In this article, we will discuss the 5 dividend paying stocks to buy according to Morgan Stanley’s quant screen. If you want to explore similar stocks, you can read 10 Best Dividend Stocks to Buy According to Morgan Stanley’s Quant Screen.
5. Eastman Chemical Company (NYSE:EMN)
Dividend Yield as of September 27: 4.18%
Total Expected Return: 77%
Number of Hedge Fund Holders: 29
Eastman Chemical Company (NYSE:EMN) operates as a specialty materials company in U.S. and international markets. The company develops a diverse range of advanced materials, chemicals, and fibers for day-to-day usage. Eastman Chemical Company (NYSE:EMN) appears to be trading at bargain levels and Morgan Stanley analysts expect the stock to gain 77% over the next couple of months. As of September 27, the stock is trading at a trailing twelve-month PE multiple of 8x.
On August 4, Eastman Chemical Company (NYSE:EMN) declared a quarterly cash dividend of $0.76 per share. The dividend is payable on October 7 to stockholders of record at the close of business on September 15. As of September 27, the stock is offering a forward dividend yield of 4.18% and has free cash flows of $617 million.
In addition to Morgan Stanley, other Wall Street giants also have Buy ratings on Eastman Chemical Company (NYSE:EMN). This September, Deutsche Bank analyst David Begleiter adjusted his price target on Eastman Chemical Company (NYSE:EMN) to $95 from $115 and maintained a Buy rating on the shares. On September 19, UBS analyst Joshua Spector revised his price target on Eastman Chemical Company (NYSE:EMN) to $108 from $118 and reiterated a Buy rating on the shares.
Insider Monkey identified 29 hedge funds that held stakes in Eastman Chemical Company (NYSE:EMN) at the end of Q2 2022. The total value of these stakes amounted to $308 million. As of June 30, Two Sigma Advisors is the leading shareholder in the company with stakes worth $59 million.
4. Philip Morris International Inc. (NYSE:PM)
Dividend Yield as of September 27: 5.53%
Total Expected Return: 21%
Number of Hedge Fund Holders: 56
On September 14, Philip Morris International Inc. (NYSE:PM) declared a quarterly cash dividend of $1.27 per share, up 1.6% from its prior dividend of $1.25 per share. The dividend is payable on October 12 to stockholders of record on September 28. As of September 27, the stock is offering a forward dividend yield of 5.53% and has free cash flows of $11.6 billion.
On July 19, Jefferies analyst Owen Bennett revised his price target on Philip Morris International Inc. (NYSE:PM) to $99 from $107 and maintained a Hold rating on the shares. Morgan Stanley analysts see a 21% upside to Philip Morris International Inc. (NYSE:PM). The stock is currently trading at a discount to earnings, and as of September 27 has a trailing twelve-month PE ratio of 15.47.
Insider Monkey spotted Philip Morris International Inc. (NYSE:PM) on 56 investment portfolios at the close of Q2 2022. The total stakes of these hedge funds amounted to $6.86 billion. This is compared to 55 positions in the previous quarter with stakes worth $6.64 billion. The hedge fund sentiment for the stock is positive.
As of June 30, GQG Partners owns over 30 million shares of Philip Morris International Inc. (NYSE:PM) and is the leading shareholder in the company. The fund’s stakes are valued at $3 billion.
Here is what First Eagle Investments had to say about Philip Morris International Inc. (NYSE:PM) in its second-quarter 2022 investor letter:
“Philip Morris shares benefited from the market rotation into defensive areas of the market. The company continued to make progress in its transition to next-generation, non-combustible products and during the quarter entered into an agreement to acquire Swedish Match, which is a Stockholm-based maker of Zyn oral nicotine pouches.”
3. LyondellBasell Industries N.V. (NYSE:LYB)
Dividend Yield as of September 27: 6.51%
Total Expected Return: 41%
Number of Hedge Fund Holders: 37
LyondellBasell Industries N.V. (NYSE:LYB) is a leading European chemicals company that has operations worldwide. The company has been growing its dividends for roughly a decade and has a 5-year dividend CAGR of 5,8% and an annual payout ratio of 27.5%. On August 19, LyondellBasell Industries N.V. (NYSE:LYB) announced that its board of directors declared a quarterly cash dividend of $1.19 per share, up 5.3% from its prior dividend of $1.13. The dividend was payable on September 6 to investors of record on August 29. As of September 27, the stock is offering a forward dividend yield of 6.51% and has free cash flows of $6.15 billion.
