In this article, we take a look at the 5 best high dividend stocks to buy now. If you want to read our detailed analysis of these stocks, go directly to 10 Best High Dividend Stocks to Buy Now.
5. ONEOK, Inc. (NYSE:OKE)
Dividend yield as of March 2: 5.86%
Number of Hedge Fund Holders: 25
ONEOK, Inc. (NYSE:OKE) is one of the high-yielding dividend stocks in the midstream industry being watched by income investors because it has increased dividends consistently for the past 19 years and has an 8.74% five-year dividend growth rate.
The Oklahoma-based NGL processor reported its full-year 2021 earnings on February 28. Net income came in at $1.5 billion. In addition, ONEOK, Inc. (NYSE:OKE) ended the year with a total debt reduction of more than $600 million. As of the end of February, shares of ONEOK, Inc. (NYSE:OKE) jumped 41% in the previous year.
25 elite funds held stakes in ONEOK, Inc. (NYSE:OKE) at the end of the fourth quarter of 2021, up from 18 the previous quarter. Adage Capital Management, led by Phill Gross and Robert Atchinson, owns the most shares in ONEOK, Inc. (NYSE:OKE), with a total holding of $27.9 million.
Miller Howard Investments, in its Q3 2021 investor letter, mentioned ONEOK, Inc. (NYSE:OKE) and discussed its stance on the firm. Here is what the fund said:
” In late August, we increased the portfolio’s cyclical exposure by trimming utilities after a period of relative outperformance and reallocating the capital to midstream energy, which had pulled back over the summer. We added ONEOK Inc. (OKE) with the expectation that it will benefit from increasing natural gas and natural gas liquids (NGL) recovery in the Bakken region.”
4. Kinder Morgan, Inc. (NYSE:KMI)
Dividend yield as of March 2: 6.21%
Number of Hedge Fund Holders: 39
Kinder Morgan, Inc. (NYSE:KMI) has a dividend yield of 6.33%, making it one of the highest-yielding oil midstream companies. In the last five years, the Houston-based energy infrastructure company has increased its dividend by an average of 16.65%. In 2022, Kinder Morgan, Inc. (NYSE:KMI) is guiding to distribute an annual dividend of $1.11 per share, a 3% increase from the 2021 declared dividends.
In January, Barclays analyst Theresa Chen raised her price target on Kinder Morgan, Inc. (NYSE:KMI) to $19 from $18, maintaining her Equal Weight rating on the stock. Chen mentioned that she has a “generally positive outlook for the group in 2022”.
Kinder Morgan, Inc. (NYSE:KMI) is one of the largest energy transportation and storage companies in the United States, operating 143 terminals and 83,000 miles of pipeline across North America. According to Insider Monkey’s Q4 13F filings, 39 hedge funds held stakes in Kinder Morgan, Inc. (NYSE:KMI) at the end of December 2021, for a total stake value of $999 million, compared to 43 funds in Q3 2021, for a total stake value of $1.01 billion.
3. AllianceBernstein Holding L.P. (NYSE:AB)
Dividend yield as of March 2: 8.70%
Number of Hedge Fund Holders: 5
Another high dividend stock from the financial sector followed by market analysts and hedge funds is investment management firm AllianceBernstein Holding L.P. (NYSE:AB). The New York-based investment manager pays its shareholders an annual dividend of $3.90 per share. In the last five years, AllianceBernstein Holding L.P. (NYSE:AB) has increased its dividend at an average rate of 15.23%.
AllianceBernstein Holding L.P. (NYSE:AB) had $751 billion in assets under management as of January 2022. In addition, the company provides its clients with business research and trading services, which contributed $452 million to total revenue in 2021. During the fourth quarter of 2021, 5 hedge funds had a total investment of $32.4 million in AllianceBernstein Holding L.P. (NYSE:AB), according to Insider Monkey’s 13F filings.
AllianceBernstein Holding L.P. (NYSE:AB) is likewise favored by market analysts. Citi analyst William Katz boosted his price objective for the financial stock to $64.50 from $62 in January. Katz maintained his Buy rating on the stock.
2. BHP Group Limited (NYSE:BHP)
Dividend yield as of March 2: 10.22%
Number of Hedge Fund Holders: 21
Australian miner BHP Group Limited (NYSE:BHP), the largest mining company in the world, currently pays its shareholders an annual dividend of $7 per share. As the Melbourne-based mining company announced its fiscal 2022 Q2 results in February, BHP Group Limited (NYSE:BHP) also stated that it will pay a record interim dividend of US$1.50 per share or US$7.6 billion. As of March 2, the stock gained 5.64% in the previous month.
