13 Value Stocks to Buy With High Dividend Yields

Published on April 27, 2023 at 11:23 am by Vardah Gill in Dividend Stocks, Hedge Funds, News

In this article, we discuss 13 value stocks to buy with high dividend yields. You can skip our detailed analysis of value and dividend stocks and their performance in the past, and go directly to read 5 Value Stocks to Buy With High Dividend Yields.

Value stocks trade at a price lower than their intrinsic or true value. These stocks are typically associated with companies that have solid fundamentals but are currently out of favor with investors, resulting in lower stock prices relative to their earnings, assets, and other metrics. Historically, growth stocks have beaten value stocks for the most part, however, value investment strategy has proven to be successful over the long term. Bank of America estimated that value investing has returned 1,344,600% since 1926, whereas growth stocks delivered a 626,000% return during the same period.

The historical performance of value and growth stocks has varied over time, with periods of outperformance for each strategy. During years of high inflation, investors turn toward stocks with lower valuations and high dividend yields, which results in the solid performance of value stocks. Last year’s consistent interest rate hikes have given value equities their much-awaited comeback after underperforming growth securities for over a decade. According to a report by T. Rowe Price, the MSCI World Value Index outperformed its growth counterpart by over 20 percentage points last year. The report also mentioned that periods of high-interest rates create broader earnings growth in equity markets, resulting in a strong performance of value stocks.

In one of our articles titled 11 Best Undervalued Dividend Stocks to Buy Now, we reported that value stocks surpassed growth equities by 18 percentage points in the first 10 months of 2022.

Another report by Schroders revealed that periods of economic slowdown bode well for value stocks in the past. The asset management company gave a positive outlook on value investing and mentioned that value equities will outperform the broader market by 11.8% cumulatively over the next three years.

Dividend stocks are also grabbing investors’ attention in addition to value stocks. Some of the best dividend stocks such as The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG) are popular because these companies have rewarded shareholders with decades of dividend growth and have strong cash flows.

Image by Sergei Tokmakov Terms.Law from Pixabay

Our Methodology:

For this list, we used the Finviz stock screener to identify dividend stocks with yields above 7%, as of April 26. From the resultant list, we shortlisted 13 stocks with P/E ratios less than 15, which means that they are traded below their intrinsic value. We also measured hedge fund sentiment around each stock as per Insider Monkey’s database of Q4 2022. The stocks are ranked in descending order of their P/E ratios, as of April 26.

Value Stocks to Buy With High Dividend Yields

13. Altria Group, Inc. (NYSE:MO)

P/E Ratio as of April 26: 14.7

Dividend Yield as of April 26: 8.02%

Altria Group, Inc. (NYSE:MO) is a Virginia-based tobacco company that also specializes in the production of cigarettes and related products. The company reported mixed results in its first quarter of 2023, with revenue of $4.76 billion, which fell by 1.2% from the same period last year. However, its cash position remained strong during the quarter as it returned $1.7 billion to shareholders in dividends.

In April, Stifel resumed its coverage on Altria Group, Inc. (NYSE:MO) with a Buy rating and a $52 price target, highlighting the stock’s valuation. The firm also appreciated the company’s earnings and investments in smoke-free developments.

Altria Group, Inc. (NYSE:MO) is one of the best dividend stocks on our list as it has raised its dividends for 53 years in a row. The company holds a long dividend growth track record like The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG). It currently pays a quarterly dividend of $0.94 per share for a dividend yield of 8.02%, as of April 26.

At the end of December 2022, 45 hedge funds tracked by Insider Monkey reported having stakes in Altria Group, Inc. (NYSE:MO), with a collective value of over $1.8 billion.

Broyhill Asset Management mentioned Altria Group, Inc. (NYSE:MO) in its Q4 2022 investor letter. Here is what the firm has to say:

“We rebalanced our tobacco exposure during the year, reducing our investment in Altria Group, Inc. (NYSE:MO) as the future of the company’s combustible cigarette business became increasingly questionable given pending US legislation and a lackluster portfolio of reduced risk products. We reinvested the proceeds in Philip Morris so that relative position sizing is more consistent with our increased conviction.”

12. Magellan Midstream Partners, L.P. (NYSE:MMP)

P/E Ratio as of April 26: 13.5

Dividend Yield as of April 26: 7.56%

Magellan Midstream Partners, L.P. (NYSE:MMP) is a Tulsa-based publicly-traded partnership and pipeline transportation company. The company currently pays a quarterly dividend of $1.0475 per share for a dividend yield of 7.56%, as of April 26. It maintains a 22-year streak of consistent dividend growth, which makes it one of the best dividend stocks on our list.

Magellan Midstream Partners, L.P. (NYSE:MMP) reported a strong cash position in the fourth quarter of 2022. The company’s distributable cash flow for the quarter came in at $345 million and it generated $324 million in free cash flow.

