15 Dividend Stocks People Buy for Early Retirement

Published on September 15, 2021 at 8:49 am by Fatima Farooq in Hedge Funds, News

In this article, we will be taking a look at 15 dividend stocks people buy for early retirement. To skip our detailed analysis of dividend investing, you can go directly to see the 5 Dividend Stocks People Buy for Early Retirement.

Investors looking at dividend stocks are typically looking to set up a passive income stream for a number of reasons. Some of the most typical reasons for investing in dividend stocks like Chevron Corporation (NYSE: CVX), AbbVie Inc. (NYSE: ABBV), Johnson & Johnson (NYSE: JNJ), and The Procter & Gamble Company (NYSE: PG) are to either meeting end-of-the-month expenses, or saving for a comfortable retirement. In either case, investors would be looking for ways to get paid to invest, either through dividend stocks, or, for instance, from capital gains. The first option tends to stand out as the more attractive one for a number of reasons, which we will now look at.

According to Fidelity, for instance, the capital-gain potential of any stock is directly reliant upon, and influenced by, what the market does each year. However, dividend payments remain consistent regardless or whether the market itself is up or down. Another reason noted is the fact that dividends tend to act as effective hedges against inflation, and are thus safer, although not entirely safe, investment options available to investors. These stocks also accelerate investment paybacks and are typically good to have on investment portfolios especially if one is looking for a way to generate higher income.

To justify all the claims made so far, we merely need to take a look at investor attitudes towards dividend stocks at present. According to a Reuters article from this July, for instance, investors are readily being pulled towards dividend stocks as concerns about inflation and the stagnant Treasury yield prevailed. The ProShares S&P Dividend Aristocrats ETF was up about 14.3% as of July 2021, while the S&P Dividend Aristocrats Index paid a dividend of about 2.15% at the time the article was written. That’s why investors are being drawn to dividend stocks in 2021. To put things in more perspective, we need only take note of the fact that the dividend yield of the 10-year Treasury was about 1.48% compared to the other value cited above. Finally, as expectations for continued dividend payout increases in the S&P 500 lead to analysts from Goldman Sachs estimating that dividend payouts will grow by about 6% in 2021 and 2022, the case can be made that dividend stocks will continue to retain their popularity in investor circles in the coming years as well.

Investing has become difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Photo by Ovidiu Gruescu on Unsplash

Without further ado, let’s take a look at the 15 dividend stocks people buy for early retirement.

Our Methodology

We have selected dividend stocks with yields going up to 11% and above. Insider Monkey tracks the data of about 873 hedge funds, and we have also used this data to pick dividend stocks that are highly popular among hedge funds today. For each stock we have mentioned its yield and the number of hedge funds holding a stake in it, ranking them from the lowest to the highest yield. Finally, we have used analysts’ ratings to determine which stocks are favorably placed in analyst and investor circles, picking stocks with mostly positive ratings and strong fundamentals.

Dividend Stocks People Buy for Early Retirement

15. Target Corporation (NYSE: TGT)

Number of Hedge Fund Holders: 66
Dividend Yield: 1.5%

Target Corporation (NYSE: TGT) is a consumer discretionary company operating as a general merchandise retailer in the US. The company ranks 15th on our list of dividend stocks people buy for early retirement. It is based in Minneapolis, US.

Tigress Financial, just this August, reiterated its Buy rating on shares of Target Corporation (NYSE: TGT), while also initiating a 12-month target price of $320 on the stock.

In the fiscal second quarter of 2022, Target Corporation (NYSE: TGT) had an EPS of $3.64, beating estimates by $0.11. The company’s revenue was $25.16 billion, up 9.51% year over year and beating estimates by $127.88 million. Target Corporation (NYSE: TGT) has gained 36.37% in the past 6 months and 37.67% year to date.

By the end of the second quarter of 2021, 66 hedge funds out of the 873 tracked by Insider Monkey held stakes in Target Corporation (NYSE: TGT) worth roughly $5.9 billion. This is compared to 60 hedge funds in the previous quarter with a total stake value of approximately $4.8 billion.

Nelson Capital Management, an investment management firm, mentioned Target Corporation (NYSE: TGT) in its second-quarter 2021 investor letter. Here’s what they said:

“We added Target (tkr: TGT) to our consumer staples sector. Target offers a broad array of products in owned and known brand items at affordable prices. Its omnichannel fulfilment centers allow customers to receive their items via in-store pickup, curbside pickup, same-day shipping and regular shipping while simultaneously reducing operating costs. With a significantly lower valuation than peers and a unique operating strategy, Target is an attractive holding.”

14. Walmart Inc. (NYSE: WMT)

Number of Hedge Fund Holders: 70
Dividend Yield: 1.5%

Walmart Inc. (NYSE: WMT), a consumer staples company, operates in retail, wholesale, and other units across the globe. The company ranks 14th on our list of dividend stocks people buy for early retirement and is based in Arkansas, US.

Tigress Financial has also reiterated a Neutral rating on shares of Walmart Inc. (NYSE: WMT) this August, while initiating a 12-month target price of $170 on the stock at the same time.

