In this article, we will be taking a look at 10 dividend stocks with over 7% yield. To skip our detailed analysis of dividend investing, you can go directly to see the 5 Dividend Stocks with Over 7% Yield.
With the looming threat of rising interest rates, dividend stocks are becoming the only feasible option for income investors across the globe. Since these stocks also offer shareholders a way to earn passive income while hedging against inflation, they are becoming increasingly popular among investors especially in light of the COVID-19 pandemic.
As such, stocks like Verizon Communications (NYSE:VZ), JPMorgan Chase & Co. (NYSE:JPM), and Johnson & Johnson (NYSE:JNJ), among others, are gaining popularity. Additionally, financial experts such as Daniel Milan, managing partner of Cornerstone Financial Services, are now recommending investors build portfolios with dividend stocks. Milan himself has recommended building portfolios that yield about 3% to 4% or more, with the potential to grow dividends of 5% to 10% annually.
This February the S&P 500 High Yield Dividend Index rose by 2.6% including dividends, according to the Wall Street Journal. In comparison, the broad benchmark brought in a negative total return of 5.8%. Dividend stocks have thus been continuing to outperform non-dividend payers in 2022, with the average dividend stock in the S&P 500 rising by 6.6% compared to non-dividend yielders in January alone. As a result of this outperformance, investors are not only pouring money into individual dividend stocks, but are also investing in funds that buy dividend stocks. In January 2022, a record $7.5 billion was poured into such funds, for instance. This figure was followed by another $2 billion in the first week of February.
Dividend stocks also prove their relative attractiveness in comparison to bond yields. While the benchmark 10-year US Treasury’s yields traded at 1.96% in February, this figure quickly became less attractive for investors when adjusted for future inflation. As a result, real bond yields were brought down to around -0.5%, making dividend stocks the more attractive choice for most income investors.
Photo by Vitaly Taranov on Unsplash
Our Methodology
We have used Insider Monkey’s hedge fund data for the first quarter of 2022 to pick high-yielding dividend stocks that are popular among hedge funds today. The stocks are ranked on the basis of their dividend yields, from the lowest yield to the highest yield. We have also mentioned analyst ratings for the stocks on our list below, ensuring they are mostly positive.
Dividend Stocks with Over 7% Yield
10. Vornado Realty Trust (NYSE:VNO)
Number of Hedge Fund Holders: 24
Dividend Yield: 7.2% as of 9th July
Vornado Realty Trust (NYSE:VNO) is a company operating in the office real estate investment trust industry. The company is a real estate industry leader in sustainability policy. It owns and manages more than 23 million square feet of LEED-certified buildings.
Truist analyst Michael Lewis holds a Buy rating on Vornado Realty Trust (NYSE:VNO) shares as of this June.
In the first quarter of 2022, 24 hedge funds were long Vornado Realty Trust (NYSE:VNO), with a total stake value of $196 million. The largest stakeholder in the company is Redwood Capital Management holding 931,901 shares worth about $42.2 million.
Baron Funds, an asset management firm, mentioned Vornado Realty Trust (NYSE:VNO) in its second quarter of 2021 investor letter. Here’s what they said:
“Vornado Realty Trust: Vornado is a REIT that owns a high-quality portfolio of office and street retail assets concentrated in New York City. As economic activity improves and employees return to work, we expect leasing and occupancy trends to improve. At its recent price of $47, we believe the shares are attractively valued at a 40% discount to our estimate of net asset value of $78 per share.”
Just like Verizon Communications (NYSE:VZ), JPMorgan Chase & Co. (NYSE:JPM), and Johnson & Johnson (NYSE:JNJ), Vornado Realty Trust (NYSE:VNO) is a dividend stock hedge funds are piling into today.
9. PennantPark Investment Corporation (NASDAQ:PNNT)
Number of Hedge Fund Holders: 13
Dividend Yield: 7.4% as of 9th July
PennantPark Investment Corporation (NASDAQ:PNNT) is next on our list of dividend stocks with over 7% yield. It is a business development company and private equity fund specializing in direct and mezzanine investments in middle-market companies.
