In this article we discuss the 5 best dividend stocks for 2021. If you want to read our detailed analysis of the best dividend stocks to buy this year and some merits of dividend investing, go directly to 10 Best Dividend Stocks For 2021.
5. Altria Group, Inc. (NYSE: MO)
Dividend Yield: 7.20%
Number of Hedge Fund Holders: 37
Altria is one of the safest dividend stocks to buy in 2021, with over 50 consecutive years of dividend hikes. The tobacco and e-cigarette company was listed in Insider Monkey’s list of dividend kings. The company in February declared a quarterly dividend of $0.86 per share, inline with its previous dividend.
A total of 37 hedge funds tracked by Insider Monkey were bullish MO at the end of the fourth quarter, down from 47 funds a quarter earlier.
4. Kinder Morgan, Inc. (NYSE: KMI)
Dividend Yield: 6.48%
Number of Hedge Fund Holders: 42
Texas-based Kinder Morgan ranks 4th in our list of 10 best dividend stocks for 2021. The company’s business has four segments: natural gas pipelines, carbon dioxide production, terminals and products pipelines. Investment firm Bernstein recently downgraded the stock with a price target of $17. However, the firm said that it continues to believe that the company’s dividend is safe. The downgrade was initiated amid a weak guidance for 2021.
The company is also getting the attention of the smart money, as 42 hedge funds tracked by Insider Monkey reported owning stakes in the company at the end of the fourth quarter.
3. International Business Machines Corporation (NYSE: IBM)
Dividend Yield: 5.13%
Number of Hedge Fund Holders: 51
Computing giant IBM ranks 3rd on the list of 10 best dividend stocks for 2021. The company has increased its dividend for 20 consecutive years. IBM shares have gained about 17% over the last 12 months. The company plans to spinoff its Managed Infrastructure Services business. IBM and Moderna recently announced that they will joins hands to create solutions to increase COVID-19 vaccine management. The companies will use technologies like hybrid Cloud, AI and blockchain to achieve the goal.
According to our database, the number of IBM’s long hedge funds positions increased at the end of the fourth quarter of 2020. There were 51 hedge funds that hold a position in IBM compared to 40 funds in the third quarter. The biggest stakeholder of the company is Arrowstreet Capital, with 2.7 million shares, worth $344.9 million.
2. Philip Morris International Inc. (NYSE: PM)
Dividend Yield: 5.54%
Number of Hedge Fund Holders: 52
Philip Morris has over 10 years of consecutive dividend hikes. The company on March 4 declared a quarterly dividend of $1.20 per share, in line with previous dividend. The tobacco company recently reiterated its 2021 EPS guidance of $5.90-$6.00. The company expects about 40% increase in net revenue from smokeless products.
With a $1.6 billion stake in Philip Morris, Terry Smith’s Fundsmith LLP owns 19.4 million shares of the company as of the end of the fourth quarter of 2020. Our database shows that 52 hedge funds held stakes in PM as of the end of the fourth quarter, versus 50 funds in the third quarter.
Fundsmith LLP, in their Q4 2020 investor letter, mentioned Philip Morris International Inc. (NYSE: PM).
“We are impressed with Philip Morris’s development of Reduced Risk Products or RRPs, most notably its heat not burn system iQOS. It seems we are not the only ones to view it this way as it was recently included in the Dow Jones Sustainability North America Index for the first time. For the moment the shares are weighed down by COVID related disruption to some of its markets and simple prejudice which seems to prevent some commentators from weighing the benefits the RRPs bring against the obvious fact that it is a tobacco company.”
1. Pfizer Inc. (NYSE: PFE)
Dividend Yield: 4.49%
Number of Hedge Fund Holders: 63
With a dividend yield of 4.4%, Pfizer ranks 1st on the list of 10 best dividend stocks for 2021. Pfizer shares have gained about 20% over the last 12 months. Pfizer is the primary supplier of the COVID-19 vaccine, which has shown 97% effectiveness against the virus. The company in 2021 expects to sell about $15 billion worth of COVID-19 vaccines, with a net profit in the range of 20% of this revenue.
According to our database, the number of PFE’s long hedge funds positions decreased at the end of the fourth quarter of 2020. There were 63 hedge funds that hold a position in Pfizer compared to 66 funds in the third quarter. The biggest stakeholder of the company is Kahn Brothers, with 674,718 shares, worth $24.8 billion.
You can also take a peek at Top 10 Car Company Stocks to Invest In and Ray Dalio’s Top 10 Stock Picks for 2021.
