In this article, we discuss 5 high free cash flow dividend stocks. If you want to read our detailed analysis of free cash flow stocks, go directly and read 10 High Free Cash Flow Dividend Stocks.
5. Altria Group, Inc. (NYSE:MO)
Free Cash Flow Yield: 10%
Dividend Yield as of August 1: 8.21%
Altria Group, Inc. (NYSE:MO) produces and markets tobacco, cigarettes, and related products. In its second quarter 2022 report, the company posted solid financials, with cash and cash equivalents amounting to over $2.5 billion. The company paid over $1.6 billion in dividends during the quarter and maintained its long-term payout ratio target of 80%. It also repurchased 10 million shares in Q2 for a total cost of over $507 million.
On May 19, Altria Group, Inc. (NYSE:MO) declared a quarterly dividend of $0.90 per share, in line with its previous dividend. The company holds a 52-year streak of consistent dividend growth. As of August 1, the stock’s dividend yield came in at 8.21%.
In July, Jefferies set a $54 price target on Altria Group, Inc. (NYSE:MO) with a Buy rating on the shares but expressed concerns due to worsening cigarette volumes in the US.
At the end of Q1 2022, 47 hedge funds in Insider Monkey’s database owned stakes in Altria Group, Inc. (NYSE:MO), up from 39 a quarter earlier. These stakes are collectively valued at nearly $2 billion. GQG Partners was the leading stakeholder of the Virginia-based company in Q1, owning stakes worth over $956.2 million.
4. American Express Company (NYSE:AXP)
Free Cash Flow Yield: 11.2%
Dividend Yield as of August 1: 1.35%
American Express Company (NYSE:AXP) is a New York-based credit card service company that also provides travel-related offerings to consumers.
In Q2 2022, American Express Company (NYSE:AXP) reported an operating cash flow of over $4.2 billion, up from $3.8 billion in the previous quarter. The company’s free cash flow also grew to $over $3.8 billion, from $3.4 billion recorded at the end of March. Its free cash flow yield stood at 11.2%. American Express Company (NYSE:AXP) has a very strong dividend history, offering regular payouts to shareholders for the past 30 years. It currently pays a quarterly dividend of $0.52 per share, with a dividend yield of 1.35%, as of August 1.
As per Insider Monkey’s Q1 2022 database, 69 hedge funds owned stakes in American Express Company (NYSE:AXP), up from 64 in the previous quarter. The collective value of these stakes is over $33 billion, compared with $29 billion worth of stakes owned by hedge funds in the previous quarter.
3. Archer-Daniels-Midland Company (NYSE:ADM)
Free Cash Flow Yield: 11.6%
Dividend Yield as of August 1: 1.93%
Archer-Daniels-Midland Company (NYSE:ADM) is an American food processing company that offers sustainable human and animal nutrition.
At the end of Q2 2022, Archer-Daniels-Midland Company (NYSE:ADM) reported $906 million in cash and cash equivalents, up from $869 million in the same period last year. The company’s operating cash flow came in at $531 million and free cash flow stood at $248 million. It paid over $453 million in dividends during the quarter, compared with $417 million worth of payouts in the prior-year quarter. The company’s free cash flow yield came in at 11.6%.
Archer-Daniels-Midland Company (NYSE:ADM) pays a quarterly dividend of $0.40 per share. The company has been making dividend payments for the past 90 years while maintaining a 48-year track record of consistent dividend growth. The dividends are well covered with a payout ratio of 24.2%. As of August 1, the stock’s dividend yield stood at 1.93%.
As the demand for renewable diesel has increased, Baird raised its price target on Archer-Daniels-Midland Company (NYSE:ADM) in July to $94, with an Outperform rating on the shares.
According to Insider Monkey’s Q1 2022 database, 42 hedge funds owned stakes in Archer-Daniels-Midland Company (NYSE:ADM), with a collective value of $625.6 million. In the previous quarter, 41 hedge funds owned stakes in the company, worth $481.2 million.
