In this article, we discuss 5 dividend stocks to buy for financial freedom. If you want to see more stocks in this selection, click 10 Dividend Stocks to Buy for Financial Freedom.
5. PepsiCo, Inc. (NASDAQ:PEP)
Dividend Yield as of May 12: 2.71%
Number of Hedge Fund Holders: 60
2022 was the 50th consecutive year of dividend increases for PepsiCo, Inc. (NASDAQ:PEP), marking it as a prominent dividend king to invest in for financial freedom. On May 3, the company declared a $1.15 per share quarterly dividend, a 7% increase from its last dividend of $1.075. The dividend is payable on June 30, to shareholders of record on June 3.
PepsiCo, Inc. (NASDAQ:PEP) announced on April 26 its fiscal Q1 results, posting earnings per share of $1.29, beating consensus estimates by $0.06. The GAAP EPS of $3.06 also exceeded forecasts by $1.83. PepsiCo, Inc. (NASDAQ:PEP)’s revenue for the period grew 9.31% year-over-year to $16.20 billion, outperforming analysts’ predictions by $658.69 million.
On April 27, JPMorgan analyst Andrea Teixeira kept an Overweight rating on PepsiCo, Inc. (NASDAQ:PEP) and raised the price target on the stock to $186 from $183. The analyst views the company’s updated 2022 guidance as conservative and told investors that its underlying performance continues to impress.
In Q4 2021, Terry Smith’s Fundsmith LLP was the biggest PepsiCo, Inc. (NASDAQ:PEP) shareholder, with 10.4 million shares worth $1.80 billion. Overall, 60 hedge funds were bullish on the stock at the end of December 2021.
Here is what ClearBridge Investments had to say about PepsiCo, Inc. (NYSE:PEP) in its Q4 2021 investor letter:
“The pandemic created opportunities for us to be more aggressive in a variety of areas of the market. We were opportunistic throughout the year. After a strong year for equities, we sought to bolster more defensive areas of the portfolio and added to PepsiCo, increasing our exposure to a high-quality and stable name.”
4. Chubb Limited (NYSE:CB)
Dividend Yield as of May 12: 1.57%
Number of Hedge Fund Holders: 34
Chubb Limited (NYSE:CB) was incorporated in 1985 and is headquartered in Zurich, Switzerland, providing insurance and reinsurance products worldwide. Chubb Limited (NYSE:CB) is a reliable dividend stock to buy for financial freedom. The company is heading towards its 29th consecutive annual dividend increase to shareholders in 2022.
On April 26, Chubb Limited (NYSE:CB) reported Q1 earnings per share of $3.82, beating consensus estimates by $0.34. The last quarterly dividend of $0.80 per share was declared on February 24, which was paid to shareholders on April 8.
Raymond James analyst C. Gregory Peters on April 28 reiterated a Strong Buy rating on Chubb Limited (NYSE:CB) and raised the firm’s price target on the shares to $250 from $240 after Q1 results came in above consensus estimates. While the analyst expects rate increases to continue to moderate, he believes rates will remain above loss cost trends through FY22.
According to Insider Monkey’s database, 34 hedge funds were bullish on Chubb Limited (NYSE:CB) at the end of December 2021, up from 30 funds in the earlier quarter. The total stakes owned in Q4 amounted to $1.7 billion, compared to $1.2 billion in Q3. Billionaire Andreas Halvorsen’s Viking Global is the largest shareholder of the company, with 3.6 million shares worth $713.6 million.
Here is what Davis Funds has to say about Chubb Limited (NYSE:CB) in their Q4 2020 investor letter:
“Chubb is now among the Fund’s largest P&C holdings at 5.2% and illustrates well why we thought there was an opportunity to add to our P&C names. Through September 30, 2020, Chubb had returned −24% for the year, reflecting investors’ fears that (1) the insurance industry would be compelled to cover substantial business interruption claims that were never intended as part of insured’s policies, (2) declining long-term rates would diminish the value of “float” (i.e., customers’ funds that insurers get to hold and invest until claims are paid), and (3) adverse trends (pre-dating the pandemic) in insured loss rates (e.g., rising litigation and settlement costs, increased frequency and severity of catastrophe losses, etc.).
With industry economics already soft, it was only a matter of time before insurance pricing would have to adjust. In fact, P&C pricing had already begun to increase in a number of business lines before COVID hit, and that trend has only increased and broadened since then. Chubb disclosed in Q3 2020 that North American commercial P&C pricing increased by more than 15% in aggregate. Some of the price increase will go to cover rising insurance loss rates, but we certainly do anticipate some dropping into underwriting profit too. Admittedly, some of that increased underwriting profit will itself get offset by a decline in investment income owing to lower interest rates, but that is a “feature,” if you will, of P&C insurance companies. Unlike a bank, where the floor on its deposit funding costs practically speaking is zero, there is in theory no reason underwriting profit cannot increase to offset low interest rates, so it is feasible for its earnings to “normalize” far in advance of an eventual rise in long-term rates. (Click here to read full text)
3. General Dynamics Corporation (NYSE:GD)
Dividend Yield as of May 12: 2.26%
Number of Hedge Fund Holders: 48
General Dynamics Corporation (NYSE:GD) is a Virginia-based aerospace and defense company that operates via four segments – Aerospace, Marine Systems, Combat Systems, and Technologies. General Dynamics Corporation (NYSE:GD)’s dividend yield on May 12 came in at 2.26%, and the board approved its 25th consecutive annual dividend hike in 2022.