Boston-based investment firm Arrowstreet Capital is one of the biggest stakeholders of BHP Group Limited (NYSE:BHP). According to Insider Monkey’s 13F filings, Arrowstreet increased its stake in the Australian miner by 101% during the fourth quarter of 2021. Overall, 21 funds of the 924 elite funds tracked by Insider Monkey reported owning stakes in the BHP Group Limited (NYSE:BHP) at the end of December 2021.
Meanwhile, Berenberg analyst Richard Hatch maintained his Hold rating on BHP Group Limited (NYSE:BHP) and increased his price target for the stock to 2,300 GBp from 2,200 GBp.
1. Star Bulk Carriers Corp. (NASDAQ:SBLK)
Dividend yield as of March 2: 26.79%
Number of Hedge Fund Holders: 20
Dry bulk cargo shipper Star Bulk Carriers Corp. (NASDAQ:SBLK) offers one of the highest dividend yields in the market. The Greek shipping company recently upped its quarterly dividend by 60% to $2 per share, which will be paid on March 15 to shareholders who were on the books on March 2.
Star Bulk Carriers Corp. (NASDAQ:SBLK) shares rose 6.6% following strong fourth-quarter results, in which the company announced that the average time charter equivalent (TCE) rate it was able to charge on its ships last year reached $37,406 per day, per vessel, helping the shipper in achieving “record-high profitability” in 2021. Additionally, Star Bulk Carriers Corp. (NASDAQ:SBLK) grew its cash to $473.3 million at the end of Q4 2021, up from $371.7 million at the beginning of the quarter.
Star Bulk Carriers Corp. (NASDAQ:SBLK) boasts a fleet of 128 vessels ranging from 52,000 to 210,000 DWT, making the company the largest dry bulk operator in the US and Europe. Given the Greek shipper’s strong financial position and market dominance, hedge funds have become bullish on Star Bulk Carriers Corp. (NASDAQ:SBLK). At the end of the fourth quarter, there were 20 elite funds with a $733 million stake in the high-yielding shipping company.
Here is what Massif Capital has to say about Star Bulk Carriers Corp. in its Q3 2021 investor letter:
“We initiated one long position, one short position and exited one position during the third quarter. Our new long position was in Star Bulk Carriers (SBLK), a pure-play dry bulk operator with roughly 120 controlled vessels and 14 million tons of combined cargo capacity globally.
SBLK has one of the better management teams in the maritime shipping industry and the lowest cost structure among all dry bulk names. After announcing their new dividend policy in May, SBLK now has one of the best payout structures in shipping. The firm has paid out $0.3 and $0.7 per share in dividends for the first and second quarters of 2021. SBLK will most likely announce a dividend for the third quarter somewhere in the $1.15-$1.25 per share range, depending on movement in net working capital.
We believe the best way to look at this business is through cash generation potential and how much is returned to investors. The current equity valuation does not reflect current rates for shipping (earnings), partly because of the velocity of the move in rates and because shipping cycles turn, and it’s not clear whether this is a local top of the early innings of a multi-year cycle. Our belief is the latter. Part of our catalyst is the market re-rating the stock higher once the length of the increased earnings power becomes understood. It is a relatively strong catalyst in the sense that with a strong dividend policy, we can be patient for the market to underwrite this story as the cash is either returned to us via a high dividend yield if the market is either slow or chooses not to join our side of the trade.
Our estimates suggest a time-charter equivalent rate (net profit or loss of operating a vessel daily) of at least $30,000 for SBLK in Q4, with the firm earning a potential annual average of $26,000. Our base case is that this is a strong floor going into next year, with little need to articulate much more upside. If rates hold, which we expect them to do, we could see a 20+% annual dividend year next year for SBLK. If the market priced the equity such that the dividend yield was 8%, that implies a $62 stock. Today our base case target for the firm is $37 per share. This is likely conservative as we know that third-quarter rates are higher than the second quarter, and third-quarter dividends will most likely reflect that. We are cautious about diving too deep into the sensitivities to the upside with this position as we are arriving at some pretty remunerative torque using current contracted values and seemingly conservative forecasts…” (Click here to see the full text)
You can also take a peek at the 10 Dividend Stocks With Over 5% Yield and 10 Companies Under Investors’ Radar After Releasing their Earnings Reports.