In the fiscal second quarter of 2022, Walmart Inc. (NYSE: WMT) had an EPS of $1.78, beating estimates by $0.21. The company’s revenue was $139.87 billion, up 2.23% year over year and beating estimates by $3.87 billion. Walmart Inc. (NYSE: WMT) has gained 10.41% in the past 6 months and 6.72% in the past.

By the end of the second quarter of 2021, 70 hedge funds out of the 873 tracked by Insider Monkey held stakes in Walmart Inc. (NYSE: WMT) worth roughly $8.03 billion. This is compared to 58 hedge funds in the previous quarter with a total stake value of approximately $5.9 billion.

13. The Procter & Gamble Company (NYSE: PG)

Number of Hedge Fund Holders: 68
Dividend Yield: 2.4%

The Procter & Gamble Company (NYSE: PG), another consumer staples company, offers household and other products in North and Latin America, Europe, the Asia Pacific, Greater China, India, the Middle East, and Africa. It ranks 13th on our list of dividend stocks people buy for early retirement.

This August, Truist raised the price target on The Procter & Gamble Company (NYSE: PG) from $140 to $145. The firm also reiterated a Hold rating on the stock at the same time.

In the fiscal fourth quarter of 2021, The Procter & Gamble Company (NYSE: PG) had an EPS of $1.13, beating estimates by $0.04. The company’s revenue was $18.95 billion, up 7.05% year over year and also beating estimates by $569.63 million. The Procter & Gamble Company (NYSE: PG) has also gained 13.57% in the past 6 months and 4.58% year to date.

By the end of the second quarter of 2021, 68 hedge funds out of the 873 tracked by Insider Monkey held stakes in The Procter & Gamble Company (NYSE: PG) worth roughly $6.9 billion. This is compared to 70 hedge funds in the previous quarter with a total stake value of approximately $8.5 billion.

12. Johnson & Johnson (NYSE: JNJ)

Number of Hedge Fund Holders: 88
Dividend Yield: 2.5%

Johnson & Johnson (NYSE: JNJ), a healthcare company, researches and manufactures products in the medical field. The company ranks 12th on our list of dividend stocks people buy for early retirement. It is also among the healthcare companies mass-producing effective vaccines against COVID-19 under the Janssen name.

Morgan Stanley holds an Overweight rating on shares of Johnson & Johnson (NYSE: JNJ), as of this May, alongside a price target of $187.

In the second quarter of 2021, Johnson & Johnson (NYSE: JNJ) had an EPS of $2.48, beating estimates by $0.20. The company’s revenue was $23.31 billion, up 27.14% year over year and also beating estimates by $802.29 million. Johnson & Johnson (NYSE: JNJ) has also gained 4.92% in the past 6 months and 6.69% year to date.

By the end of the second quarter of 2021, 88 hedge funds out of the 873 tracked by Insider Monkey held stakes in Johnson & Johnson (NYSE: JNJ) worth roughly $7.1 billion. This is compared to 81 hedge funds in the previous quarter with a total stake value of approximately $6.9 billion.

11. PepsiCo, Inc. (NASDAQ: PEP)

Number of Hedge Fund Holders: 66
Dividend Yield: 2.8%

PepsiCo, Inc. (NASDAQ: PEP) is a multinational company operating in the food and beverage industry. Some of the company’s brands include Cheetos, Doritos, Lay’s, and Aquafina. It is next on our list of dividend stocks people buy for early retirement, ranking 11th.

This July, Wells Fargo analysts reiterated an Equal Weight rating on PepsiCo, Inc. (NASDAQ: PEP) shares. The firm has also raised its price target on the stock from $147 to $160.

In the second quarter of 2021, PepsiCo, Inc. (NASDAQ: PEP) had an EPS of $1.71, beating estimates by $0.17. The company’s revenue was $19.22 billion, up 20.52% year over year and also beating estimates by about $1.27 billion. PepsiCo, Inc. (NASDAQ: PEP) has gained 16.69% in the past 6 months and 7.76% year to date.

By the end of the second quarter of 2021, 66 hedge funds out of the 873 tracked by Insider Monkey held stakes in PepsiCo, Inc. (NASDAQ: PEP) worth roughly $5.2 billion. This is compared to 61 hedge funds in the previous quarter with a total stake value of approximately $4.9 billion.

10. The Coca-Cola Company (NYSE: KO)

Number of Hedge Fund Holders: 62
Dividend Yield: 3.02%

The Coca-Cola Company (NYSE: KO), a multinational beverage company, operates to provide non-alcoholic drinks to consumers. The company ranks 10th on our list of dividend stocks people buy for early retirement.

This July, Truist raised the price target on shares of The Coca-Cola Company (NYSE: KO) from $60 to $65, while reiterating a Buy rating on the stock.

In the second quarter of 2021, The Coca-Cola Company (NYSE: KO) had an EPS of $0.68, beating estimates by $0.12. The company’s revenue was $10.13 billion, up 41.61% year over year and beating estimates by $823.11 million. The Coca-Cola Company (NYSE: KO) has gained 9.30% in the past 6 months and 5.40% year to date.

