In this article, we will be looking at the 5 best dividend contenders to buy in 2021. If you want to see our detailed analysis of dividend contenders and investing, you can go directly to the 10 Best Dividend Contenders to Buy in 2021.
5. CSX Corporation (NASDAQ: CSX)
Number of Hedge Fund Holders: 53
Number of Years of Consecutive Dividend Increases: 17
Dividend Yield: 1.1%
CSX Corporation (NASDAQ: CSX) is a railroads company providing rail-based freight transportation services and transportation of intermodal containers and trailers, among other related services. It ranks 5th on our list of the best dividend contenders to buy in 2021.
This July, TD Securities upgraded CSX Corporation (NASDAQ: CSX) from Hold to Buy, while RBC Capital also raised its price target on the company’s shares from $36 to $37.
In the second quarter of 2021, CSX Corporation (NASDAQ: CSX) had an EPS of $0.52, beating estimates by $0.15. The company’s revenue was $2.99 billion, up 32.59% year over year and also beating estimates by $46.04 million. CSX Corporation (NASDAQ: CSX) has gained about 8.08% in the past 6 months and 7.64% year to date as well.
By the end of the first quarter of 2021, 53 hedge funds out of the 866 tracked by Insider Monkey held stakes in CSX Corporation (NASDAQ: CSX) worth roughly $3.69 billion. This is compared to 58 hedge funds in the previous quarter with stakes worth approximately $3.31 billion.
4. Verizon Communications Inc. (NYSE: VZ)
Number of Hedge Fund Holders: 69
Number of Years of Consecutive Dividend Increases: 17
Dividend Yield: 4.4%
Verizon Communications Inc. (NYSE: VZ) is an integrated telecommunication services company that offers postpaid and prepaid service plans, internet access, wireless equipment, and other communications, technology, information, and entertainment products and services across the world. The company ranks 4th on our list of the best dividend contenders to buy in 2021.
RBC Capital has a Sector Perform rating on Verizon Communications Inc. (NYSE: VZ) shares as of this July, while Tigress Financial has also reiterated its Buy rating on the stock alongside a $67 12-month target price.
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 also beating estimates by $1.03 billion. Verizon Communications Inc. (NYSE: VZ) has gained about 0.36% in the past year.
By the end of the first quarter of 2021, 69 hedge funds out of the 866 tracked by Insider Monkey held stakes in Verizon Communications Inc. (NYSE: VZ) worth roughly $11.38 billion. This is compared to 67 hedge funds in the previous quarter with stakes worth approximately $10.5 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.”
3. Costco Wholesale Corporation (NASDAQ: COST)
Number of Hedge Fund Holders: 56
Number of Years of Consecutive Dividend Increases: 17
Dividend Yield: 0.8%
Costco Wholesale Corporation (NASDAQ: COST) is a consumer staples company that manages warehouses in the US and internationally, alongside operating pharmacies, food courts, gas stations, and other consumer-oriented spaces. The company ranks 3rd on our list of the best dividend contenders to buy in 2021.
Bill Kirk, an analyst at MKM Partners, raised his price target on Costco Wholesale Corporation (NASDAQ: COST) shares this July to $385, keeping a Neutral rating on the stock. The analyst has cited the company’s strong June sales report while raising the price target.
In the fiscal third quarter of 2021, Costco Wholesale Corporation (NASDAQ: COST) had an EPS of $2.75, beating estimates by $0.47. The company’s revenue was $45.28 billion, up 21.50% year over year and also beating estimates by $1.46 billion. Costco Wholesale Corporation (NASDAQ: COST) has gained about 14.55% in the past 6 months and 9.17% year to date as well.
By the end of the first quarter of 2021, 56 hedge funds out of the 866 tracked by Insider Monkey held stakes in Costco Wholesale Corporation (NASDAQ: COST) worth roughly $4.01 billion. This is compared to 61 hedge funds in the previous quarter with stakes worth approximately $3.61 billion.
