In this article, we discuss 5 best dividend stocks under $50 according to hedge funds. If you want to read our detailed analysis of dividend stocks and their historic returns, go directly to read 10 Best Dividend Stocks Under $50 According to Hedge Funds.
5. Pfizer Inc. (NYSE:PFE)
Share Price as of August 30: $46.04
Number of Hedge Fund Holders: 70
Pfizer Inc. (NYSE:PFE) is a multinational pharmaceutical and biotech company. In August, Barclays raised its price target on the stock to $52 with an Equal Weight rating on the shares, as the company starts trials for Crohn’s Disease medication.
In Q2 2022, Pfizer Inc. (NYSE:PFE) reported revenue of $27.7 billion, which presented a 45.8% year-over-year growth. The company’s operating cash flow for the quarter came in at $8.1 billion, up from $6.5 billion in the previous quarter. Its free cash flow stood at over $7.4 billion and it paid $4.5 billion in dividends. This shows that the company’s cash flow is enough to cover its dividends.
Pfizer Inc. (NYSE:PFE) has a strong dividend history, raising its dividends consistently for the past 12 years. In the past 10 years, the company has grown its dividend by 82%. It currently pays a quarterly dividend of $0.40 per share, with its shares yielding at 3.49%, as of August 30.
As of the close of Q2 2022, 70 hedge funds tracked by Insider Monkey owned stakes in Pfizer Inc. (NYSE:PFE), down from 79 in the previous quarter. These stakes hold a collective value of over $2.8 billion. With over 10.5 million shares, AQR Capital Management was the company’s leading stakeholder in Q2.
ClearBridge Investments mentioned Pfizer Inc. (NYSE:PFE) in its Q4 2021 investor letter. Here is what the firm has to say:
“While the level of general turnover abated as we progressed through 2021, it remained high in one area: post-COVID-19 recovery plays. The concept behind this investment thesis was, and still is, straightforward: with the advent of effective vaccines, the path from pandemic to endemic is just a matter of time. As this transition occurs, the estimated excess savings of over $2 trillion built up on U.S. consumer balance sheets will unlock dramatic pent-up demand for experiences, especially global travel. This investment case seemed especially compelling when the Pfizer vaccine positively surprised markets in November 2020. As a result, we made post-COVID-19 stocks (which were trading well below our estimate of recovery value) a sizable theme within the portfolio. We understood this to be a more aggressive tilt in positioning because it required a major improvement in demand to catalyze fundamentals and drive price toward higher business values. While we accepted that recovery would not be smooth and that it would take time to deploy vaccines both domestically and globally, we decided that recovery was the logical path of least resistance and we were being well compensated for these risks. (Click here for the full text)
4. Comcast Corporation (NASDAQ:CMCSA)
Share Price as of August 30: $35.9
Number of Hedge Fund Holders: 75
An American multinational telecommunications company, Comcast Corporation (NASDAQ:CMCSA) was a part of 75 hedge fund portfolios in Q2 2022, according to Insider Monkey’s data. The stakes owned by these hedge funds hold a total value of nearly $5.4 billion.
Comcast Corporation (NASDAQ:CMCSA) has been raising its dividends consistently for the past 14 years. It currently pays a quarterly dividend of $0.27 per share and has a yield of 3.02%, as recorded on August 30.
In Q2 2022, Comcast Corporation (NASDAQ:CMCSA) generated $3.1 billion in free cash flow while its cash from operations came in at over $6.3 billion. The company returned $4.2 billion to shareholders during the quarter, with dividend payments amounting to over $1.2 billion. Moreover, it had over $6.8 billion available in cash and cash equivalents at the end of the quarter. The company’s stable cash generation shows that it is well-positioned to maintain its dividends in the future.
ClearBridge Investments mentioned Comcast Corporation (NASDAQ:CMCSA) in its Q4 2021 investor letter. Here is what the firm had to say:
“Weakness among our holdings in the communication services sector was the other detractor to performance. Comcast was hurt by tepid subscriber growth in its broadband business but demonstrated strong growth in free cash flow, positioning the company for accelerated capital return going forward.”
3. Citigroup Inc. (NYSE:C)
Share Price as of August 30: $49.14
Number of Hedge Fund Holders: 82
Citigroup Inc. (NYSE:C) is an American multinational investment banking company that also provides other financial services to its consumers. Though the company has not raised its dividends consecutively, it has been making uninterrupted dividend payments for over 10 years. Its quarterly payout stands at $0.51 per share, with a dividend yield of 4.16%, as of August 30.