Diamond Hill Capital mentioned Archer-Daniels-Midland Company (NYSE:ADM) in its Q1 2022 investor letter. Here is what the firm has to say:
“ADM is a leading agricultural processor that also operates a global nutrition business focused on the development of ingredients and flavors for food and beverages, supplements and more. The company’s recent operating results have benefited (unfortunately) from the war in Ukraine as grain prices and agricultural markets globally experienced strong price increases. ADM is positioned well to benefit from the volatility due to its stable North American agricultural base.”
2. AT&T Inc. (NYSE:T)
Free Cash Flow Yield: 18.9%
Dividend Yield as of August 1: 5.91%
AT&T Inc. (NYSE:T) is a Texas-based multinational telecommunications company that is the largest provider of mobile phone services in the US.
In Q2 2022, AT&T Inc. (NYSE:T) generated over $1.1 billion in free cash flow, up from $984 million in the previous quarter. The company’s operating cash flow came in at nearly $6 billion, compared with $5.7 billion at the end of March 2022. Its free cash flow yield stood at 18.9%. The company expects to generate over $10 billion in free cash flow in the second half of the year. AT&T Inc. (NYSE:T) paid over $2 billion worth of dividends during the quarter and its free cash flow dividend payout ratio came in at 150%.
AT&T Inc. (NYSE:T) has been raising its dividends consecutively for the past 23 years. Its current quarterly payout stands at $0.2775 per share, with a yield of 5.91%, as of the close of August 1.
In July, Morgan Stanley set a $22 price target on AT&T Inc. (NYSE:T) with an Overweight rating on the shares, highlighting the company’s earnings beat in Q2 2022.
As per Insider Monkey’s data, 74 hedge funds were bullish on AT&T Inc. (NYSE:T) in Q1 2022, up from 70 in the previous quarter. The stakes owned by these hedge funds are collectively valued at over $4 billion. Among these hedge funds, Arrowstreet Capital owned the largest stake in the company, valued at $678.5 million.
Weitz Investment Management mentioned AT&T Inc. (NYSE:T) in its Q4 2021 investor letter. Here is what the firm has 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. Chubb Limited (NYSE:CB)
Free Cash Flow Yield: 24.2%
Dividend Yield as of August 1: 1.76%
Chubb Limited (NYSE:CB) provides insurance products that cover property and casualty, accident and health, life insurance, and reinsurance.
At the end of Q2 2022, Chubb Limited (NYSE:CB) reported over $7 billion in cash, up from $1.6 billion at the end of December 2021. Its operating cash flow came in at $2.7 billion, up from $2.4 billion in the previous quarter. The company’s free cash flow yield came in at 24.2%. Chubb Limited (NYSE:CB) pays a quarterly dividend of $0.83 per share. The company spent over $348 million in dividends during the quarter. The stock’s dividend yield was recorded at 1.76%, as of the close of August 1.
In July, Jefferies lowered its price target on Chubb Limited (NYSE:CB) to $244 due to Russia-related losses and below-average investment returns of the insurance sector. However, the firm maintained a Buy rating on the stock.
At the end of March 2022, 31 hedge funds in Insider Monkey’s database owned stakes in Chubb Limited (NYSE:CB), down from 34 a quarter earlier. These stakes are collectively valued at over $1.8 billion.
Aristotle Capital Management mentioned Chubb Limited (NYSE:CB) in its Q1 2022 investor letter. Here is what the firm has to say:
“Our investment in Chubb began in the fourth quarter of 2015, shortly after ACE Limited announced it would acquire the Chubb Corporation, creating the largest global property and casualty insurance company by underwriting income. During our nearly seven-year holding period, the company’s combination progressed leading to the realization of main catalysts we had identified. These included cost savings, broadened product offerings and an expanded customer base, as well as enhanced distribution capabilities and improved pricing due to scale. In addition, Chubb successfully grew its profitable high-net-worth personal lines. While we still consider Chubb to be a high-quality business, few catalysts remain after what was, in our opinion, a remarkable run of successful business execution. As such, we decided to step aside in favor of what we believe to be a more optimal investment in Blackstone.”
You can also take a look at 10 Best Dividend Stocks to Buy in 2022 and 10 Best Long-Term Dividend Stocks
