5 Best Dividend Stocks To Buy Right Now

Dividend stocks have become a favorite investment category in the last few years as central banks have supressed interest rates. Senior citizens and people requiring a regular cash flow stream have focused on high dividend paying stocks as traditional fixed income instruments such as bonds and treasuries have very low yields. Large blue chip stocks paying a decent dividend are a good alternative to bonds because they have low default risk. Large global companies with a strong brand and competitive barriers are a good investment since their cash flows are stable. In the article below, we look at some of the best dividend stocks which are also favoured by hedge funds.

At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).

Pfizer Inc. (NYSE:PFE) is one of the largest pharmaceutical companies in the world with a market value of $189 billion. This company has a long history of paying dividends and recently declared a quarterly dividend of 30 cents per share. It has steadily increased its dividends from 20 cents a quarter in 2011 to 30 cents per share now. Its annualized dividend yield is around 3.8%, making it an attractive stock for yield hungry investors. It global reach and technology strengths ensures that its cash flows will remain stable in the future. Pfizer Inc. (NYSE:PFE) operates in the healthcare industry which is more or less recession proof. In its most recent quarter, it declared revenues of $13 billion with a net income of $1.32 billion. There were 83 funds tracked by Insider Monkey long Pfizer Inc. (NYSE:PFE), down by 12% from the end of June.

Procter & Gamble Co (NYSE:PG) is a global consumer goods conglomerate that owns some of the most well-known brands on the planet. The company has a distribution reach across 180 countries and annual sales of more than $60 billion. This stock is also extremely safe and gives a handsome dividend yield of 3.24%. The company has not missed a single quarterly dividend over the last 5 years and has increased its yield from 2.5% in 2011 to 3.24% now. The company has been doing well as the management has embarked on a major restructuring initaitive. Out of the 25 analysts covering the stock, 13 analysts rate it as a buy, while only 1 analyst rate it as a ‘sell’. As per our database, the number of hedge funds bullish on this stock during the third quarter also increased to 71 from 56 in the quarter earlier. The value of their total holdings increased by a whopping 263% quarter over quarter.

QUALCOMM, Inc. (NASDAQ:QCOM) is one of the largest semiconductor companies in the world with the company’s chips and technology being used in the majority of smartphones. QUALCOMM, Inc. (NASDAQ:QCOM) owns the most number of patents related to telecommunication technology and gets billions of dollars in royalty payments alone. The stock also pays a dividend yield in excess of 3.3%. The company has increased its quarterly dividends by more than 150% in the last 5 years and its current dividend stands at 53 cents per share. QUALCOMM, Inc. (NASDAQ:QCOM) recently announced that it would buy European semiconductor manufacturer NXP Semiconductors NV (NASDAQ:NXPI) in a $47 billion all cash deal. The number of funds from our system having QUALCOMM, Inc. (NASDAQ:QCOM) in their portfolio increased by 21 to 69 during the third quarter.

Intel Corporation (NASDAQ:INTC) is another dominant global semiconductor company which pays a solid dividend yield of 3.05%. This company almost has a monopoly in providing microprocessors for PCs, laptops and servers. Not only does the company design the chips, but also has a number of leading edge “fabs” which produce these chips. Vertical integration has allowed the company to deliver extremely high gross margins for a long time. Though Intel has not increased its dividends too much, it has not missed a single quarterly dividend over the past 5 years. The stock has remained more or less flat over the last one year as revenue growth has remained tepid due to a slowdown in the global PC market. 68 funds from our records held shares worth $4.88 billion in this stock in the third quarter, up from 57 funds that held $3.4 billion in this stock in the second quarter.

Cisco Systems, Inc. (NASDAQ:CSCO) is one of the leading global network technology equipment providers with a presence across all major countries. The company is the No.1 player in most of the segments it operates in and has a current market value is $148 billion. Athough growth has slowed, Cisco generates billions of free cash flows every year which it distributes to shareholders in the form of dividends and buybacks. At current prices, the stock pays an annualized dividend yield of 3.5%. Cisco Systems, Inc. (NASDAQ:CSCO) has also been a prolific acquirer of other companies using this strategy to further bolster its technology. The number of funds from our system long Cisco increased by 5 to 66 during the third quarter.

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