This September, Wells Fargo analyst Michael Sison revised his price target on LyondellBasell Industries N.V. (NYSE:LYB) to $100 from $115 and maintained a buy-side Overweight rating on the shares. Morgan Stanley analysts expect LyondellBasell Industries N.V. (NYSE:LYB) to gain 41% over the next couple of months and are recommending it as a top dividend stock to buy.
At the close of Q2 2022, 37 hedge funds disclosed ownership of stakes in LyondellBasell Industries N.V. (NYSE:LYB). These funds held collective stakes of $953 million in the company. This is compared to 32 positions in the previous quarter with stakes worth $744 million. The hedge fund sentiment for the stock is positive.
As of June 30, Eagle Capital Management is the top shareholder in LyondellBasell Industries N.V. (NYSE:LYB) with stakes worth $358 million.
2. Energy Transfer L.P. (NYSE:ET)
Dividend Yield as of September 27: 8.73%
Total Expected Return: 34%
Number of Hedge Fund Holders: 36
On August 3, Energy Transfer L.P. (NYSE:ET) announced market-beating earnings for the fiscal second quarter of 2022. The company reported earnings per share of $0.39 and outperformed estimates by $0.01. The company generated a revenue of $25.95 billion, up 72% year over year, and beat expectations by $5.61 billion. As of September 27, Energy Transfer L.P. (NYSE:ET) has gained 17.3% year to date and Morgan Stanley expects the stock to gain 34% over the next few months.
Energy Transfer L.P. (NYSE:ET) is currently trading at a discount to its earnings. As of September 27, the stock is trading at a PE multiple of 8x and is offering a forward dividend yield of 8.73%, which the company backs with free cash flows of $5.8 billion.
On September 12, Energy Transfer L.P. (NYSE:ET) reported that its executive chairman, Kelcy Warren, purchased over 2.4 million shares of the company’s common stock at $12.04 per share.
This August, Barclays analyst Theresa Chen raised her price target on Energy Transfer L.P. (NYSE:ET) to $14 from $13 and maintained a buy-side Overweight rating on the shares.
At the close of the second quarter of 2022, 36 hedge funds were bullish on Energy Transfer L.P. (NYSE:ET) and held stakes worth $598.5 million in the company. As of June 30, Abrams Capital Management owns 22 million shares of the company and is the top shareholder.
1. Diamondback Energy, Inc. (NASDAQ:FANG)
Dividend Yield as of September 27: 10.59%
Total Expected Return: 36%
Number of Hedge Fund Holders: 54
Wall Street is bullish on Diamondback Energy, Inc. (NASDAQ:FANG). On September 19, KeyBanc analyst Tim Rezvan started coverage of Diamondback Energy, Inc. (NASDAQ:FANG) with a buy-side Overweight rating and a $163 price target. This September, Citi analyst Scott Gruber raised his price target on Diamondback Energy, Inc. (NASDAQ:FANG) to $155 from $148 and maintained a Buy rating on the shares. Morgan Stanley sees a 36% upside to Diamondback Energy, Inc. (NASDAQ:FANG) from current levels.
Diamondback Energy, Inc. (NASDAQ:FANG) is trading at bargain levels, making now an attractive entry point for investors. As of September 27, the stock is trading at a PE ratio of 5.16 and is offering a forward dividend yield of 10.59%, which the company supports with free cash flows of $2.8 billion.
On August 1, Diamondback Energy, Inc. (NASDAQ:FANG) announced earnings for the second quarter of fiscal 2022. The company reported a revenue of $2.77 billion, up 65% year over year, and beat expectations by $328 million. The company reported earnings per share of $7.07 and outperformed estimates by $0.40. Shares of Diamondback Energy, Inc. (NASDAQ:FANG) have surged 16.5% over the past twelve months, as of September 27.
Insider Monkey spotted Diamondback Energy, Inc. (NASDAQ:FANG) on 54 hedge fund portfolios at the end of Q2 2022. The total stakes of these hedge funds amounted to $811 million. As of June 30, Harris Associates is the leading shareholder in the company with stakes worth $181 million.
You can also take a look at 14 Best European Dividend Stocks To Buy and 10 Best Stocks To Buy Now According To Quant Billionaires.