In Q2 2022, Citigroup Inc. (NYSE:C) reported revenue of $19.6 billion, up 12.4% from the same period last year. The company’s operating cash flow for the quarter came in at over $10.2 billion while its free cash flow stood at over $9 billion. In addition to this, it returned over $1.3 billion to shareholders in dividends and share repurchases during the quarter.
In July, Oppenheimer raised its price target on the stock to $86 with an Outperform rating on the shares, appreciating the company’s strong balance sheet and its shareholder return.
As per Insider Monkey’s Q2 2022 database, 82 hedge funds owned stakes in Citigroup Inc. (NYSE:C), down from 88 in the previous quarter. The collective value of these stakes is over $7.4 billion. Berkshire Hathaway owned $2.5 billion worth of stakes in the banking company, becoming its largest stakeholder in Q2.
Diamond Hill Capital mentioned Citigroup Inc. (NYSE:C) in its Q1 2022 investor letter. Here is what the firm has to say:
“Shares of Citigroup declined in the quarter as investors became increasingly negative on capital markets activity. The company is also continuing to divest certain consumer banking geographies which may be dilutive to earnings in the near term.”
2. Wells Fargo & Company (NYSE:WFC)
Share Price as of August 30: $44.01
Number of Hedge Fund Holders: 83
Wells Fargo & Company (NYSE:WFC) is a California-based multinational financial services company. Appreciating the company’s strong Q2 results, Barclays set a $58 price target on the stock in July with an Overweight rating on the shares.
On July 26, Wells Fargo & Company (NYSE:WFC) declared a 20% hike in its quarterly dividend to $0.30 per share. The company has been paying dividends to shareholders since 1995. As of August 30, the stock’s dividend yield came in at 2.72%.
In Q2 2022, Wells Fargo & Company (NYSE:WFC) reported over $166 million available in cash, cash equivalents, and restricted cash. The company’s total assets amount to over $1.8 billion and its revenue for the quarter stood at $17.03 billion. Moreover, it generated over $7.5 billion in free cash flow.
According to Insider Monkey’s database, 83 hedge funds owned stakes in Wells Fargo & Company (NYSE:WFC), compared with 93 in the previous quarter. These stakes are valued at over $5.16 billion.
1. Bank of America Corporation (NYSE:BAC)
Share Price as of August 30: $34.02
Number of Hedge Fund Holders: 99
Bank of America Corporation (NYSE:BAC) is a North Carolina-based investment bank and financial services company. It has been raising its dividend consistently for the past 9 years. Currently, it pays a quarterly dividend of $0.22 per share, with a dividend yield of 2.58%, as recorded on August 30.
In July, RBC Capital reiterated its Outperform rating on Bank of America Corporation (NYSE:BAC) and appreciated its diversified business model in the current economic landscape. The firm further lauded the company’s strong revenue growth.
The number of hedge funds tracked by Insider Monkey owning stakes in Bank of America Corporation (NYSE:BAC) stood at 99 in Q2 2022, the same as in the previous quarter. The collective value of these stakes is roughly $36 billion. Warren Buffett, Ken Griffin, and D. E. Shaw were some of the company’s major stakeholders in Q2.
Miller Value Partners mentioned Bank of America Corporation (NYSE:BAC) in its Q1 2022 investor letter. Here is what the firm has to say:
“There are many times when volatility and beta give false signals. Banks outperformed in the post-tech bubble bear market of the early 2000s. At the market peak prior to the financial crisis (when risk was the highest in those names!), Bank of America (NYSE:BAC) had a 0.9x beta (based on the trailing 5 years) suggesting its “risk” was below the market’s. Wrong! It massively underperformed in the financial crisis. Realized beta over the 5 years from the pre-crisis’ 2006 peak measured 2.3x.
A much better indicator of actual risk, both before and after the financial crisis, was the quality of the balance sheet and risk-taking appetite. Beta is backwards looking and non-stationary. Relying on it underestimated risk going into the financial crisis and overestimated coming out of it (its beta has continued to fall over the past decade).
We care greatly about risk. We spend a significant amount of time thinking about the risks to our investments. We measure risk as permanent impairment of capital, which means the prices and values don’t bounce back. Business fundamentals determine risk.”
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