In this article, we will take a detailed look at the 14 Best High-Yield Dividend Stocks To Buy Now. For a quick overview of such stocks, read our article 5 Best High-Yield Dividend Stocks To Buy Now.
The Federal Reserve has made it clear that it’s eyeing three rate cuts this year. But something about the market makes some analysts and experts think otherwise. The Federal Reserve has not achieved its inflation target so far, the labor market remains strong and economists still need more data to have clarity on inflation-related concerns. In this backdrop, some analysts say it’d be too early for the Fed to pull the trigger and start cutting interest rates. Mark Okada, the co-founder and CEO of Sycamore Tree Capital Partners, recently told CNBC that a “second wave of inflation” is his base case since he believes historically inflation has never experienced a single “peak.” The analyst thinks “usually” there is another “hump down the road” and he thinks “it’s coming.”
Okada said that the PCE (personal consumption expenditures price index) is closer to the Fed’s target than CPI and PCE matters more because PCE is “data” while CPI is “survey.” Okada in the past believed the Fed won’t cut interest rates this year. In his latest interview he yet again said there’s a chance the Fed doesn’t cut interest rates at all this year. But he now thinks that would be an “outlier” case.
But Okada also said the market just doesn’t care about inflation data as he thinks it’s driving on momentum now. Lori Calvasina, RBC Capital Markets head of U.S. equity strategy, while talking to CNBC, also said that investors are now seeing Fed rate cut expectations under a different backdrop. The analyst highlighted GDP growth forecasts which continue to improve by the day. Calvasina said instead of worrying about the Fed not cutting rates because of high inflation, the focal point of the Street should be GDP growth. She also said the worst might be over for the market and we are in a “weird recovery” phase. However, she said we might see a 5% to 10% pullback this year.
Photo by Sharon McCutcheon on Unsplash
Given this uncertainty around rate cuts and the market’s trajectory in the next few weeks and months, dividend stocks could see a rebound in attention from investors. That’s why in this article we decided to take a look at some dividend stocks with high yields. For this article we scanned Insider Monkey’s database of 933 funds and their holdings and picked 14 stocks with over 5% dividend yield that had the highest number of hedge fund investors as of the end of 2023. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
14. OneMain Holdings Inc (NYSE:OMF)
Number of Hedge Fund Investors: 32
Financial services company OneMain Holdings Inc (NYSE:OMF) has a dividend yield of about 7.8%. Last month OneMain Holdings Inc (NYSE:OMF) posted Q4 results. Adjusted EPS in the period came in at $1.39, beating estimates by $0.01. Revenue in the quarter jumped 3.8% year over year to $1.1 billion, beating estimates by $10 million.
As of the end of the fourth quarter of 2023, 32 hedge funds tracked by Insider Monkey had stakes in OneMain Holdings Inc (NYSE:OMF).
Patient Capital Management stated the following regarding OneMain Holdings, Inc. (NYSE:OMF) in its fourth quarter 2023 investor letter:
“OneMain Holdings, Inc. (NYSE:OMF) is a name we have owned for years. It’s a high return, well-managed franchise that has successfully navigated credit cycles for nearly a hundred years. The stock has continued to climb higher with prudent risk management and an 8% dividend yield.”
13. Stellantis NV (NYSE:STLA)
Number of Hedge Fund Investors: 33
Netherlands-based automotive company Stellantis NV (NYSE:STLA) is one of the top dividend stocks to buy according to hedge funds. Insider Monkey’s database of 933 hedge funds and their holdings shows that 33 hedge funds had stakes in Stellantis NV (NYSE:STLA) as of the end of 2023. In February, Stellantis NV (NYSE:STLA) said it plans to launch a 3 billion euros ($3.22 billion) stock buyback program. Stellantis NV (NYSE:STLA) has also proposed a dividend of EUR1.55 per common share, an increase of about 16% from the prior year.
