In this article, we discuss 5 best income stocks to invest in. If you want to see more stocks in this selection, check out 12 Best Income Stocks To Invest In.
5. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 56
Dividend Yield as of October 19: 5.85%
Philip Morris International Inc. (NYSE:PM), the New York-based tobacco giant, is one of the best income stocks to invest in. On September 14, Philip Morris International Inc. (NYSE:PM) declared a $1.27 per share quarterly dividend, a 1.6% increase from its prior dividend of $1.25. The dividend was distributed to shareholders on October 12. The dividend yield on October 19 came in at 5.85%.
Morgan Stanley analyst Pamela Kaufman on October 14 reiterated an Overweight rating on Philip Morris International Inc. (NYSE:PM) but lowered the price target on the shares to $102 from $112. While trimming her target, the analyst said she expects Philip Morris International Inc. (NYSE:PM) to post “solid” Q3 results and that her latest meetings with management underscored resilient underlying fundamentals. Given the stock’s 12% pullback over the last month and present valuation, she sees an “attractive buying opportunity”.
According to Insider Monkey’s data, 56 hedge funds were long Philip Morris International Inc. (NYSE:PM) at the end of the second quarter of 2022, compared to 55 funds in the last quarter. Rajiv Jain’s GQG Partners is the largest stakeholder of the company, with 30.4 million shares valued at $3 billion.
Here is what Artisan Partners specifically said about Philip Morris International Inc. (NYSE:PM) in its Q2 2022 investor letter:
“On the positive side of the ledger, our top contributor was Swedish Match, a Swedish tobacco and nicotine products maker. The company received an all-cash takeover offer from rival Philip Morris International Inc. (NYSE:PM), which we also held in the portfolio, for SEK 106 per share—a 35% premium to Swedish Match’s prior closing share price. The deal is a good fit for PM as it reduces PM’s dependence on cigarettes—a category in steady decline—and accelerates the company’s transition to smokeless “reduced-risk” products (RRPs)—a category that has experienced rapid growth over the past five years. PM can also leverage its global scale to generate significant revenue synergies from these complementary product sets, as well as quickly gain access to the US market—the world’s largest market for RRPs and one where regulators have embraced RRPs and other less harmful nicotine products. We exited our position in Swedish Match as shares approached the takeout price.”
4. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 57
Dividend Yield as of October 19: 6.62%
Devon Energy Corporation (NYSE:DVN) is an Oklahoma-based independent energy company, primarily engaged in the exploration, development, and production of oil, natural gas, and natural gas liquids in the United States. On August 1, Devon Energy Corporation (NYSE:DVN) declared a $1.55 per share quarterly dividend, a 22% increase from its last dividend of $1.27. This dividend has a fixed and variable component, and in Q2 2022, the board approved an increase in the fixed dividend of 13% or $0.02 per share. The dividend was paid to shareholders on September 30. Devon Energy Corporation (NYSE:DVN) is one of the best income stocks to consider.
On October 18, Piper Sandler analyst Mark Lear raised the price target on Devon Energy Corporation (NYSE:DVN) to $96 from $94 and reaffirmed an Overweight rating on the shares. After a turbulent September, exploration and production names are “back on solid footing” heading into the Q3 results with the “OPEC+ supply cuts mostly to thank,” the analyst told investors in a bullish thesis.
According to Insider Monkey’s Q2 data, 57 hedge funds were long Devon Energy Corporation (NYSE:DVN), compared to 66 funds in the last quarter. Ken Fisher’s Fisher Asset Management features as a significant stakeholder of the company, with 4.2 million shares worth $232.3 million.
GoodHaven Capital Management released its second-quarter 2022 investor letter and mentioned Devon Energy Corporation (NYSE:DVN). Here is what it said:
“Our biggest dollar gainer within this period was Devon Energy Corporation (NYSE:DVN), a position which emanated from a takeover in early 2021 of our long time holding WPX Energy. We are sitting on a material (unrealized) gain from our cost and are now receiving material dividends thanks to Devon’s thoughtful fixed/variable dividend policy. Energy is now a hot sector for investors but we have had a material exposure for a long time. We remember a bit too well $40 oil, NEGATIVELY PRICED front-month oil contract, and what it’s like to own a company with leverage and negative free cash flow during such periods. Our desire to have our biggest portfolio exposures be high return, growing, reasonably predictable and moderately levered companies lead us to reduce our Devon exposure in the past. When the recent facts and circumstances for the industry changed and appeared supportive of healthy oil prices, we decided to maintain a sizable holding and more recently added to the position. At Devon’s Q1 dividend rate, which is mostly variable in nature, the shares now yield approximately 10% and our yield on our average cost is materially higher. In addition, we maintain additional energy exposure through our long-term (and successful) holding in Hess Midstream and less directly through TerraVest and Berkshire Hathaway’s energy investments.”
3. Blackstone Inc. (NYSE:BX)
Number of Hedge Fund Holders: 61
Dividend Yield as of October 19: 6.65%
Blackstone Inc. (NYSE:BX) is headquartered in New York, with offices across Asia, Europe, and North America. It is an alternative asset management firm specializing in real estate, private equity, hedge fund solutions, credit, secondary funds of funds, public debt and equity, and multi-asset class strategies. Blackstone Inc. (NYSE:BX) delivers a dividend yield of 6.65%.
