained 8% in the past six months.
GQG Partners initiated a $380 million stake in Enbridge Inc. (NYSE:ENB) in the fourth quarter of 2021, making the hedge fund firm the company’s largest shareholder. Overall, 21 funds of the 924 elite funds tracked by Insider Monkey reported owning stakes in Enbridge Inc. (NYSE:ENB) at the end of December 2021.
7. Altria Group, Inc. (NYSE:MO)
Dividend yield as of February 27: 6.99%
Number of Hedge Fund Holders: 39
Altria Group, Inc. (NYSE:MO), one of the biggest tobacco companies in the world, offers a dividend yield of 6.99%. The Virginia-based Marlboro cigarette manufacturer paid $1.7 billion in dividends in the fourth quarter of 2021 and $6.4 billion for the full year. Altria Group, Inc. (NYSE:MO) is known as a dividend aristocrat and dividend king for consistently increasing its dividend over the last 52 years.
At the end of the fourth quarter of 2021, 39 hedge funds in the database of Insider Monkey held stakes worth $1.06 billion in Altria Group, Inc. (NYSE:MO), compared to 45 in the preceding quarter worth $829 million.
Altria Group, Inc. (NYSE:MO) reported $6.3 billion in revenue in the fourth quarter of 2021, bringing its total revenue for the year to $26 billion.
6. Ares Capital Corporation (NASDAQ:ARCC)
Dividend yield as of February 27: 7.72%
Number of Hedge Fund Holders: 15
Ares Capital Corporation (NASDAQ:ARCC), a business development company that invests in middle-market companies in the United States and Canada, is one of the dividend stocks in the financial services sector that yields over 5%. Ares Capital Corporation (NASDAQ:ARCC) increased its quarterly dividend by 2.4% in February to $0.42 per share, payable on March 31 to shareholders of record on March 15. The New York-based lender also declared additional dividends totaling $0.12 per share for 2022, to be paid in four consecutive quarterly payments of $0.03 per share per quarter.
On February 10, investment banking firm Raymond James kept its Outperform rating on Ares Capital Corporation (NASDAQ:ARCC) and increased its price target for the stock to $23 from $22. Hedge funds were also optimistic about the financial stock. By the end of December 2021, 15 elite funds held a stake in Ares Capital Corporation (NASDAQ:ARCC), up from 12 in the previous quarter.
In addition to Altria Group, Inc. (NYSE:MO) and Enterprise Products Partners L.P. (NYSE:EPD), Ares Capital Corporation (NASDAQ:ARCC) is a good investment option that offers a dividend yield of more than 5%.
Click to continue reading and see 5 Dividend Stocks With Over 5% Yield.
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Disclosure: None. 10 Dividend Stocks With Over 5% Yield is originally published on Insider Monkey.
