In this article, we discuss 10 under-the-radar dividend stocks to buy now. You can skip our detailed analysis of dividend stocks and their importance in the current economic environment, and go directly to the 5 Under-The-Radar Dividend Stocks to Buy Now.
As inflation in the U.S. reaches its highest levels in decades, investors are being drawn towards dividend stocks to generate stable income. Dividends have significantly contributed to the broader market’s total returns, outperforming their peers during times of financial volatility. According to a report by CNBC, companies paying dividends delivered a 9.6% annual average return from 1973 to 2021, compared with an 8.2% return for the S&P 500 during this period.
Dave Sekera, a chief U.S. market strategist at Morningstar, said in a CNBC interview that dividend-paying companies offer great investment opportunities during inflationary and recessionary periods, as they are mature companies that produce services and products that are needed during those periods. He further mentioned that as dividend companies have higher levels of free cash flow, they can benefit investors in times of financial clampdown. This stance was also supported by Dimensional Fund Advisors’ research, which shows that high dividend-payers returned an annual average return of 11.8% from 1928 to 2021, while companies with low dividends delivered an 11% return on average.
Dividend stocks like Exxon Mobil Corporation (NYSE:XOM), The Coca-Cola Company (NYSE:KO), and Johnson & Johnson (NYSE:JNJ) are some of the major dividend stocks that are gaining ground among investors as these stocks are outperforming the broader market in 2022 and have shown resilience during previous inflationary periods. In this article, we will discuss some under-the-radar dividend stocks to further emphasize the importance of dividend investing.
Source: pexels
Our Methodology:
The current environment has shifted investors’ attention to popular and well-known dividend stocks that have raised their dividends for decades. The companies mentioned below are comparatively lesser known to investors but offer great investment opportunities. The companies have strong balance sheets, solid fundamentals, and stable dividend histories. They are ranked according to their stocks’ dividend yields, as recorded on August 24.
10 Under-The-Radar Dividend Stocks to Buy Now
10. Albemarle Corporation (NYSE:ALB)
Dividend Yield as of August 24: 0.56%
Albemarle Corporation (NYSE:ALB) is a North Carolina-based chemical manufacturing company that also provides lithium for electric vehicle batteries. The company reported strong Q2 2022 results, posting revenue of $1.48 billion which represented 91.2% year-over-year growth. At the end of June, the company had $931 million available in cash and cash equivalents, up from nearly $440 million at the end of December. For FY22, Albemarle Corporation (NYSE:ALB) expects its net sales to fall between $7.1 billion to $7.5 billion.
Albemarle Corporation (NYSE:ALB) pays a quarterly dividend of $0.395 per share, raising it by 1% in February. This was the company’s 27th consecutive year of dividend growth. As of August 24, the stock’s dividend yield came in at 0.56%.
Following the company’s impressive second-quarter results, Deutsche Bank raised its price target on Albemarle Corporation (NYSE:ALB) to $270 from $255 and maintained a ‘Buy’ rating on the shares.
At the end of Q2 2022, 39 hedge funds tracked by Insider Monkey owned stakes in Albemarle Corporation (NYSE:ALB), down from 44 a quarter earlier. The collective value of these stakes was over $600 million. Marshall Wace LLP was the company’s largest stakeholder in Q2.
In addition to popular dividend stocks like Exxon Mobil Corporation (NYSE:XOM), The Coca-Cola Company (NYSE:KO), and Johnson & Johnson (NYSE:JNJ), ALB could also be a good addition to dividend portfolios because of its solid fundamentals.
9. Brown & Brown, Inc. (NYSE:BRO)
Dividend Yield as of August 24: 0.63%
Brown & Brown, Inc. (NYSE:BRO) offers a comprehensive range of insurance services and solutions to general businesses, institutions, and individual consumers. Goldman Sachs recently presented a positive outlook on insurance brokers, believing that the current environment will strengthen this group. The firm initiated coverage of Brown & Brown, Inc. (NYSE:BRO) in July with a $67 price target and ‘Neutral’ rating.
In Q2 2022, Brown & Brown, Inc. (NYSE:BRO)’s revenue experienced a 15.5% year-over-year growth to $840 million. The company had $2.38 billion in cash and cash equivalents at the end of June, up significantly from $693 million at the end of December. Its free cash flow for the quarter stood at $234 million, compared with $93.6 million in the previous quarter.
Brown & Brown, Inc. (NYSE:BRO) holds a strong dividend growth track record, raising its payouts consistently for the past 28 years. It currently pays a quarterly dividend of $0.1025 per share, with shares boasting a dividend yield of 0.63% as of August 24.