ClearBridge Investments, an investment management firm, mentioned Costco Wholesale Corporation (NASDAQ: COST) in its first-quarter 2021 investor letter. Here’s what they said:
“To take a more discretionary stance in retailing and make room for our additional purchases where we see better opportunities, we closed our position in Costco Wholesale. Costco was a big winner during the most restrictive periods of the COVID-19 lockdowns with its focus on staples, larger basket size, necessities and bulk items, and it remains an exceptional retailer in its category, with a sticky subscription base and non-U.S. growth ahead. However, the company is facing very tough comparisons as well as margin pressure in its core business and we believe its valuation has become stretched.”
2. Microchip Technology Incorporated (NASDAQ: MCHP)
Number of Hedge Fund Holders: 42
Number of Years of Consecutive Dividend Increases: 18
Dividend Yield: 1.1%
Microchip Technology Incorporated (NASDAQ: MCHP) is a leading tech company that manufactures semiconductor products for a range of embedded control applications in the US and internationally. The company ranks 2nd on our list of the best dividend contenders to buy in 2021.
KeyBanc’s John Vinh has raised the price target on Microchip Technology Incorporated (NASDAQ: MCHP) shares from $180 to $185 this July while retaining the firm’s Overweight rating on the stock.
In the fiscal fourth quarter of 2021, Microchip Technology Incorporated (NASDAQ: MCHP) had an EPS of $1.85, beating estimates by $0.11. The company’s revenue was $1.47 billion, up 10.61% year over year and also beating estimates by $10.85 million. Microchip Technology Incorporated (NASDAQ: MCHP) has gained about 34.62% in the past year.
By the end of the first quarter of 2021, 42 hedge funds out of the 866 tracked by Insider Monkey held stakes in Microchip Technology Incorporated (NASDAQ: MCHP) worth roughly $962 million. This is compared to 45 hedge funds in the previous quarter with stakes worth approximately $961 million.
1. International Flavors & Fragrances Inc. (NYSE: IFF)
Number of Hedge Fund Holders: 55
Number of Years of Consecutive Dividend Increases: 19
Dividend Yield: 2.1%
International Flavors & Fragrances Inc. (NYSE: IFF) is a manufacturer and seller of cosmetic active and natural health ingredients to be used in consumer products in the US and internationally. The company ranks 1st on our list of the best dividend contenders to buy in 2021.
As of this July, Redburn has initiated coverage of International Flavors & Fragrances Inc. (NYSE: IFF) shares with a Buy rating, led by analyst Ranulf Orr.
In the first quarter of 2021, International Flavors & Fragrances Inc. (NYSE: IFF) had an EPS of $1.60, beating estimates by $0.05. The company’s revenue was $2.46 billion, up 82.96% year over year and also beating estimates by $9.68 million. International Flavors & Fragrances Inc. (NYSE: IFF) has gained about 25.19% in the past 6 months and 37.97% year to date as well.
By the end of the first quarter of 2021, 55 hedge funds out of the 866 tracked by Insider Monkey held stakes in International Flavors & Fragrances Inc. (NYSE: IFF) worth roughly $3.602 billion. This is compared to 33 hedge funds in the previous quarter with stakes worth approximately $488 million.
Rhizome Partners, an investment management firm, mentioned International Flavors & Fragrances Inc. (NYSE: IFF) in its first-quarter 2021 investor letter. Here’s what they said:
“We are still getting used to the higher multiples that investors will pay for larger market cap and pure play companies such as IFF. We do understand the market’s rationale. IFF’s products account for a small percentage of the customers’ cost while playing critical roles in the products’ performance. With some operating leverage, the company can probably grow FCF at 4-6% a year. This brings the total return close to the long-term return of the S&P 500 index of 10%. Through trial and error, we have come to appreciate how scale, higher market share, route densities, switching costs, and collaborative relationships amongst major industry players can contribute to sustained high returns on invested capital.”
You can also take a peek at 10 Best Dividend Champions to Buy Now and 10 Best Dividend Stocks to Buy According to Mason Hawkins’ Southeastern Asset Management.
