In this article, we discuss 10 dividend stocks that analysts are recommending. If you want to skip our detailed analysis of these stocks, go directly to Analysts Are Recommending These 5 Dividend Stocks.
Dividends are considered to be a comfortable stream of income or a cushion against financial distress by many investors. Dividends are extremely important to the stock market’s total return, representing roughly 40% of the total returns since 1930.
Dividends not only stabilize the performance of stocks and reduce overall volatility, but companies with consistent dividend payments have been known to outperform the overall market during periods of high inflation.
Due to the COVID-19 pandemic, dividend stocks took a dive, and companies slashed or lowered their dividend payments as a result of losses, reduced margins, and highly impacted revenues. However, 2021 saw an increase in dividend payouts, with analysts forecasting the total dividends paid in 2021 reaching $1.4 trillion, closer to pre-pandemic levels.
Some notable dividend stocks currently recommended by analysts include PepsiCo, Inc. (NASDAQ:PEP), The Coca-Cola Company (NYSE:KO), and Chevron Corporation (NYSE:CVX).
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Our Methodology
We selected dividend stocks that recently received positive ratings from market analysts. For each stock we have mentioned these ratings, along with hedge fund sentiment and other important metrics to gauge the strength of these stocks.
Analysts Are Recommending These Dividend Stocks
10. Air Products and Chemicals, Inc. (NYSE:APD)
Dividend Yield as of January 14: 2.06%
Number of Hedge Fund Holders: 32
Air Products and Chemicals, Inc. (NYSE:APD) is an American company headquartered in Pennsylvania, supplying natural gasses and chemicals for multiple industrial applications. Air Products and Chemicals, Inc. (NYSE:APD) offers a 2.06% yield as of January 14, with 39 successive years of dividend growth.
On November 18, Air Products and Chemicals, Inc. (NYSE:APD) declared a quarterly per share dividend of $1.50, in line with previous. The dividend will be paid on February 14 to shareholders of record on January 3. The company increased the quarterly dividend by 12% to $1.50 per share in 2021.
Air Products and Chemicals, Inc. (NYSE:APD) announced on November 18 that it has signed a $15 billion deal with the Indonesian government to develop a coal gasification industry in the country. Air Products and Chemicals, Inc. (NYSE:APD) has signed this agreement for the long-term, and will convert coal into highly valued chemical products.
Kevin McCarthy, an analyst from the investment advisory named Vertical Research, upgraded Air Products and Chemicals, Inc. (NYSE:APD) to Buy from Hold with a $335 price target on January 4.
Among the hedge funds tracked by Insider Monkey, 32 funds reported owning stakes totaling $528.7 million in Air Products and Chemicals, Inc. (NYSE:APD) in the third quarter of 2021, as compared to 40 funds holding stakes worth $456.4 million in Air Products and Chemicals, Inc. (NYSE:APD) in the prior quarter. Adage Capital Management is the leading stakeholder of the company as of Q3 2021, with 351,940 shares worth $90.1 million.
In addition to PepsiCo, Inc. (NASDAQ:PEP), The Coca-Cola Company (NYSE:KO), and Chevron Corporation (NYSE:CVX), analysts are recommending Air Products and Chemicals, Inc. (NYSE:APD).
9. PepsiCo, Inc. (NASDAQ:PEP)
Dividend Yield as of January 14: 2.45%
Number of Hedge Fund Holders: 61
PepsiCo, Inc. (NASDAQ:PEP) is an American multinational food, snack, and beverage corporation that has been consistently delivering dividend growth for 49 years. As of January 14, PepsiCo, Inc. (NASDAQ:PEP) offers a dividend yield of 2.45%.
Argus analyst John Staszak raised the price target on PepsiCo, Inc. (NASDAQ:PEP) to $195 from $180 and kept a Buy rating on the shares on January 4, stating that PepsiCo, Inc. (NASDAQ:PEP) is a well-managed company with a strong brand portfolio, and continues to display growth potential in the company years.
PepsiCo, Inc. (NASDAQ:PEP) declared a $1.075 dividend per share on November 18, which was paid January 7 to shareholders of record on December 3. As of September 2021, PepsiCo, Inc. (NASDAQ:PEP) distributes approximately 68.8% of its net income to shareholders.
A total of 61 hedge funds monitored by Insider Monkey were bullish on PepsiCo, Inc. (NASDAQ:PEP) in the third quarter, with stakes equaling $4.4 billion. This is compared to 66 funds holding stakes worth $5.1 billion in PepsiCo, Inc. (NASDAQ:PEP) in the preceding quarter.
In an effort to reduce its carbon footprint, PepsiCo, Inc. (NASDAQ:PEP) announced on November 8 that it is replacing its fleet with Tesla, Inc. (NASDAQ:TSLA) trucks as of the third quarter of 2021.