The number of hedge funds tracked by Insider Monkey owning stakes in Brown & Brown, Inc. (NYSE:BRO) grew to 29 in Q2 2022, from 24 in the previous quarter. The total value of those stakes came to around $1.4 billion.
8. Brown-Forman Corporation (NYSE:BF-B)
Dividend Yield as of August 24: 0.98%
Brown-Forman Corporation (NYSE:BF-B) is one of the world’s leading wine and spirits producers and owns the biggest selling American whiskey, Jack Daniels. The company was a part of 28 hedge funds’ portfolios in Q2 2022, according to Insider Monkey’s data. The stakes owned by those hedge funds held a collective value of over $1.5 billion. With over 12.2 million shares, Fundsmith LLP was the leading stakeholder of the Kentucky-based company in Q2.
On July 28, Brown-Forman Corporation (NYSE:BF-B) announced a quarterly dividend of $0.1885 per share, in line with its previous dividend. The company has been making dividend payments for the past 78 years while raising its payouts for 38 consecutive years. As of August 24, the stock’s dividend yield stood at 0.98%.
For its fiscal Q4 2022, Brown-Forman Corporation (NYSE:BF-B) reported revenue of $996 million, up 22.7% from the same period last year. In FY22, the company returned $831 million to stockholders, which included $480 million in special dividends and $351 million in regular dividends.
7. Cintas Corporation (NASDAQ:CTAS)
Dividend Yield as of August 24: 1.07%
Cintas Corporation (NASDAQ:CTAS) is an Ohio-based business services company that provides a wide range of related products. In August, Baird lifted its price target on the stock to $475 with an ‘Outperform’ rating on the shares. The firm mentioned that the company could benefit from its scale which makes its position favorable in the current environment.
On July 26, Cintas Corporation (NASDAQ:CTAS) declared a 21% hike in its quarterly dividend to $1.15 per share. This marked the company’s 39th consecutive year of dividend growth. As of August 24, the stock’s dividend yield was recorded at 1.07%.
In its fiscal Q4 of 2022, Cintas Corporation (NASDAQ:CTAS) grew organic revenue by 12.7%. The company’s revenue for the quarter came in at $2.07 billion, a 12.5% increase from the same period last year. It generated $476 million in free cash flow during the quarter, growing that figure by 15.2% year-over-year. The company’s dividend payments of $98.2 million were well-covered by its FCF.
As of the close of Q2 2022, 32 hedge funds in Insider Monkey’s database owned stakes in Cintas Corporation (NASDAQ:CTAS), the same as in the previous quarter. Those stakes held a collective value of over $1.1 billion.
Cooper Investors mentioned Cintas Corporation (NASDAQ:CTAS) in its Q1 2022 investor letter. Here is what the firm had to say:
“During the quarter the Fund established a position in Cintas Corporation, a market leader in uniform rental services across North America (Mcap $44bn). This service provides workwear for large corporate and government clients, for example managing supply and laundry of uniforms for the nationwide employee base of customers such as Home Depot. (Click here to see full text)
6. Expeditors International of Washington, Inc. (NASDAQ:EXPD)
Dividend Yield as of August 24: 1.26%
Expeditors International of Washington, Inc. (NASDAQ:EXPD) is an American logistics and freight forwarding company. The company has been raising its dividends consistently for the past 28 years. It pays a quarterly dividend of $0.67 per share, with the stock yielding 1.26% as of August 24.
For its Q2 2022, Expeditors International of Washington, Inc. (NASDAQ:EXPD) reported 27.8% year-over-year growth in its revenue to $4.6 billion. The company’s operating income also jumped by 23% to $506 million. It returned $659 million to shareholders in dividends and share repurchases during the quarter.
At the end of June 2022, First Eagle Investment Management owned a stake worth nearly $253 million in Expeditors International of Washington, Inc. (NASDAQ:EXPD), becoming the company’s leading stakeholder. In addition to this, 28 hedge funds tracked by Insider Monkey’s database owned stakes in the Washington-based company, worth $349 million.
EXPD is another dividend stock to consider in the current economic landscape, along with Exxon Mobil Corporation (NYSE:XOM), The Coca-Cola Company (NYSE:KO), and Johnson & Johnson (NYSE:JNJ).
Click to continue reading and see 5 Under-The-Radar Dividend Stocks to Buy Now.
Suggested articles:
- 10 Important Dividend Increases to Watch in August
- 10 Best Blue Chip Dividend Stocks to Buy in August
- Low-Risk Retirement Portfolio: Top 10 Stocks
Disclosure. None. 10 Under-The-Radar Dividend Stocks to Buy Now is originally published on Insider Monkey.
