In this article, we discuss 10 safe dividend stocks with over 5% yield. You can skip our detailed analysis of other dividend stocks, and go directly to read 5 Safe Dividend Stocks With Over 5% Yield.
Since the start of 2022, the turbulent market conditions have forced investors to focus on dividend stocks and avoid growth stocks that were enjoying huge valuations on the basis of future profits. According to a survey conducted by CNBC Delivering Alpha, investors are favoring dividend stocks for the rest of 2022, as they face uncertainty due to rising inflation and interest rates, and unstable geopolitical conditions.
In January, the average dividend-paying stock in the S&P 500 gained 6.6% more than their non-dividend counterparts. This was the biggest margin recorded in the past 17 years, as reported by Wall Street Journal.
However, companies offering dividends often fail to maintain regular payouts during unstable market conditions because they lack strong balance sheets and other business fundamentals. This was demonstrated during the pandemic of 2020 when dividend stocks saw a decline and dividend cuts amounted to $220 billion globally. As the market rebounded in 2021, dividend payouts found a foothold and reached $1.97 trillion.
As financial markets continue to face tremors worldwide, investors are on the lookout for safe dividend stocks to hedge against rising inflation. In this article, we’ll explore some high-yield dividend but safe dividend stocks such as Altria Group, Inc. (NYSE:MO), Philip Morris International Inc. (NYSE:PM), and Verizon Communications Inc. (NYSE:VZ).
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Our Methodology:
We picked solid companies that have raised their dividends for the at least 5 consecutive years. These dividend stocks are also popular among the 912 elite money managers we track as of Q1.
Safe Dividend Stocks With Over 5% Yield
10. Leggett & Platt, Incorporated (NYSE:LEG)
Dividend Yield as of June 21: 5.10%
Leggett & Platt, Incorporated (NYSE:LEG) is a Missouri-based manufacturing company that designs and produces various home and automobile-related products. In Q1 2022, the company reported a 13% year-over-year growth in its organic sales, while its gross revenue came in at $1.32 billion, up 15% from the same period last year. Moreover, it posted an EPS of $0.79, which beat market consensus by $0.23.
On May 17, Leggett & Platt, Incorporated (NYSE:LEG) announced a quarterly dividend of $0.44 per share, up 5% from its previous dividend. The Dividend King has raised its payout for the past 51 years in a row. As of June 21, the stock’s dividend yield was 5.10%.
In its May investors’ note, Raymond James mentioned Leggett & Platt, Incorporated (NYSE:LEG) and highlighted the slow demand for home durables and global supply chain issues. In view of this, the firm downgraded the stock to Market Perform, without a price target.
At the end of Q1 2022, 15 hedge funds tracked by Insider Monkey owned positions in Leggett & Platt, Incorporated (NYSE:LEG), with stakes valued at roughly $102 million. In the previous quarter, 21 hedge funds held stakes in the company, valued at $136.7 million. Jim Simons’ Renaissance Technologies was the company’s leading shareholder in Q1, with stakes valued at $24.8 million.
In addition to Altria Group, Inc. (NYSE:MO), Philip Morris International Inc. (NYSE:PM), and Verizon Communications Inc. (NYSE:VZ), Leggett & Platt, Incorporated (NYSE:LEG) is also one of the notable dividend stocks with high yield.
9. Philip Morris International Inc. (NYSE:PM)
Dividend Yield as of June 21: 5.10%
Philip Morris International Inc. (NYSE:PM) is a leading multinational tobacco company that specializes in the manufacturing and sales of cigarettes and other smoke-free products. The company has operations in over 180 countries. In its recent Deutsche Bank Global Consumer Conference, the management stated that it expects the company’s core business to improve in the second quarter, as it is all set to launch the disposable e-vapor product. The stock is up 2.98% year-to-date, as of June 21’s close.
In Q1 2022, Philip Morris International Inc. (NYSE:PM) reported revenue of $7.75 billion, surpassing estimates by $320 million. Smoke-free products accounted for 31.2% of the gross revenue. In April, BofA appreciated the underlying business of Philip Morris International Inc. (NYSE:PM) and expects it to work through temporary cost pressures imposed due to the Russia-Ukraine situation. The firm raised its price target on the stock to $117, with a Buy rating on the shares.
On June 17, Philip Morris International Inc. (NYSE:PM) declared a quarterly payout of $1.25 per share, consistent with the previous dividend. The company has been raising its dividend every year since its IPO in 2008. The stock’s dividend yield stood at 5.10% on June 21.
As per Insider Monkey’s database for Q1, 55 hedge funds owned stakes in Philip Morris International Inc. (NYSE:PM), compared with 47 a quarter earlier. The collective value of these stakes is over $6.6 billion.
Broyhill Asset Management mentioned Philip Morris International Inc. (NYSE:PM) in its Q2 2021 investor letter. Here is what the firm has to say:
“Philip Morris (PM) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 23%. We shared our thoughts on these regulations during the quarter, which are available here.
‘PM Valuation. PM is up ~ 15% YTD and would have the most to gain under a nicotine cap. A cap would likely accelerate conversion to iQOS, which is 100% incremental for PM (PM also has zero exposure to combustible cigarettes in the U.S. and licenses its IQOS product for MO to distribute domestically). As such, the decline in PM was much more muted, with the stock hitting new 52 week highs a day after the Biden headline, driven by yesterday’s earnings release. It didn’t take long for investors to shift their attention back to fundamentals and the fundamentals here are best in class. In short, results beat estimates across the board (a recurring theme here), and management raised guidance for the full year (another recurring theme). IQOS continued to deliver impressive growth, recording continued market share gains on the heels of continued user acquisition growth, up 1.5M to 19.1M total users. Importantly, IQOS now represents nearly 30% of PM net revenues (management expects “smoke-free” products to represent more than half of their business by 2025, which should make the ESG folks happy), which is driving top-line growth and margin expansion. Hard to believe that they have created a product with higher margins than combustible cigarettes!! We expect PM operating margins to increase by 100bps – 200bps annually as IQOS continues to gain share. The stock trades at ~ 15x today or 2/3 of the market’s multiple for a business likely to generate $35B in cash flow – or 25% of the market cap – in just the next three years. Over the last decade, shares have traded at an average multiple of 18x and within a range of ~ 14x – 22x (+/-1 standard deviation). The stock yields 5.1% at the current price, and we expect management to resume share purchases in the back half of this year.’”
