In this article we discuss the 5 best American dividend stocks to invest in. If you want to read our detailed analysis of these companies, go directly to the 10 Best American Dividend Stocks to Invest In.
5. ONEOK, Inc. (NYSE: OKE)
Dividend Yield: 6.80%
Number of Hedge Fund Holders: 22
ONEOK, Inc. (NYSE: OKE) is involved in the gathering, processing, storage, and transportation of natural gas within the US. It is based in Tulsa, Oklahoma and was established in 1906. It has since become one of the leading companies in the oil and gas sector with a market cap of $24.05 billion. ONEOK, Inc. (NYSE: OKE) is one of the best American dividend stocks to invest in due to its high dividend yield and strong growth performance over the years. The company reported a net income of $386.2 million or $0.36 earnings per diluted share for the first quarter of fiscal year 2021.
There was a 24% year-over-year increase in the company’s adjusted EBITDA which amounted to $866.4 million. ONEOK, Inc. (NYSE: OKE) also declared a quarterly dividend of $3.74 per share on an annual basis in April 2021 with a dividend yield of 6.93%. The company has a 13% higher ROE than the average ROE in the oil and gas industry of the US. ONEOK, Inc. (NYSE: OKE)’s dividend has shown stable growth in the past decade. The dividend per share’s growth rate was 3.7% during the past year.
4. Altria Group, Inc. (NYSE: MO)
Dividend Yield: 6.88%
Number of Hedge Fund Holders: 37
Altria Group, Inc. (NYSE: MO) is headquartered in Richmond, Virginia and is a well known tobacco company that manufactures and sells cigarettes, wine, and oral tobacco products in the United States. The company has experienced a tough financial year in 2020 due to the COVID-19 pandemic with its net revenues decreasing by 5.1% to $6 billion in the first quarter of 2021. However, Altria Group, Inc. (NYSE: MO) has still maintained its long-term objective of a dividend payout ratio target of 80% of the adjusted diluted EPS. In the first quarter of 2021, the company paid $1.6 billion in dividends and has announced an annualized dividend of $3.44 per share for the entire year. The dividend per share growth rate for the company was 3% during the past fiscal year. For the past 5 years, this dividend growth rate was approximately 10.20% annually making it one of the best American dividend stocks to invest in.
Oakmark Funds, in their Q1 2021 investor letter, mentioned Altria Group, Inc. (NYSE: MO). Here is what the fund said:
“We initiated a new position in Altria, which commands roughly 50% of the cigarette and smokeless tobacco market in the U.S. Both of these markets are duopolies that we believe have exhibited strong pricing power over time. While the shares trade at a low multiple of reported earnings, Altria also owns valuable stakes in other non-core businesses, including ~10% of AB InBev, 35% of Juul and 45% of Cronos. Excluding the values of these stakes and their respective earnings contribution, we were able to purchase shares of Altria for less than seven times our estimate of next year’s earnings. This compares to other consumer brands with less favorable earnings growth profiles that trade for three times Altria’s multiple. The company also has several promising reduced-risk products that may appeal to tobacco users, including On! and iQOS. We believe these products position the company well to help consumers slowly transition to a tobacco-free future. We expect management to return the vast majority of future earnings to shareholders given the company’s strong balance sheet, high free cash flow conversion and limited capital requirements.”
3. British American Tobacco p.l.c. (NYSE: BTI)
Dividend Yield: 7.56%
Number of Hedge Fund Holders: 10
Like Altria Group, Inc. (NYSE: MO), British American Tobacco p.l.c. (NYSE: BTI) is another tobacco giant that has made the list of the 10 best American dividend stocks to invest in due to its high dividend yield above 7%. The company has grown its business due to a strategic combination of smart management choices and mergers.
British American Tobacco p.l.c. (NYSE: BTI) is diversifying its portfolio by including vaping, nicotine pouches, and tobacco heating products in its mix. Its recent investment in the company OrganiGram provides great potential for its stock which has been greatly undervalued to gain speed in the market. BTI paid an annual dividend of $2.73 per share in 2020 representing an annual payout growth rate of 3.60%.
2. Enterprise Products Partners L.P. (NYSE: EPD)
Dividend Yield: 7.62%
Number of Hedge Fund Holders: 30
Ranking number 2 in the 10 best American dividend stocks to invest in list is Enterprise Products Partners L.P. (NYSE: EPD) which is a midstream energy service provider that caters to consumers of natural gas, petrochemicals, crude oil, and refined products. Headquartered in Houston, Texas, Enterprise Products Partners L.P. (NYSE: EPD) has a high yield dividend stock that is worth buying due to its strong financial outlook.
Enterprise Products Partners L.P. (NYSE: EPD) reported a net income of $1.3 billion or $0.61 per diluted share in the first quarter of 2021 compared to $1.4 billion or $0.61 per diluted share in the first quarter of 2020. Enterprise Products Partners L.P. (NYSE: EPD) has started to see stronger demand for NGLs, crude oil, and primary petrochemicals as the world is recovering from the effects of the COVID-19 lockdowns. At the end of 2020, the annual dividend of Enterprise was reported to be $0.445. The average dividends per share growth rate for the company was 3.30% for the past 5 years. Enterprise Products Partners L.P. (NYSE: EPD) has a high dividend yield of 7.62% making it one of the best American dividends to invest in.
1. Two Harbors Investment Corp. (NYSE: TWO)
Dividend Yield: 9.47%
Number of Hedge Fund Holders: 18
Two Harbors Investment Corp. (NYSE: TWO) is a real estate investment trust (REIT) which specializes in investment, financing, and management of residential mortgage-backed securities, mortgage servicing rights, non-agency securities, and other financial assets. As of 2020, the company was the fourth largest mortgage REIT by total assets. The Minnesota-based company has landed a top spot in the 10 best American dividend stocks to invest in due to its high dividend yield of 9.47%.
Two Harbors Investment Corp. (NYSE: TWO) declared a dividend of $0.17 per share of commons stock for the first quarter of fiscal year 2021 which was paid on April 29. Two Harbors Investment Corp. (NYSE: TWO) has an annual dividend of $0.68 per share in 2021 which has increased from $0.17 per share in 2020. The company has a payout ratio of 49.64% and reported a 2.2% quarterly return on book value per common share.
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