In this article, we discuss 5 dividend stocks Redditors buy for early retirement. If you to see some more dividend stocks, go to 10 Dividend Stocks Redditors Buy for Early Retirement.
5. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 39
Dividend Yield as of March 11: 7.13%
Headquartered in Richmond, Virginia, Altria Group, Inc. (NYSE:MO) manufactures and markets smokeable and oral tobacco products in the United States. Although green investors shy away from Altria Group, Inc. (NYSE:MO) due to its harmful products, Redditors were strongly inclined towards the tobacco manufacturer, owing to its high yield and solid dividend history.
Altria Group, Inc. (NYSE:MO) on February 25 declared a $0.90 per share quarterly dividend, in line with previous. The dividend will be paid on April 29, to shareholders of record on March 25. Altria Group, Inc. (NYSE:MO)’s dividend yield on March 11 was 7.13%.
Among the hedge funds tracked by Insider Monkey, 39 funds were bullish on Altria Group, Inc. (NYSE:MO) at the end of December 2021, as compared to 45 funds in the previous quarter. GQG Partners held the biggest stake in the company, owning over 9 million shares worth approximately $435 million.
Here is what Broyhill Asset Management has to say about Altria Group, Inc. (NYSE:MO) in its Q2 2021 investor letter:
“Altria (MO) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 20%. We shared our thoughts on these regulations during the quarter, which are available here.
MO Valuation. MO is up ~ 18% YTD (even accounting for the recent sell-off). We expect MO to generate close to $5 in annual FCF per share over the next few years, putting the stock at ~ 10x, which is less than half the market’s multiple today. Over the last decade, shares have traded at an average multiple of 15x and within a range of ~ 10x – 20x (+/-1 standard deviation). The stock yields 7.2% at the current price, close to a 6% premium to treasuries. Historically, shares have traded closer to a 3% premium to the 10Y, which would imply a ~ $75 share price.”
4. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 60
Dividend Yield as of March 11: 2.80%
PepsiCo, Inc. (NASDAQ:PEP) is a New York-based multinational beverage corporation that markets its products worldwide. PepsiCo, Inc. (NASDAQ:PEP) is a favorite stock of several Redditors for early retirement, since they have gained consistently from PepsiCo, Inc. (NASDAQ:PEP)’s steady dividend growth over the years.
On February 10, PepsiCo, Inc. (NASDAQ:PEP) announced a 7% increase in its annualized dividend to $4.60 per share from $4.30 per share, effective with the dividend expected to be paid in June 2022. This represents the company’s 50th consecutive annual dividend per share increase.
Elite hedge funds hold large stakes in PepsiCo, Inc. (NASDAQ:PEP). In the December quarter, 60 funds were bullish on PepsiCo, Inc. (NASDAQ:PEP), compared to 61 funds in the prior quarter. Total stakes held in Q4 2021 amounted to $4.64 billion. Fundsmith LLP is the largest shareholder of the company, with 10.4 million shares worth $1.80 billion.
Here is what Saturna Capital Amana Funds has to say about PepsiCo, Inc. (NASDAQ:PEP) in its Q4 2021 investor letter:
“Given the likelihood of rising inflation and interest rates ahead, we anticipate adjustments to the portfolio to reduce exposure to highly valued stocks dependent on low interest rates to support terminal year valuations, while seeking investments in companies more correlated with a return to economic normalcy. We sold our positions in Pepsi. We believe Pepsi to be a well-run firm, but its products are not in keeping with an ESG mandate. Additionally, it has entered a joint venture to produce and distribute alcoholic beverages, making it ineligible for the portfolio.”
3. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 63
Dividend Yield as of March 11: 1.58%
Walmart Inc. (NYSE:WMT) is an American retail chain that operates supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, and discount stores.
Morgan Stanley analyst Simeon Gutman on February 22 lowered the price target on Walmart Inc. (NYSE:WMT) to $165 from $170 and kept an Overweight rating on the shares.
Walmart Inc. (NYSE:WMT) is a steady dividend stock, and it raised its annual dividend on February 17 to $2.24 per share, marking the 49th consecutive year of dividend increases. This is an increase of approximately 2% from the $2.20 per share paid for the last fiscal year. A quarterly payment of $0.56 per share will be made on April 4, to shareholders of record on March 18.