Terry Smith’s Fundsmith LLP is the leading PepsiCo, Inc. (NASDAQ:PEP) stakeholder, holding more than 10 million shares of the company, worth $1.5 billion.
8. The Coca-Cola Company (NYSE:KO)
Dividend Yield as of January 14: 2.74%
Number of Hedge Fund Holders: 61
The Coca-Cola Company (NYSE:KO) is an American multinational beverage corporation, with a portfolio of non-alcoholic and alcoholic drinks. The Coca-Cola Company (NYSE:KO) offers a dividend yield of 2.74% as of January 14, and has been increasing dividends for 59 years.
Guggenheim analyst Laurent Grandet on January 4 upgraded The Coca-Cola Company (NYSE:KO) to Buy from Neutral with a price target of $66, up from $61. The company is exiting the fiscal 2021 transition year “stronger”, the valuation is “compelling” at current share levels, and the analyst sees 12% annual earnings growth through fiscal 2023.
Among the hedge funds tracked by Insider Monkey in Q3 2021, Berkshire Hathaway is the leading stakeholder of The Coca-Cola Company (NYSE:KO), with 400 million shares worth approximately $21 billion. Overall, 61 hedge funds were long The Coca-Cola Company (NYSE:KO) in the third quarter of 2021.
7. Merck & Co., Inc. (NYSE:MRK)
Dividend Yield as of January 14: 3.39%
Number of Hedge Fund Holders: 77
Merck & Co., Inc. (NYSE:MRK) is a multinational American pharmaceutical company that manufactures drugs, holds clinical trials, and conducts extensive research for therapeutic focus areas including oncology, infectious diseases, and cardio-metabolic disorders.
Like PepsiCo, Inc. (NASDAQ:PEP), The Coca-Cola Company (NYSE:KO) and Chevron Corporation (NYSE:CVX), Merck has a strong dividend history.
Goldman Sachs analyst Chris Shibutani on December 17 initiated coverage of Merck & Co., Inc. (NYSE:MRK) with a Buy rating and a $93 price target, adding the stock to the firm’s Conviction List, with the price target implying 22% upside from current levels. The analyst noted that the market is undervaluing the outlook for several of Merck & Co., Inc. (NYSE:MRK)’s assets.
Merck & Co., Inc. (NYSE:MRK)’s COVID-19 pill received FDA approval for emergency use, and the company reported on December 23 that it has entered into supply agreements with the governments of over 30 countries, including Australia, Canada, Korea, Japan, Thailand, the United Kingdom, and the United States, pending regulatory authorizations, and is currently in contact with additional governments. This announcement also attracted a Buy rating for Merck & Co., Inc. (NYSE:MRK) on December 23 by Mizuho analyst Mara Goldstein, who kept a $100 price target on the shares.
In the third quarter of 2021, 77 hedge funds were long Merck & Co., Inc. (NYSE:MRK), with stakes totaling $4.55 billion. Billionaire Ken Fisher’s Fisher Asset Management is the largest Merck & Co., Inc. (NYSE:MRK) stakeholder, with 10.6 million shares worth $798.6 million.
Here is what Miller Howard Investments has to say about Merck & Co., Inc. (NYSE:MRK) in its Q3 2021 investor letter:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We hold three pharmaceutical companies, (which includes) Merck (MRK). All three have strong cash flows and balance sheets, making their high dividends reasonably safe. The investment controversy surrounding these pharma companies is whether they can develop or acquire new products to replace their current blockbuster drugs. The low valuations on these stocks reflects what we believe to be undue pessimism by investors on the prospects for new drugs.”
6. Amcor plc (NYSE:AMCR)
Dividend Yield as of January 14: 3.88%
Number of Hedge Fund Holders: 19
Amcor plc (NYSE:AMCR) is a Zurich-based global packaging company that manufactures specialty cartons, containers, and flexible packaging, among other packaging solutions for food, beverage, pharmaceutical, and healthcare products.
BofA analyst George Staphos double upgraded Amcor plc (NYSE:AMCR) to Buy from Underperform with a $13.20 price target on December 15. Dividend stocks are well positioned for a market in which the yield curve is flattening, and Amcor plc (NYSE:AMCR) should benefit from lower resin costs and “slow and steady growth”, according to the analyst.
A total of 19 hedge funds were long Amcor plc (NYSE:AMCR) in the third quarter of 2021, up from 16 funds in the preceding quarter. Bernard Horn’s Polaris Capital Management is the largest Amcor plc (NYSE:AMCR) stakeholder, with 13.2 million shares worth $153.9 million.
Amcor plc (NYSE:AMCR) is a buy-rated dividend stock according to analysts, just like PepsiCo, Inc. (NASDAQ:PEP), The Coca-Cola Company (NYSE:KO), and Chevron Corporation (NYSE:CVX).
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Disclosure: None. Analysts Are Recommending These 10 Dividend Stocks is originally published on Insider Monkey.
