In this article, we discuss the 5 dividend stocks with over 5% yield. If you want to read our detailed analysis of these stocks, go directly to the 10 Dividend Stocks With Over 5% Yield.
5. Enterprise Products Partners L.P. (NYSE:EPD)
Dividend yield as of February 27: 7.82%
Number of Hedge Fund Holders: 21
Enterprise Products Partners L.P. (NYSE:EPD) is another high-yielding dividend stock from the midstream industry. Enterprise Products Partners L.P. (NYSE:EPD) provides a $1.86 yearly dividend to its stockholders. The Houston-based company operates approximately 50,000 miles of pipelines, multiple natural gas processing units, and several import and export terminals in the US.
Investors are drawn to Enterprise Products Partners L.P. (NYSE:EPD) not only because of its dividends but also because of its strong financial health, as seen by its latest Q4 2021 revenue and earnings. Revenue for the fourth quarter was $11.4 billion, up from $7.04 billion in Q4 2020, and total revenue for 2021 increased by 50% year on year to $40.8 billion. In addition, Enterprise Products Partners L.P. (NYSE:EPD) ended 2021 with $6.3 billion of free cash flow, up from $2.7 billion in 2020, owing primarily to the net effect of changes in working capital accounts and a decrease in capital expenditures.
As of the fourth quarter of 2021, 21 hedge funds out of the 924 funds tracked by Insider Monkey held stakes in Enterprise Products Partners L.P. (NYSE:EPD). New York-based investment management firm First Eagle Investment Management is the company’s biggest stakeholder. The firm held shares of Enterprise Products Partners L.P. (NYSE:EPD) since the first quarter of 2020 and increased its stake in the energy company by 12% as of the fourth quarter of 2021, bringing its total holdings to 3.14 million shares valued at $69 million.
Here is what ClearBridge Investments has to say about Enterprise Products Partners L.P. in its Q1 2021 investor letter:
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names (including) Enterprise Products Partners LP. We are positive on this company’s strong balance sheets, competitive positions, and exposure to economic recovery.”
4. Lumen Technologies, Inc. (NYSE:LUMN)
Dividend yield as of February 27: 9.91%
Number of Hedge Fund Holders: 39
Lumen Technologies, Inc. (NYSE:LUMN), formerly known as CenturyLink, Inc., is another high-yielding dividend stock from the telecom sector. The company offers a dividend yield of 9.91%. Lumen Technologies, Inc. (NYSE:LUMN) offers tech and connectivity solutions from IT consulting to cloud connectivity. As of the end of December 2021, the company has approximately 4.5 million broadband subscribers.
At the end of the fourth quarter of 2021, 39 hedge funds in the database of Insider Monkey held stakes worth $1.08 billion in Lumen Technologies, Inc. (NYSE:LUMN). Knoll Capital Management held 100,000 shares of Lumen Technologies, Inc. (NYSE:LUMN) in Q4 2021, making the hedge fund firm the biggest stakeholder of the company.
Here is what Longleaf Partners Small-Cap Fund Commentary has to say about Lumen Technologies, Inc. in its Q4 2021 investor letter:
“Lumen (39%, 4.22%; 3%, 0.38%), the global fiber company, was the top absolute and relative contributor for the year. CEO Jeff Storey took two actions this year to substantially increase the business’s value and address the stock’s enormous discount (it trades below 35% of our appraisal value). First, during the third quarter, Lumen sold its Latin American fiber for a good price (9x EBITDA) and the weaker half of its US consumer business for an encouraging 5.5x EBITDA. Both multiples came in above our appraisals and demonstrate how cheap the consolidated Lumen RemainCo is today at less than 6x P/FCF and EV/EBITDA. The majority of Lumen’s remaining EBITDA comes from its US Enterprise and SMB segments, which grow faster than Lumen’s disposed LatAm fiber and are worth higher multiples. The weakest segment of the new Lumen, the western half of Consumer, is superior to the assets the company just sold for 5.5x EBITDA. Second, Storey quickly repurchased 7% of Lumen’s shares, adding meaningfully to value per share and free cash flow per share. When the dispositions close, proceeds will reduce debt meaningfully, putting net debt right at the company’s leverage ratio target even though that target was based on the prior, inferior business mix. We are pleased that our engagement since filing an amended 13D helped the company begin to deliver positive corporate actions. The market has fixated on the potential for another dividend cut, but Lumen’s FCF is more than sufficient to cover the $1/share payout while investing aggressively into high-return, edge-out CAPEX to grow revenues.”