According to the fourth quarter database of Insider Monkey, 63 elite funds were long Walmart Inc. (NYSE:WMT), as compared to 71 funds in the earlier quarter. Bill & Melinda Gates Foundation Trust endorses the stock, holding close to 7 million Walmart Inc. (NYSE:WMT) shares worth more than $1 billion.
2. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 80
Dividend Yield as of March 11: 3.53%
Merck & Co., Inc. (NYSE:MRK) is a healthcare company that develops animal and human health products. The main therapeutic focus areas at Merck & Co., Inc. (NYSE:MRK) include oncology, immunology, neuroscience, virology, cardiovascular, and diabetes.
On January 25, Merck & Co., Inc. (NYSE:MRK) declared a quarterly dividend of $0.69 per share, distributable on April 7, to shareholders of record at the close of business on March 15.
JPMorgan analyst Chris Schott lowered the price target on Merck & Co., Inc. (NYSE:MRK) to $95 from $100 and kept an Overweight rating on the shares on January 28. The analyst does not expect any major surprises with the 2022 guidance based on the positive momentum he’s seeing in Merck & Co., Inc. (NYSE:MRK)’s core business and with near-term upside from Molnupiravir sales.
The fourth quarter database of Insider Monkey suggests that 80 hedge funds were bullish on Merck & Co., Inc. (NYSE:MRK), up from 77 funds in the prior quarter. Fisher Asset Management is the biggest shareholder of the company, owning 11.40 million shares worth $874.4 million.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 262
Dividend Yield as of March 11: 0.89%
Microsoft Corporation (NASDAQ:MSFT) is a reliable blue chip dividend stock that was reported by several Redditors as part of their early retirement income portfolios, which is a testament to the company’s solid dividend history, consistency of performance, and fortress balance sheet.
Morgan Stanley analyst Keith Weiss on February 8 extended his Microsoft Corporation (NASDAQ:MSFT) forecast to five years to highlight what he sees as a “durable EPS growth story”, arguing that Microsoft Corporation (NASDAQ:MSFT) positions well against multiple secular growth trends, which leads him to forecast the company sustaining a 15% revenue compound annual growth rate through calendar year 2026. He maintained an Overweight rating and a $372 price target on Microsoft Corporation (NASDAQ:MSFT), which he said “remains a strong buy at current levels”.
On December 7, Microsoft Corporation (NASDAQ:MSFT) declared a quarterly dividend of $0.62 per share. The dividend was paid on March 10, to shareholders of record on February 17.
Microsoft Corporation (NASDAQ:MSFT) is a favorite tech stock in the hedge fund universe. A total of 262 funds were bullish on Microsoft Corporation (NASDAQ:MSFT) in Q4 2021, up from 250 funds in the prior quarter. Arrowstreet Capital is a prominent Microsoft Corporation (NASDAQ:MSFT) shareholder, with more than 17 million shares worth $5.7 billion.
Here is what Saturna Capital Amana Funds has to say about Microsoft Corporation (NASDAQ:MSFT) in its Q4 2021 investor letter:
“Only two companies remain from 2010’s top 10 list: Apple and Microsoft. Going back to 2000, only Microsoft remains. We expect that Microsoft will maintain its position as the dominant global provider of personal and business software, while growing its cloud business and potentially being a key provider of augmented and mixed hardware and software.
US Technology companies have been the equity market’s biggest winners in recent years. Because of the Amana Income Fund’s objective of current income, many of these zero- or low-dividend companies do not suit the Fund’s mandate. One that does — Microsoft, which returned 46.03% for 2021 — was the Fund’s second biggest contributor to returns during the year. While Technology no doubt underpins much of the current economy and its future potential, Tech stocks have also benefited from low inflation, globalization, and valuations that are near historic highs. With globalization backsliding and inflation worries escalating, we believe companies in other industries with strong financial positions, competitive advantages, strong management, attractive dividend yields, and reasonable valuations can offer investors diversification in the context of equity markets increasingly concentrated in a handful of very large Technology firms.”
You can also take a look at 10 Dividend Stocks with Over 10% Yield and 10 Companies That Topped Profit Expectations.