By the end of the second quarter of 2021, 62 hedge funds out of the 873 tracked by Insider Monkey held stakes in The Coca-Cola Company (NYSE: KO) worth roughly $25 billion. This is compared to 61 hedge funds in the previous quarter with a total stake value of approximately $25 billion.

9. Northwest Natural Holding Company (NYSE: NWN)

Number of Hedge Fund Holders: 11
Dividend Yield: 3.9%

Northwest Natural Holding Company (NYSE: NWN) is a provider of regulated natural gas distribution services to residential, commercial, industrial, and transportation consumers. The company ranks 9th on our list of dividend stocks people buy for early retirement.

Wells Fargo, this May raised the price target on shares of Northwest Natural Holding Company (NYSE: NWN) from $49 to $58, while reiterating an Equal Weight rating on the stock.

In the second quarter of 2021, Northwest Natural Holding Company (NYSE: NWN) had an EPS of -$0.02, beating estimates by $0.12. The company’s revenue was $148.92 million, up 10.33% year over year and beating estimates by $6.28 million. Northwest Natural Holding Company (NYSE: NWN) has gained 7.82% year to date and 6.49% in the past year.

By the end of the second quarter of 2021, 11 hedge funds out of the 873 tracked by Insider Monkey held stakes in Northwest Natural Holding Company (NYSE: NWN) worth roughly $14 million. This is compared to 10 hedge funds in the previous quarter with a total stake value of approximately $28 million.

8. Simon Property Group, Inc. (NYSE: SPG)

Number of Hedge Fund Holders: 37
Dividend Yield: 4.7%

Simon Property Group, Inc. (NYSE: SPG), a real estate investment trust that is part of the S&P 100, is next on our list of dividend stocks people buy for early retirement, ranking 8th. The company owns shopping, dining, entertainment, and mixed-use destinations.

Piper Sandler analysts have placed an Overweight rating on shares of Simon Property Group, Inc. (NYSE: SPG) this September, alongside raising the price target on the stock from $150 to $165.

In the second quarter of 2021, Simon Property Group, Inc. (NYSE: SPG) had an FFO of $3.24, beating estimates by $0.86. The company’s revenue was $1.25 billion, up 18.09% year over year and beating estimates by $119.68 million. Simon Property Group, Inc. (NYSE: SPG) has gained 10.41% in the past 6 months and 54.45% year to date.

By the end of the second quarter of 2021, 37 hedge funds out of the 873 tracked by Insider Monkey held stakes in Simon Property Group, Inc. (NYSE: SPG) worth roughly $666 million. This is compared to 31 hedge funds in the previous quarter with a total stake value of approximately $506 million.

7. Verizon Communications Inc. (NYSE: VZ)

Number of Hedge Fund Holders: 63
Dividend Yield: 4.7%

Verizon Communications Inc. (NYSE: VZ) is a communication services company that offers communications, technology, and entertainment products and services to consumers globally. It ranks 7th on our list of dividend stocks people buy for early retirement.

This July, analysts at Cowen reiterated an Outperform rating on shares of Verizon Communications Inc. (NYSE: VZ), while raising the price target on the stock from $66 to $68.

In the second quarter of 2021, Verizon Communications Inc. (NYSE: VZ) had an EPS of $1.37, beating estimates by $0.07. The company’s revenue was $33.76 billion, up 10.89% year over year and beating estimates by $1.03 billion.

By the end of the second quarter of 2021, 63 hedge funds out of the 873 tracked by Insider Monkey held stakes in Verizon Communications Inc. (NYSE: VZ) worth roughly $11 billion. This is compared to 69 hedge funds in the previous quarter with a total stake value of approximately $11.4 billion.

Miller/Howard Investments, an investment management firm, mentioned Verizon Communications Inc. (NYSE: VZ) in its first-quarter 2021 investor letter. Here’s what they said:

“We sold Verizon (VZ) based on concerns over how much they might spend in ongoing spectrum auctions. Management may legitimately view spending billions of dollars to expand their spectrum holdings as necessary, but we believe the payoff will be slow and will make it challenging to grow the dividend at a good pace.”

6. Exxon Mobil Corporation (NYSE: XOM)

Number of Hedge Fund Holders: 68
Dividend Yield: 6.2%

Exxon Mobil Corporation (NYSE: XOM) is an oil and gas corporation based in America but operating globally. The company ranks 6th on our list of dividend stocks people buy for early retirement.

BMO Capital, just this July, reiterated a Market Perform rating on shares of Exxon Mobil Corporation (NYSE: XOM), while setting a $69 price target on the shares as well.

In the second quarter of 2021, Exxon Mobil Corporation (NYSE: XOM) had an EPS of $1.10, beating estimates by $0.11. The company’s revenue was $67.74 billion, up 107.77% year over year and beating estimates by $3.02 billion. Exxon Mobil Corporation (NYSE: XOM) has gained 30.07% year to date and 46.29% in the past year.

By the end of the second quarter of 2021, 68 hedge funds out of the 873 tracked by Insider Monkey held stakes in Exxon Mobil Corporation (NYSE: XOM) worth roughly $3.7 billion. This is compared to 65 hedge funds in the previous quarter with a total stake value of approximately $2.8 billion.

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