12. UGI Corp (NYSE:UGI)
Number of Hedge Fund Investors: 33
Gas and electric power distribution company UGI Corp (NYSE:UGI) ranks 12th in our list of the best high-yield dividend stocks to buy now according to hedge funds. In January 2024 UGI Corp (NYSE:UGI) posted fiscal first quarter results. Adjusted EPS in the period came in at $1.20, beating estimates by $0.17. Revenue fell 23.2% year over year to $2.12 billion, missing estimates by $420 million.
As of the end of the fourth quarter of 2023, 33 hedge funds out of the 933 funds in Insider Monkey’s database had stakes in UGI Corp (NYSE:UGI).
FPA Queens Road Small Cap Value Fund stated the following regarding UGI Corporation (NYSE:UGI) in its fourth quarter 2023 investor letter:
“UGI Corporation (NYSE:UGI) owns gas utilities and pipelines in Pennsylvania and West Virginia and the largest propane distribution businesses in the United States and Europe. Despite its disparate parts, UGI has increased earnings at a relatively steady high single digit rate historically while distributing excess cash through dividends.24 Shares are down primarily because of the combination of poor execution and too much debt at AmeriGas, UGI’s U.S. propane business. On August 30, 2023 UGI announced a review of strategic alternatives. 25 We believe the company’s stock price is attractive at less than 10x earnings, and we have been incrementally adding to the Fund’s position.”
11. Rio Tinto plc ADR Common Stock (NYSE:RIO)
Number of Hedge Fund Investors: 34
Rio Tinto plc ADR Common Stock (NYSE:RIO) is one of the most famous commodity stocks to buy according to hedge funds. Last month, JPMorgan published a list of its top picks from the STOXX 600 Index (STOXX) so far this year. Rio Tinto plc ADR Common Stock (NYSE:RIO) made it to the list.
As of the end of the fourth quarter of 2023, 34 hedge funds tracked by Insider Monkey had stakes in Rio Tinto plc ADR Common Stock (NYSE:RIO). The most significant stake in Rio Tinto plc ADR Common Stock (NYSE:RIO) is owned by Ken Fisher’s Fisher Asset Management which owns a $1.2 billion stake in Rio Tinto plc ADR Common Stock (NYSE:RIO).
10. Vale SA (NYSE:VALE)
Number of Hedge Fund Investors: 34
Trading at just under $14 as of March 7 market close, Vale SA (NYSE:VALE) is a high-yield dividend stock that is popular among the smart money investors tracked by Insider Monkey. A total of 34 hedge funds had stakes in Vale SA (NYSE:VALE) as of the end of 2023.
In February Vale SA (NYSE:VALE) posted Q4 results. Adjusted EBITDA from continuing operations jumped 35% YoY in the period to $6.7 billion, thanks to strong iron ore prices.
9. Energy Transfer LP Unit (NYSE:ET)
Number of Hedge Fund Investors: 34
Energy Transfer LP Unit (NYSE:ET) is one of the top high-yield dividend stocks to pile into in 2024, according to hedge funds. Of the 933 hedge funds tracked by Insider Monkey, 34 hedge funds had stakes in Energy Transfer LP Unit (NYSE:ET). The most significant stake in the energy company is owned by David Abrams’ Abrams Capital Management which owns a $256 million stake in Energy Transfer LP Unit (NYSE:ET).
Silver Beech Capital made the following regarding Energy Transfer LP (NYSE:ET) in its fourth quarter 2023 investor letter:
Energy Transfer LP (NYSE:ET) owns and operates the largest and most balanced collection of energy infrastructure assets in the United States. ET’s assets include 125,000 miles of oil and natural gas pipelines, export facilities on both the Gulf Coast and East Coast, and more than 1 million barrels per day of natural gas liquid fractionation capacity. ET accounts for 20% of worldwide natural gas liquid exports. Further, ET is uniquely connected to every major hydrocarbon basin in the United States.
By assembling energy infrastructure to gather, process, transport, and store hydrocarbons, ET connects exploration and production companies (“E&Ps”) with downstream end users such as gas stations, utilities, and export facilities. As an end-to-end midstream solution, ET enables its customers to focus on their portion of the value chain without the burden of significant but essential midstream logistics. ET’s services thus add tremendous value to all constituents of the energy marketplace.