8. Verizon Communications Inc. (NYSE:VZ)
Dividend Yield as of June 21: 5.22%
Verizon Communications Inc. (NYSE:VZ) is one of the leading providers of technology, communications, and entertainment products. On June 15, the company announced its collaboration with Mastercard and First National Bank of Omaha to launch credit card services for small business owners that would enhance the global payments system. The stock gained 1.24% in the past month, as of June 21.
According to Insider Monkey’s Q1 database, Verizon Communications Inc. (NYSE:VZ) remained popular among elite funds, becoming a part of 69 hedge fund portfolios. In comparison, 63 hedge funds owned stakes in the New York-based company in the previous quarter. The consolidated value of stakes held by 69 funds stood at over $4.1 billion. Fisher Asset Management was the company’s leading stakeholder in Q1.
In May, LightShed Partners initiated its coverage of Verizon Communications Inc. (NYSE:VZ) with a Neutral rating, highlighting the stock’s fair valuation at its current share price. In Q1 2022, the company’s revenue fell in line with Street estimates, with its EPS and revenue standing at $1.35 and $33.6 billion, respectively. Moreover, Verizon Communications Inc. (NYSE:VZ) also reported a total of 229,000 broadband additions, the best result in over a decade.
Verizon Communications Inc. (NYSE:VZ) currently offers a quarterly dividend of $0.64 per share, with a dividend yield of 5.22%, as of June 21. The company has been raising its dividends consistently for the past 14 years, which makes it one of the safest dividend stocks.
Weitz Investment Management mentioned Verizon Communications Inc. (NYSE:VZ) in its Q4 2021 investor letter. Here is what the firm had to say:
“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”
7. Universal Corporation (NYSE:UVV)
Dividend Yield as of June 21: 5.52%
Universal Corporation (NYSE:UVV) is a leading tobacco merchant that processes and supplies leaf tobacco and plant-based ingredients worldwide. In 2021, the company reported revenue of $2.1 billion, up 6.1% from the same period last year. However, its operating income for the Tobacco Operations segment fell by $11.1 million to $157.8 million.
On May 25, Universal Corporation (NYSE:UVV) announced a 1.3% hike in its quarterly dividend to $0.79 per share. This marked the company’s 52nd consecutive year of dividend growth. Though the company raises its dividends by a comparatively smaller percentage, its high yield makes it an appealing option for income investors. As of June 21, the stock’s dividend yield came in at 5.52%.
At the end of Q1 2022, 10 hedge funds tracked by Insider Monkey were bullish on Universal Corporation (NYSE:UVV), up from 7 in the previous quarter. These stakes hold a collective value of $85.6 million, compared with $79.3 million worth of stakes held by hedge funds in Q4 2021. With 890,281 UVV shares, Pzena Investment Management held the largest position in the Virginia-based company in Q1.
6. Enbridge Inc. (NYSE:ENB)
Dividend Yield as of June 21: 6.51%
Enbridge Inc. (NYSE:ENB) is a Canada-based multinational pipeline company with an extensive delivery network of natural gas, crude oil, and renewable energy. In May, the company announced the development of a low-carbon hydrogen and ammonia production facility in Texas that would supply low-carbon hydrogen and ammonia to keep up with the global demand. Since the start of 2022, the stock gained 8.40%, as of the close of June 21.
Enbridge Inc. (NYSE:ENB) has been a dividend payer for the past 67 years and maintains a 27-year track record of dividend growth. In the past five years, the company has raised its dividend at a CAGR of 9.5%, coming through as one of the safest dividend stocks. Currently, the company offers a quarterly payout of C$0.86, with a yield of 6.51%, as of June 21.
In the first quarter of 2022, Enbridge Inc. (NYSE:ENB) reported the transportation of 3 million bbl/day on its Mainline system, up from 2.75 million bbl/day in the same period last year. Moreover, its distributable cash flow stood at C$3.07 billion, increasing from C$1.37 billion a quarter earlier. Appreciating the company’s strong quarterly earnings, Wall Street analysts presented a positive stance on Enbridge Inc. (NYSE:ENB). In May, both National Bank and RBC Capital raised their price targets on the stock to C$60 and C$65, respectively.
As per Insider Monkey’s database, 24 hedge funds owned stakes in Enbridge Inc. (NYSE:ENB), up from 21 in the previous quarter. The consolidated value of these stakes is nearly $2.4 billion, growing significantly from $550.2 million worth of stakes owned by hedge funds a quarter earlier.
Like Altria Group, Inc. (NYSE:MO), Philip Morris International Inc. (NYSE:PM), and Verizon Communications Inc. (NYSE:VZ), Enbridge Inc. (NYSE:ENB) offers stable dividends to shareholders.
ClearBridge Investments mentioned Enbridge Inc. (NYSE:ENB) in its Q3 2021 investor letter. Here is what the firm has to say:
“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.”
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Disclosure. None. 10 Safe Dividend Stocks With Over 5% Yield is originally published on Insider Monkey.