Barclays lifted its price target on Magellan Midstream Partners, L.P. (NYSE:MMP) to $50 in April with an Overweight rating on the shares, presenting a positive outlook on the midstream and refining sector.

As per Insider Monkey’s Q4 2022 database, 10 hedge funds reported having stakes in Magellan Midstream Partners, L.P. (NYSE:MMP), the same as in the previous quarter. The total value of these stakes is over $24.2 million. With over 1 million shares, First Eagle Investment Management was the company’s leading stakeholder in Q4.

11. Enterprise Products Partners L.P. (NYSE:EPD)

P/E Ratio as of April 26: 10.64

Dividend Yield as of April 26: 7.37%

Enterprise Products Partners L.P. (NYSE:EPD) is a Midstream natural gas and crude oil pipeline company, based in Texas, US. Morgan Stanley raised its price target on the stock to $33 in April with an Equal Weight rating on the shares, appreciating the sector’s stability during inflationary periods.

In FY22, Enterprise Products Partners L.P. (NYSE:EPD) reported a distributable cash flow of $7.8 billion, up from $6.6 billion in 2021. The company’s operating cash flow for the year came in at $8.1 billion and it generated $3 billion in free cash flow. The strong cash generation resulted in the company’s payout ratio of a healthy 71%.

On April 6, Enterprise Products Partners L.P. (NYSE:EPD) declared a quarterly dividend of $0.49 per share, which was consistent with its previous dividend. The company’s dividend growth streak currently stands at 23 years, making it one of the best dividend stocks on our list. The stock’s dividend yield on April 26 came in at 7.37%.

According to Insider Monkey’s data, 24 hedge funds owned investments in Enterprise Products Partners L.P. (NYSE:EPD) in Q4 2022, up from 21 in the previous quarter. The collective worth of these stakes is over $242.4 million.

Legacy Ridge Capital Management, LLC mentioned Enterprise Products Partners L.P. (NYSE:EPD) in its Q4 2022 investor letter. Here is what the firm has to say:

“Enterprise Products Partners L.P. (NYSE:EPD) is still owned in the fund and remains one of our largest positions, as it has been since the partnership was founded. This has not been a great investment. Shares are down about 6% since I first wrote about it. However, we have received $8.93 per share in dividends, which is about 34% of the 2018 share price. So, with dividends included we’ve made 28% cumulatively over 5-years. Still not good, but not an impairment of capital either.

10. British American Tobacco p.l.c. (NYSE:BTI)

P/E Ratio as of April 26: 10.3

Dividend Yield as of April 26: 7.24%

British American Tobacco p.l.c. (NYSE:BTI) is a British multinational tobacco company that also manufactures other nicotine products. The company currently pays a quarterly dividend of $0.735 per share and has a dividend yield of 7.24%, as of April 26. It is one of the best dividend stocks on our list as it has raised its dividends consistently for the past 23 years.

In April, Morgan Stanley maintained an Overweight rating on British American Tobacco p.l.c. (NYSE:BTI) with a 3,5000 GBP price target, appreciating the company’s overall performance.

As of the end of Q4 2022, 19 hedge funds tracked by Insider Monkey reported owning stakes in British American Tobacco p.l.c. (NYSE:BTI), up from 14 in the previous quarter. These stakes have a consolidated value of over $2.1 billion. Among these hedge funds, GQG Partners was the company’s leading stakeholder in Q4.

Distillate Capital Partners LLC mentioned British American Tobacco p.l.c. (NYSE:BTI) in its Q1 2022 investor letter. Here is what the firm has to say:

“Distillate Capital’s International FSV Strategy is less expensive, more fundamentally stable, and less levered than the benchmark All Country World Ex U.S. (ACWI-EX US) Index.The largest new position is British American Tobacco (NYSE:BTI), which was not owned previously due to leverage, but now passes that threshold and offers an 11% free cash flow to market cap yield.”

9. Energy Transfer LP (NYSE:ET)

P/E Ratio as of April 26: 8.92

Dividend Yield as of April 26: 9.77%

Energy Transfer LP (NYSE:ET) is a Texas-based energy company that is engaged in natural gas and propane pipeline transport. In the fourth quarter of 2022, the company’s distributable cash flow came in at nearly $2 billion, compared with $1.6 billion during the same period last year. Its revenue for the quarter stood at $20.5 billion, which showed a 9.7% growth from the prior-year period.

On April 26, Energy Transfer LP (NYSE:ET) declared a 0.8% hike in its quarterly dividend to $0.3075 per share. This was the company’s sixth consecutive quarter of dividend growth and it also maintains a 5-year streak of raising its payouts. The stock’s dividend yield came in at 9.77%, as of April 26. It is among the best dividend stocks on our list.

In April, Barclays raised its price target on Energy Transfer LP (NYSE:ET) to $16 with an Overweight rating on the shares, appreciating the sector’s performance in high inflationary periods.