On October 12, Deutsche Bank analyst Brian Bedell assigned a Buy recommendation to Blackstone Inc. (NYSE:BX) but slashed the price target on the shares to $134 from $153. The analyst views the alternative asset managers and exchanges as best positioned into the Q3 earnings prints. Overall, the analyst sees this year’s price drops as providing “good long-term entry points” for much of his coverage.
According to Insider Monkey’s Q2 data, 61 hedge funds were long Blackstone Inc. (NYSE:BX), with combined stakes worth $1.85 billion, compared to 61 funds in the prior quarter worth $2.8 billion. Thomas Steyer’s Farallon Capital is the largest stakeholder of the company, with 2.82 million shares worth $257.40 million.
Here is what RiverPark Funds specifically said about Blackstone Inc. (NYSE:BX) in its Q2 2022 investor letter:
“Blackstone Inc. (NYSE:BX) has been investing in private markets since 1987. The company today has over $900 billion in assets under management as compared with about $70 billion at the time of its 2007 debut as a public company. The company’s world-class reputation is built on its superior investment returns which, in private equity, have delivered a compounded 16% net to investors for over 30 years.
BX’s business is asset light and brand heavy as the company has virtually no net debt against its $110 billion equity market capitalization and pays out a large percentage of its earnings each year in dividends (while also supporting a steady stock buyback program). Fee related earnings (a conservative proxy for EPS that does not include lucrative performance fees) have increased 225% since the company’s Investor Day 3.5 years ago, having compounded more than 35% annually over that time.
The company continues to target strong AUM growth, expecting to raise in excess of $150 billion in new assets over the next 1.5 years as it continues to lead in an alternative management industry that continues to take share of institutional assets. AUM in the alt space has steadily migrated up from a low single digit share 25 years ago to the low 30% range today with substantial additional growth coming from the retail and insurance industries. By 2030, some analysts estimate that allocations to alternatives could double again to over 60% of institutional AUM. Today, while AUM in the alternative industry has grown to $10 trillion, there are over $250 trillion of assets in stocks and bonds, leaving a vast runway of growth available for the future…” (Click here to read the full text)
2. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 72
Dividend Yield as of October 19: 3.42%
Exxon Mobil Corporation (NYSE:XOM), the American energy giant, is one of the top income stocks to invest in. Exxon Mobil Corporation (NYSE:XOM) has increased its annual dividend payments to shareholders for 39 consecutive years and it is one of the most prominent dividend aristocrats to consider. The company delivers a dividend yield of 3.42% as of October 19.
Jefferies analyst Lloyd Byrne on October 18 upgraded Exxon Mobil Corporation (NYSE:XOM) to Buy from Hold with a price target of $133, up from $90. Exxon Mobil Corporation (NYSE:XOM) invested through the cycle, while the rest of the industry restricted capital, said the analyst. Capital expenditure paired with increasing commodity prices allows Exxon to de-lever and position for growth in both the Upstream and Downstream segments, the analyst told investors.
According to Insider Monkey’s data, 72 hedge funds were bullish on Exxon Mobil Corporation (NYSE:XOM) at the end of June 2022, compared to 83 funds in the prior quarter. Rajiv Jain’s GQG Partners is the largest stakeholder of the company, with 47.5 million shares worth over $4 billion.
In its Q2 2022 investor letter, First Eagle Investments, an asset management firm, highlighted a few stocks and Exxon Mobil Corporation (NYSE:XOM) was one of them. Here is what the fund said:
“Integrated oil and gas giant Exxon Mobil Corporation (NYSE:XOM) performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industry wide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”
1. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 82
Dividend Yield as of October 19: 4.72%
Citigroup Inc. (NYSE:C), a New York-based diversified financial services holding company, is one of the premier income stocks to monitor. On October 14, Citigroup Inc. (NYSE:C) posted a Q3 non-GAAP EPS of $1.50 and a revenue of $18.51 billion, outperforming Wall Street consensus by $0.05 and $230 million, respectively. The revenue rose 6.1% year-over-year due to restructuring moves. Citigroup Inc. (NYSE:C)’s dividend yield as of October 19 stood at 4.72%.
BMO Capital analyst James Fotheringham on October 17 reaffirmed an Outperform rating on Citigroup Inc. (NYSE:C) and lowered the price target on the shares to $71 from $76. The company posted “mixed” Q3 results with resilient performance across Services, Branded Cards, and Retail Services being offset by softer results in Investment Banking, Trading, and Global Wealth segments, the analyst told investors in a research note. However, the analyst contended that the resumption of share repurchases by the end of the third quarter is a potential positive catalyst for Citigroup Inc. (NYSE:C).
Among the hedge funds tracked by Insider Monkey, 82 funds reported owning stakes worth $7.4 billion in Citigroup Inc. (NYSE:C) at the end of Q2 2022, compared to 88 funds in the last quarter worth $8.1 billion. Warren Buffett’s Berkshire Hathaway is the largest position holder in the company, with more than 55 million shares valued at $2.5 billion.
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.”
You can also take a look at 10 Best Video Game Stocks To Buy and 12 Best Fortune 500 Dividend Stocks To Buy.