3. Rio Tinto Group (NYSE:RIO)
Dividend yield as of February 27: 10.09%
Number of Hedge Fund Holders: 22
London-based miner Rio Tinto Group (NYSE:RIO) offers its shareholders an annual dividend of $7.93 per share. The company also declared a special dividend of $2.47 per share on February 23. In 2021, Rio Tinto Group (NYSE:RIO) paid a total dividend of $16.8 billion, a new high for the miner and one of the largest in British corporate history.
Rio Tinto Group (NYSE:RIO) announced in December that it had signed a deal to acquire Rincon Mining’s Rincon lithium project in Argentina. The $825 million acquisition gives RIO access to one of the world’s largest undeveloped lithium brine projects. Overall, Rio Tinto Group’s (NYSE:RIO) exploration and evaluation spending in 2021 increased by 16% last year to $726 million, with a boost in activities in Australia, Europe, and Western Africa.
As of the end of December 2021, 22 hedge funds had stakes in Rio Tinto Group (NYSE:RIO), with total holdings amounting to $1.84 billion. While in the previous quarter, only 18 funds held stakes in the mining company. As of the end of February, Rio Tinto Group (NYSE:RIO) is up 7.45% in the last month.
2. ZIM Integrated Shipping Services Ltd. (NYSE:ZIM)
Dividend yield as of February 27: 14.27%
Number of Hedge Fund Holders: 43
ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) is an Israeli shipping company with global operations. As of the end of February 2022, the company had returned 248% of gains to investors in the previous year, having gone public in January 2021 with gross proceeds of $217.5 million. Currently, ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) pays an annual dividend of $10 per share.
ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) is one of Israel’s largest container shipping companies, with over 100 vessels. In February, ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) entered into a charter deal with Navios Maritime Partners L.P. (NYSE:PAC). For $870 million, the Israeli shipping company will charter and deploy five secondhand vessels across its global network, as well as eight newbuilds in Asia and Africa from Navios.
Insider Monkey’s data shows that 33 hedge funds held stakes in ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) at the end of the fourth quarter worth $784 million. At the end of the third quarter, 22 hedge funds held stakes in the company. With over 2.7 million shares of ZIM Integrated Shipping Services Ltd. (NYSE:ZIM), Marshall Wace LLP holds the largest stake in the shipping company.
In the Q2 2021 investor letter of Evermore Global Advisors, the fund mentioned ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) and discussed its stance on the firm. Here is what the fund said:
“ZIM Integrated Shipping Services (ZIM) was the largest contributor to the Fund’s performance during the second quarter. With a market cap of $5.2 billion, ZIM is an Israel-based containership operator that had its initial public offering on the New York Stock Exchange this past January. As a reminder, we discussed ZIM at length in the Q1 2021 quarterly commentary as one of the new investments that we initiated during that period.
There were several notable developments during the second quarter. Given the company’s unique asset-light business model and targeted, global niche approach, ZIM continued to generate exceptionally strong cash flows. ZIM ended the period with approximately $1.25 billion in cash and about $915 million in net debt. Due to the strong operational performance, the company further strengthened its balance sheet by redeeming its Series 1 and Series 2 unsecured notes due in 2023. With the early redemption of the unsecured notes, ZIM was no longer subject to certain dividend restrictions, and it declared a special dividend of $2 per share, which will be payable on Sept 15th (goes ex on August 24th). Lastly, management revised its 2021 full-year EBITDA guidance from $1.4 – 1.6 billion to $2.5 – $2.7 billion, which was a sizeable increase compared to the levels set last March. To that end, we continue to have high conviction in our position in ZIM.”
1. Vale S.A. (NYSE:VALE)
Dividend yield as of February 27: 15.17%
Number of Hedge Fund Holders: 25
Mining giant Vale S.A. (NYSE:VALE), the largest iron ore producer in Brazil, pays its shareholders an annual dividend of $2.70 per share and offers a dividend yield of 15.17%. Vale S.A. (NYSE:VALE) extracts thermal and metallurgical coal and produces other basic materials such as gold, silver, copper, and precious metals.
On February 9, Exane BNP Paribas analyst Sylvain Brunet upgraded his rating on Vale S.A. (NYSE:VALE) to Outperform from Neutral. Brunet set a $20.50 price target for the mineral stock.
Following an incident last year in which 39 miners were trapped in the Canadian mine, the Brazilian miner has recently resumed operations in the Totten mine. Vale S.A. NYSE:VALE) indicated that the Totten mine closure had already been factored into its 2022 nickel production forecast, which ranged from 175,000 to 190,000 tonnes.
At the end of the fourth quarter of 2021, 25 hedge funds in the database of Insider Monkey held stakes worth $1.71 billion in Vale S.A. (NYSE:VALE), compared to 27 funds in the previous quarter worth 1.98 billion. Fisher Asset Management holds the biggest stake in Vale S.A. (NYSE:VALE) as of the end of December 2021, with over 30.9 million shares worth $434 million.
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