The number of hedge funds tracked by Insider Monkey owning stakes in Energy Transfer LP (NYSE:ET) grew to 38 in Q4 2022, from 33 in the previous quarter. These stakes have a consolidated value of over $613.4 million. With over 17.8 million shares, Abrams Capital Management was the company’s leading stakeholder in Q4.

8. Pioneer Natural Resources Company (NYSE:PXD)

P/E Ratio as of April 26: 7.09

Dividend Yield as of April 26: 12.35%

Pioneer Natural Resources Company (NYSE:PXD) is an American independent oil and natural gas exploration and production company. Susquehanna raised its price target on the stock in April to $278 with a Positive rating on the shares. The firm updated its estimates on Exploration & Production sector.

Pioneer Natural Resources Company (NYSE:PXD) currently pays a quarterly dividend of $3.34 per share and has a dividend yield of 12.35%, as of April 26. The company returned $8 billion to shareholders in dividends during FY22, which makes it one of the best dividend stocks on our list.

At the end of Q4 2022, 55 hedge funds tracked by Insider Monkey were long Pioneer Natural Resources Company (NYSE:PXD), up from 49 in the previous quarter. The stakes owned by these hedge funds have a collective value of nearly $842 million.

TimesSquare Capital Management mentioned Pioneer Natural Resources Company (NYSE:PXD) in its Q4 2022 investor letter. Here is what the firm has to say:

“Better was the 8% surge from Pioneer Natural Resources Company (NYSE:PXD), an exploration and production company with operations in Texas. They reported a slight beat to production estimates with other metrics within their guidance range. The company continued with its aggressive capital return program inclusive of a sizable quarterly dividend and share repurchases. Management announced a shift to its drilling plans by focusing on acreage with higher expected returns.”

7. Arbor Realty Trust, Inc. (NYSE:ABR)

P/E Ratio as of April 26: 6.29

Dividend Yield as of April 26: 15.24%

A New York-based real estate investment trust company, Arbor Realty Trust, Inc. (NYSE:ABR) is next on our list of the best dividend stocks. The company has been raising its dividends consistently for the past 10 years. It currently pays a quarterly dividend of $0.40 per share and has a dividend yield of 15.24%, as of April 26.

At the end of December 2022, Arbor Realty Trust, Inc. (NYSE:ABR) reported $534.3 million in cash and cash equivalents, up from $404.5 million during the same period last year. The company’s revenue for the fourth quarter of 2022 came in at $113 million, up 48% from the prior-year period.

Of the 943 hedge funds tracked by Insider Monkey at the end of Q4 2022, 17 funds owned stakes in Arbor Realty Trust, Inc. (NYSE:ABR), up from 13 a quarter earlier. These stakes are collectively valued at over $68.5 million.

Devon Energy Corporation (NYSE:DVN)

P/E Ratio as of April 26: 5.70

Dividend Yield as of April 26: 9.73%

Devon Energy Corporation (NYSE:DVN) is an American energy company that is involved in the exploration of hydrocarbons. The company offers a quarterly dividend of $0.20 per share and has a dividend yield of 9.73%, as of April 26. It can be added to dividend portfolios alongside some of the best dividend stocks such as The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG).

At the end of December 2022, 55 hedge funds owned stakes in Devon Energy Corporation (NYSE:DVN), up from 51 in the previous quarter, according to Insider Monkey’s data. The stakes are valued at $823.5 million collectively.

GoodHaven Capital Management mentioned Devon Energy Corporation (NYSE:DVN) in its Q2 2022 investor letter. Here is what the firm has to say:

“Our biggest dollar gainer within this period was Devon Energy Corporation (NYSE:DVN), a position which emanated from a takeover in early 2021 of our long time holding WPX Energy. We are sitting on a material (unrealized) gain from our cost and are now receiving material dividends thanks to Devon’s thoughtful fixed/variable dividend policy. Energy is now a hot sector for investors but we have had a material exposure for a long time. We remember a bit too well $40 oil, NEGATIVELY PRICED front-month oil contract, and what it’s like to own a company with leverage and negative free cash flow during such periods. Our desire to have our biggest portfolio exposures be high return, growing, reasonably predictable and moderately levered companies lead us to reduce our Devon exposure in the past. When the recent facts and circumstances for the industry changed and appeared supportive of healthy oil prices, we decided to maintain a sizable holding and more recently added to the position. At Devon’s Q1 dividend rate, which is mostly variable in nature, the shares now yield approximately 10% and our yield on our average cost is materially higher. In addition, we maintain additional energy exposure through our long-term (and successful) holding in Hess Midstream and less directly through TerraVest and Berkshire Hathaway’s energy investments.”

Click to continue reading and see 5 Value Stocks to Buy With High Dividend Yields.

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Published on November 16, 2024 at by Insider Monkey Staff

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