This February, PennantPark Investment Corporation (NASDAQ:PNNT) initiated a $25 million stock buyback program, to be continued until the end of March 2023. The news was delivered in light of the company’s positive first-quarter results, which proved to be stronger than expected by consensus estimates.
There were 13 hedge funds long PennantPark Investment Corporation (NASDAQ:PNNT) in the first quarter of 2022, with a total stake value of $47.8 million. In the previous quarter, seven hedge funds were long the stock with a total stake value of $21.2 million.
8. Franchise Group, Inc. (NASDAQ:FRG)
Number of Hedge Fund Holders: 21
Dividend Yield: 7.7% as of 9th July
Franchise Group, Inc. (NASDAQ:FRG) is a consumer discretionary company owning and operating franchised and franchisable businesses. The company is based in Delaware, Ohio.
This July, DA Davidson analyst Michael Baker reiterated a Buy rating on Franchise Group, Inc. (NASDAQ:FRG) shares.
Franchise Group, Inc. (NASDAQ:FRG) had 21 hedge funds holding stakes in the stock in the first quarter of 2022, with a total stake value of $179 million. Of these funds, Cannell Capital was the largest stakeholder in the company, holding 808,762 shares worth about $33.5 million.
Like Verizon Communications (NYSE:VZ), JPMorgan Chase & Co. (NYSE:JPM), and Johnson & Johnson (NYSE:JNJ), Franchise Group, Inc. (NASDAQ:FRG) is rising the ranks among dividend stocks in 2022.
7. Pioneer Natural Resources Company (NYSE:PXD)
Number of Hedge Fund Holders: 54
Dividend Yield: 8.01% as of 9th July
Pioneer Natural Resources Company (NYSE:PXD) is an independent oil and gas exploration and production company. The company owns interests in 11 gas processing plants and has reserves of 130 million barrels of oil, 92 million barrels of natural gas liquids, and 462 billion cubic feet of gas. It is one of the top energy dividend stocks with over 7% yield.
Jeanine Wai, a Barclays analyst, holds an Overweight rating on Pioneer Natural Resources Company (NYSE:PXD) shares as of this June.
There were 54 hedge funds long Pioneer Natural Resources Company (NYSE:PXD) in the first quarter of 2022, with a total stake value of $1.04 billion. Of these funds, the largest stakeholder in the company was Abrams Bison Investments, holding 598,000 shares worth approximately $149.5 million.
Carillon Tower Advisers, an investment management firm, mentioned Pioneer Natural Resources Company (NYSE:PXD) in its first quarter of 2022 investor letter. Here’s what they said:
“Pioneer Natural Resources (NYSE:PXD) performed well in a strong energy sector. Pioneer stood out recently with a pledge to return a large majority of free cash flow to shareowners through dividends and stock buybacks, and ended hedging to give shareowners more earnings and dividend potential should oil and gas prices continue to rise.”
6. Southern Copper Corporation (NYSE:SCCO)
Number of Hedge Fund Holders: 16
Dividend Yield: 8.1% as of 9th July
Southern Copper Corporation (NYSE:SCCO) is a materials company engaged in mining, exploring, smelting, and refining copper and other minerals in Peru, Mexico, Argentina, Ecuador, and Chile.
Matthew Murphy, an analyst at Barclays, holds an Equal Weight rating on Southern Copper Corporation (NYSE:SCCO) shares as of this June.
There were 16 hedge funds holding stakes in Southern Copper Corporation (NYSE:SCCO) in the first quarter of 2022, and 19 hedge funds long the stock in the previous quarter. Their total stake values were $406 million and $440 million respectively.
Southern Copper Corporation (NYSE:SCCO) is a dependable dividend stock pick this year, just like Verizon Communications (NYSE:VZ), JPMorgan Chase & Co. (NYSE:JPM), and Johnson & Johnson (NYSE:JNJ).
Click to continue reading and see the 5 Dividend Stocks with Over 7% Yield.
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Disclosure: None. 10 Dividend Stocks with Over 7% Yield is originally published on Insider Monkey.
