In this article, we discuss 10 Dow Jones dividend stocks with over 1% yield. You can skip our detailed analysis of dividend investment and past performance of dividend stocks, and go directly to read 5 Dow Jones Dividend Stocks With Over 1% Yield.
The Dow Jones Industrial Average, or DJIA, is a stock market index of 30 prominent companies listed on US stock exchanges. Some of the major stocks in the index include Microsoft Corporation (NASDAQ:MSFT), The Procter & Gamble Company (NYSE:PG), and McDonald’s Corporation (NYSE:MCD). The current inflationary environment has jolted major US indexes this year as they suffered their sharpest decline in over 50 years. DJIA is down 15.21% year-to-date and has fallen by 8.69% in the past year, as of the close of September 19.
As inflation reached its 40-year high in 2022, investors are considering dividend stocks to stay afloat in this market condition. Historically, dividend stocks have outperformed their peers in times of financial volatility. In addition to this, dividends have played a significant role in the total return of the broader index in the past. According to a report by CNBC, dividends represented 68% of the S&P 500’s total return since 1988. Another report by Fidelity sheds light on dividend stocks’ performance during inflationary periods. The report mentioned that during the 1940s, 1970s, and 1980s, when the average inflation rate was 5% or above, dividends accounted for 54% of the total return of the S&P 500.
Given the market volatility with the Federal Reserve raising interest rates, stocks could decline if economic data doesn’t meet expectations. Nevertheless, there could be an opportunity for long term investors to buy quality blue chip stocks given the lower valuations.
Further building upon these observations, we will discuss some Dow Jones dividend stocks with over 1% yield.
Photo by Nick Chong on Unsplash
Our Methodology:
We took 10 Dow Jones stocks that had dividend yields of over 1% as of September 18 and we sorted them based on the number of hedge funds in our database that owned shares in the stock at the end of Q2 2022.
10 Dow Jones Dividend Stocks With Over 1% Yield
10. The Travelers Companies, Inc. (NYSE:TRV)
Number of Hedge Fund Holders: 31
Dividend Yield as of September 18: 2.29%
The Travelers Companies, Inc. (NYSE:TRV) is a New York-based insurance company that engages in the provision of commercial and personal property and casualty insurance products and services. The company was added to Dow Jones Industrial Average in 2009 and is the only property casualty insurance company in the index.
In July, Raymond James appreciated the company’s outperformance and also highlighted the improvements in its Business Insurance segment. Given this, the firm upgraded The Travelers Companies, Inc. (NYSE:TRV) to Strong Buy with a $185 price target.
In Q2 2022, The Travelers Companies, Inc. (NYSE:TRV) reported strong earnings, as the company posted revenue of $9.14 billion, which showed a 5% year-over-year growth. The company earned a premium of $8.32 billion, up 9.2% from the same period last year. Its free cash flow for the quarter grew to $1.37 billion, from $1.26 billion in the previous quarter.
The Travelers Companies, Inc. (NYSE:TRV) has been making consistent dividend payments for the past 33 years and has a 16-year run of raising its payouts. It currently pays a quarterly dividend of $0.93 per share, with a dividend yield of 2.29%, as of September 18.
At the end of Q2 2022, 31 hedge funds tracked by Insider Monkey owned stakes in The Travelers Companies, Inc. (NYSE:TRV), down from 37 in the previous quarter. These stakes hold a collective value of over $433.8 million. With over 3 million shares, First Eagle Investment Management owned the largest position in the company in Q2.
Alongside NIKE, Inc. (NYSE:NKE), UnitedHealth Group Incorporated (NYSE:UNH), and Microsoft Corporation (NASDAQ:MSFT), The Travelers Companies, Inc. (NYSE:TRV) is a dividend stock with a dividend yield of over 1% as of September 18 that’s held by many hedge funds in our database as of Q2 2022.
9. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 42
Dividend Yield as of September 18: 2.21%
Honeywell International Inc. (NASDAQ:HON) is an American multinational manufacturing company that specializes in products related to different industries, including aerospace, technology, and performance materials. In Q2 2022, the company reported a strong cash position as its operating cash flow stood at nearly $800 million, up from $36 million in the previous quarter. Its free cash flow came in at $631 million and expects it to fall between $4.7 billion to $5.1 billion in FY22. The company ended the quarter with $8.2 billion in cash and cash equivalents, with total assets amounting to over $62.2 billion.
On July 29, Honeywell International Inc. (NASDAQ:HON) declared a quarterly dividend of $0.98 per share, consistent with its previous dividend. In 2021, the company extended its dividend growth streak to 12 years. The stock’s dividend yield came in at 2.21%, as of September 18.
In July, JPMorgan raised its price target for Honeywell International Inc. (NASDAQ:HON) to $190 with an Overweight rating on the shares, following the company’s solid Q2 earnings beat. In addition to this, the firm also appreciated the company’s improved organic revenue and better segment margins.
As of the close of Q2 2022, 42 hedge funds in Insider Monkey’s database owned stakes in Honeywell International Inc. (NASDAQ:HON), compared with 50 in the previous quarter. These stakes hold a collective value of over $1.02 billion.
8. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 45
Dividend Yield as of September 18: 2.67%
Caterpillar Inc. (NYSE:CAT) is another company on our list of Dow Jones dividend stocks. It specializes in the manufacturing of construction equipment and also sells insurance to customers via a worldwide dealer network. The company is a Dividend Aristocrat as it has been raising its dividends consistently for the past 28 years. It currently pays a quarterly dividend of $1.20 per share, with a dividend yield of 2.67%, as recorded on September 18.
In Q2 2022, Caterpillar Inc. (NYSE:CAT) reported revenue of $14.2 billion, which showed an 11% growth from the same period last year. The company returned $1.7 billion to shareholders through dividends and share repurchases during the quarter. In the first half of the year, it generated $2.5 billion in free cash flows and returned $600 million in dividends, which shows that its FCF is stable to cover its dividend payments.
In August, Baird raised its price target on Caterpillar Inc. (NYSE:CAT) to $224 with an Outperform rating on the shares, highlighting the company’s competitive advantage in the mining space.
At the end of June 2022, 45 hedge funds tracked by Insider Monkey owned stakes in Caterpillar Inc. (NYSE:CAT), compared with 54 in the previous quarter. These stakes are collectively valued at over $3.25 billion. Fisher Asset Management was the company’s leading stakeholder in Q2, owning shares worth over $1.3 billion.
Diamond Hill Capital mentioned Caterpillar Inc. (NYSE:CAT) in its Q1 2022 investor letter. Here is what the firm had to say:
“We also initiated a position in Caterpillar (NYSE:CAT), one of the world’s leading manufacturers of construction and mining equipment. It’s a company we know well, as we have owned it in our large cap portfolio for quite some time. Recent share price weakness provided an opportunity for us to add it to our large cap concentrated portfolio at an attractive discount to our estimate of intrinsic value. We believe Caterpillar stands to benefit from increased capital investment supported by a healthier/recovering end market environment, particularly in construction and mining.”
7. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 50
Dividend Yield as of September 18: 2.17%
McDonald’s Corporation (NYSE:MCD) is an American multinational fast food chain and is the leading global food service retailer. In September, Piper Sandler raised its price target on the stock to $270 with an Overweight rating on the shares, appreciating the growth in its comparable sales and its performance in the recent quarter.
In Q2 2022, McDonald’s Corporation (NYSE:MCD) reported a 9.7% growth in global comparable sales and a 3.7% growth in its US comparable sales. The company’s digital systemwide sales exceeded $6 billion for the quarter and its systemwide sales grew by 4%. In addition to this, it generated $618 million in operating cash flow and $180.2 million in free cash flow during the quarter.
McDonald’s Corporation (NYSE:MCD) currently pays a quarterly dividend of $1.38 per share, with a dividend yield of 2.17%, as of September 18. The company started paying dividends in 1976 and has raised its payouts every year since then.
As of the end of Q2 2022, 50 hedge funds tracked by Insider Monkey owned stakes in McDonald’s Corporation (NYSE:MCD), down from 58 in the previous quarter. These stakes hold a consolidated value of over $2.3 billion.
6. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 67
Dividend Yield as of September 18: 1.68%
Walmart Inc. (NYSE:WMT) is an American multinational retail corporation that operates a chain of grocery stores in the US. The company’s revenue in Q2 2022 saw an 8.2% year-over-year growth at $152.6 billion and its comparable sales in the US also grew by 6.5%. Its global advertising business grew by nearly 30% and its international sales amounted to over $24.4 billion. The company’s operating cash flow for the quarter stood at nearly $13 billion and its free cash flow came in at over $9 billion.
Walmart Inc. (NYSE:WMT) holds one of the longest dividend growth track records in the market, raising its payouts consistently for the past 49 years. Currently, it pays a quarterly dividend of $0.56 per share and has a yield of 1.68%, as recorded on September 18. The company is a prominent Dow Jones dividend stock alongside Microsoft Corporation (NASDAQ:MSFT), The Procter & Gamble Company (NYSE:PG), and McDonald’s Corporation (NYSE:MCD).
In September, KeyBanc initiated its coverage of Walmart Inc. (NYSE:WMT) with an Outperform rating and a $155 price target. The firm highlighted the company’s defensive growth, market share gains, and margin recovery to normal levels.
The number of hedge funds tracked by Insider Monkey owning stakes in Walmart Inc. (NYSE:WMT) grew to 67 in Q2 2022, from 60 in the previous quarter. The collective value of these stakes came in at over $3.78 billion. Rajiv Jain and Ray Dalio were some of the company’s major stakeholders in Q2.
Like Walmart Inc. (NYSE:WMT), NIKE, Inc. (NYSE:NKE), UnitedHealth Group Incorporated (NYSE:UNH), and Microsoft Corporation (NASDAQ:MSFT) are Dow Jones stocks with dividend yields of over 1% as of September 18 that are also widely held by many hedge funds in our database as of Q2 2022.
Click to continue reading and see 5 Dow Jones Dividend Stocks With Over 1% Yield.
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Disclosure. None. 10 Dow Jones Dividend Stocks With Over 1% Yield is originally published on Insider Monkey.