On March 2, General Dynamics Corporation (NYSE:GD) declared a $1.26 per share quarterly dividend, a 5.9% increase from its prior dividend of $1.19. The dividend was distributed on May 6, to shareholders of the company as of April 8.
General Dynamics Corporation (NYSE:GD) reported its first quarter financial results on April 27, posting earnings per share of $2.61, above consensus by $0.09. The Q1 revenue of $9.39 billion also outperformed analysts’ predictions by $371.23 million.
Susquehanna analyst Charles Minervino on April 28 maintained a Positive rating on General Dynamics Corporation (NYSE:GD) and raised the price objective on the shares to $285 from $280. The analyst observed that the company continues to benefit from a strong recovery in the business jet market due to the robust Aerospace orders, which should generate high revenue growth and margin expansion in the coming years.
According to Insider Monkey’s Q4 data, 48 hedge funds were long General Dynamics Corporation (NYSE:GD), up from 36 funds in the prior quarter. James A. Star’s Longview Asset Management held the largest stake in the company, with more than 30 million shares worth $6.2 billion.
Here is what Oakmark Global Fund has to say about General Dynamics Corporation (NYSE:GD) in their Q1 2021 investor letter:
“The second new U.S. equity purchase was General Dynamics, a leading U.S. defense contractor and owner of the world’s premier business jet franchise (Gulfstream). We were able to purchase this high-quality and durable business at a meaningful discount to our estimate of its intrinsic value after a series of near-term concerns hurt its share price. Taking a longer term view, the company’s business jet franchise should benefit from a multi-year investment program in new, differentiated products. Also, its free cash flow conversion is set to improve materially and the company is poised to benefit from a highly visible ramp up in revenue related to next generation nuclear-powered submarines. As these positives come into clearer view, we expect sentiment to improve, along with the company’s share price.”
2. Atmos Energy Corporation (NYSE:ATO)
Dividend Yield as of May 12: 2.43%
Number of Hedge Fund Holders: 20
Atmos Energy Corporation (NYSE:ATO) is a Texas-based company that offers regulated natural gas distribution, as well as gas pipelines and storage in the United States. Atmos Energy Corporation (NYSE:ATO) declared on May 4 a $0.68 per share quarterly dividend, payable on June 6, to shareholders of record on May 23. The company has raised its dividend payouts for 37 years consistently.
On May 4, Atmos Energy Corporation (NYSE:ATO) reported earnings for the first fiscal quarter of 2022. The company posted an EPS of $2.37, beating consensus estimates by $0.03. The Q1 revenue came in at $1.65 billion, up 25.07% year-over-year, outperforming analysts’ predictions by $256.51 million.
Wells Fargo analyst Sarah Akers maintained an Overweight rating on Atmos Energy Corporation (NYSE:ATO) and raised the price target on the shares to $130 from $120 on May 5. With fiscal Q2 in the books, Atmos Energy Corporation (NYSE:ATO) updated the 2022 EPS guidance range to $5.50-5.60, the analyst noted. She remains impressed by Atmos Energy Corporation (NYSE:ATO)’s execution, which is driven by strong underlying customer growth and constructive regulatory treatment.
According to Insider Monkey’s fourth quarter database, 20 hedge funds were long Atmos Energy Corporation (NYSE:ATO), up from 16 funds in the preceding quarter. Rajiv Jain’s GQG Partners held the largest position in the company, with 3.5 million shares worth $375.2 million.
1. Johnson & Johnson (NYSE:JNJ)
Dividend Yield as of May 12: 2.56%
Number of Hedge Fund Holders: 83
Johnson & Johnson (NYSE:JNJ), the American multinational healthcare corporation, is one of the most notable dividend stocks. 2022 marked the 60th annual dividend increase at Johnson & Johnson (NYSE:JNJ), which merits its inclusion in our list of dividend stocks to buy for financial freedom.
On April 19, Johnson & Johnson (NYSE:JNJ) declared a $1.13 per share quarterly dividend, a 6.6% increase from its prior dividend of $1.06. The dividend is payable on June 7, to shareholders of the company as of May 24. Johnson & Johnson (NYSE:JNJ)’s dividend yield on May 12 stood at 2.56%.
Citi analyst Joanne Wuensch on April 20 reiterated a Buy recommendation on Johnson & Johnson (NYSE:JNJ) and raised the price target on the shares to $210 from $203. The company’s Q1 results reflected a recovery across the business balanced by expense and currency headwinds, the analyst told investors. The core business “seems to be gaining its footing with forward commentary fairly robust”, said the analyst.
According to Insider Monkey’s Q4 database, 83 hedge funds were bullish on Johnson & Johnson (NYSE:JNJ), with collective stakes worth $7.3 billion. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is a prominent shareholder of the company, with 4.8 million shares worth $829.3 million.
You can also take a look at 10 Best Micro-Cap Stocks to Buy According to Hedge Funds and 10 Growth ETFs to Buy Now.
