In this article, we discuss 5 dividend stocks Redditors are buying for recession. If you want to read our detailed analysis of dividend stocks, go directly to 10 Dividend Stocks Redditors are Buying for Recession.
5. Target Corporation (NYSE:TGT)
Dividend Yield as of July 10: 2.92%
Target Corporation (NYSE:TGT) is a Minnesota-based big box-store company and one of America’s leading retailers. After delivering better-than-expected results in Q1 2022, the company expects its operating margins to be around 5.3% in the second quarter and revenue growth in the low-to-mid single-digits range.
On June 9, Target Corporation (NYSE:TGT) announced a quarterly dividend of $1.08 per share, up 20% from its previous payout. In Q1, the company paid 27.8% of its net income in dividends, which shows that it had more than sufficient cash left to fulfill its other financial obligations. It has raised its dividends for the past 51 consecutive years while growing its payouts by 300% in the last ten years. Over its history of 120 years, Target Corporation (NYSE:TGT) has survived nearly 19 recessions, becoming one of the best dividend stocks for recession. The stock’s dividend yield came in at 2.92%, as of July 10.
With consumers shifting their attention to essentials from discretionary products, Credit Suisse set a $180 price target on Target Corporation (NYSE:TGT) and kept an ‘Outperform’ rating on the shares.
At the end of Q1 2022, 50 of the hedge funds that are tracked by Insider Monkey’s database owned stakes in Target Corporation (NYSE:TGT), up from 49 in the previous quarter. The collective value of those stakes was nearly $3 billion. Arrowstreet Capital held the largest position in the company in Q1.
4. Realty Income Corporation (NYSE:O)
Dividend Yield as of July 10: 4.31%
Realty Income Corporation (NYSE:O) is an American real estate investment trust that is also known among Redditors for being a monthly dividend stock.
Realty Income Corporation (NYSE:O) has a long and solid history of dividend payments. On June 14, the company raised its monthly dividend by 0.2% to $0.2475 per share. This was the company’s 623rd-consecutive monthly dividend payout, throughout its 53-year history. Moreover, it has raised its dividend 116 times since its IPO in 1994. Realty Income Corporation (NYSE:O) derives its cash flow from 11,200 real estate properties, a figure which is expected to increase in the coming years as the company continues to expand its footprint. The stock’s dividend yield was recorded at 4.31% on July 10.
In June, Credit Suisse named Realty Income Corporation (NYSE:O) one of the firm’s ‘Top Picks’ and initiated its coverage of the stock with an ‘Outperform’ rating and $75 price target.
As per Insider Monkey’s Q1 2022 database, 22 hedge funds held investments in Realty Income Corporation (NYSE:O), down from 30 funds a quarter earlier. The collective value of these investments stood at over $284.8 million.
3. 3M Company (NYSE:MMM)
Dividend Yield as of July 10: 4.63%
3M Company (NYSE:MMM) is a mining and manufacturing company that produces a wide range of products in the fields of industry, healthcare, and consumer goods.
3M Company (NYSE:MMM) has raised its dividend every year since 1958, including through ten recessions, coming through as one of the best dividend stocks for recession. In 2021, the company generated $5.6 billion in free cash flow and paid $3.35 billion in dividends. This shows that its dividends are well covered within its FCF for the foreseeable future. 3M Company (NYSE:MMM) currently offers a quarterly payout of $1.49 per share, with a yield of 4.63% as of July 10. The company’s payout ratio has also improved to 59.3% in 2022, from 68.5% in 2020.
In July, Barclays lowered its price target on 3M Company (NYSE:MMM) to $143, with an ‘Underweight’ rating on the shares, as it sees declining demand for industrial products.
At the end of March 2022, 3M Company (NYSE:MMM) remained popular among elite funds, as 51 hedge funds owned stakes in the company, up from 41 a quarter earlier. Those 51 stakes held a collective value of over $1.53 billion. With over 6 million shares, Fisher Asset Management was the company’s largest stakeholder in Q1.
2. Verizon Communications Inc. (NYSE:VZ)
Dividend Yield as of July 10: 5.67%
Verizon Communications Inc. (NYSE:VZ) is a multinational tech company that offers voice, data, and video services and solutions to its consumers. In June, Wells Fargo added VZ to its recession stock portfolio as the economy faces a market-driven recession. The firm upgraded the stock to ‘Overweight’.
Verizon Communications Inc. (NYSE:VZ) has raised its dividends through every crisis of the past two decades, including the pandemic of 2020. Though the company’s cash flow fell to $6.8 billion in Q1 2022 from $9.7 billion a year earlier, it still has enough room to grow its dividends in the coming years. Verizon Communications Inc. (NYSE:VZ) had a payout ratio of 46.8% in Q1, improving from 55.9% in 2020. The company’s current quarterly dividend stands at $0.64 per share, with a yield of 5.67%, recorded on July 10.
In June, Scotiabank assumed its coverage on Verizon Communications Inc. (NYSE:VZ) with an ‘Outperform’ rating and a $59 price target. The firm presented a positive outlook on the wireless business.
As of the quarter ended in March 2022, 69 hedge funds tracked by Insider Monkey owned stakes in Verizon Communications Inc. (NYSE:VZ), up from 63 in the previous quarter. The collective value of those stakes was over $4.12 billion. Fisher Asset Management was the company’s leading shareholder in Q1.
Weitz Investment Management mentioned Verizon Communications Inc. (NYSE:VZ) in its Q4 2021 investor letter. Here is what the firm had to say:
“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”
1. Altria Group, Inc. (NYSE:MO)
Dividend Yield as of July 10: 8.67%
Altria Group, Inc. (NYSE:MO) is a Virginia-based manufacturing company that specializes in tobacco, cigarettes, and related products. On June 24, Morgan Stanley upgraded the stock to ‘Equal Weight’, highlighting the company’s fundamentals and long-term structural positioning. The firm maintained a $43 price target on the stock.
At the end of Q1, Altria Group, Inc. (NYSE:MO) had over $5.3 billion available in cash and cash equivalents, up from $4.5 billion in the previous quarter. The company paid nearly $1.3 billion in dividends in Q1, which shows its financial strength. Altria Group, Inc. (NYSE:MO) has grown its dividend payments 56 times in the past 52 years, with its 5-year dividend CAGR standing at 8.09%. The company currently offers a quarterly payout of $0.90 per share, with a yield of 8.67%.
The number of hedge funds tracked by Insider Monkey that reported owning stakes in Altria Group, Inc. (NYSE:MO) stood at 47 in Q1, up from 39 in the previous quarter. Those stakes held a consolidated value of nearly $2 billion.
You can also take a look at 12 Best Bear Market Stocks to Buy Now and Top Stock Picks of Michael Burry.