Though natural gas is a relatively clean source of fuel, restrictive federal and state regulations and other permissions severely restrict the building of natural gas pipelines and other infrastructure in North America that would help facilitate abundant hydrocarbon production. Pipelines are by far the cheapest and greenest method of transporting hydrocarbons; pipelines reduce emissions from truck transport and reduce congestion on highways, rail, and shipping routes…” (Click here to read the full text)
8. Petroleo Brasileiro ADR Reptg 2 Ord Shs (NYSE:PBR)
Number of Hedge Fund Investors: 36
Petroleo Brasileiro ADR Reptg 2 Ord Shs (NYSE:PBR) is one of the ultra-high dividend-yield stocks out there. However, Petroleo Brasileiro ADR Reptg 2 Ord Shs (NYSE:PBR) recently said it will avoid giving huge payouts as it plans to invest in wind, solar and biofuels projects. The company also revealed that its board authorized 14.2 billion reais ($2.9 billion) in dividends, much lower than analysts’ estimate of $3.7 billion in dividends.
As of the end of the fourth quarter of 2023, 36 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in Petroleo Brasileiro ADR Reptg 2 Ord Shs (NYSE:PBR). The most notable stake in Petroleo Brasileiro ADR Reptg 2 Ord Shs (NYSE:PBR) is owned by Rajiv Jain’s GQG Partners which owns a $3.4 billion stake in Petroleo Brasileiro ADR Reptg 2 Ord Shs (NYSE:PBR).
Fairlight Capital made the following comment about Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) in its Q3 2023 investor letter:
“Throughout the year, we have reviewed thousands of companies, including many in the oil sector. While we are generally cautious about commodity-based businesses where the company lacks control over the price of what it produces, the valuations in several cases have reached extremely compelling levels. For example, Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) and Ecopetrol (EC). Petrobras has distributed dividends of over $2.30 paid this year3 , while Ecopetrol has traded as cheaply as the $9-$10 range (close to our purchase price) and is paying approximately $2.50 in dividends this year.
We factor in the potential cost of FX movements over time, but even under the most pessimistic scenarios the investments should work out well. We initially came across these ideas while looking at South American stocks in general. We saw that many market commentators had expressed concerns that Ecopetrol’s dividends might be halted, especially following the election of Gustavo Petro as president of Colombia in June 2022. Similarly, there have been reservations about the sustainability of Petrobras’s dividend. However, the government owns substantial controlling stakes in these companies and is also a recipient of their dividends. For Ecopetrol, the Colombian government owes money to Ecopetrol due to the Fuel Price Stabilization Fund (FEPC). This fund aims to stabilize fuel prices for Colombian consumers. It bridges the gap between international and national Colombian consumer prices by compensating producers and importers for this price difference. The primary goal is to cushion the impact of global oil price fluctuations on the Colombian market. This is achieved either through cash payment or by forgoing dividend payments due from the government’s stake in these companies. In Ecopetrol’s case, the dividends paid (or those that would be paid to the government) are applied against the outstanding balances…” (Click here to read the full text)
7. Healthpeak Properties Inc. (NYSE:DOC)
Number of Hedge Fund Investors: 36
With about 6.4% dividend yield, California-based REIT Healthpeak Properties Inc. (NYSE:DOC) ranks seventh in our list of the best high-yield dividend stocks to buy according to hedge funds. As of the end of the fourth quarter of 2023, 36 hedge funds had stakes in Healthpeak Properties Inc. (NYSE:DOC).
In February Healthpeak Properties Inc. (NYSE:DOC) posted Q4 results. Adj. FFO in the period came in at $0.46, beating estimates by $0.01.
6. Altria Group Inc (NYSE:MO)
Number of Hedge Fund Investors: 42
With a dividend yield of about 9% and 42 hedge fund investors as of the end of 2023, Altria Group Inc (NYSE:MO) is one of the top high-yield dividend stocks to invest in 2024 according to smart money investors.
Click to continue reading and see the 5 Best High-Yield Dividend Stocks To Buy Now.
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Disclosure. None. 14 Best High-Yield Dividend Stocks To Buy Now was initially published on Insider Monkey.