In this article, we discuss 10 high-yield stocks to buy in February. You can skip our detailed analysis on dividend capture strategy and past performance of high dividend stocks, and go directly to read Dividend Capture Strategy: 5 High-Yield Stocks to Buy in February.
Dividend capture strategy is one of the most popular techniques employed by short-term investors. The strategy involves buying dividend stocks before their ex-dividend dates and selling them after receiving the payouts. Investors often follow this technique because it offers the potential for price appreciation. If the stock price increases after the payout, the investor can sell the stock for a profit. Moreover, this strategy can be a source to generate stable income in a short time, especially if the dividends are above-average.
Dividend stocks’ returns over the years have shown their solid performance during inflationary periods. According to a report by AMG Funds, dividend payments of the S&P 500 Index have grown at an annual average rate of 6% over the past five decades, which is well above the inflation rate in the US. The report cited data from Ned Davis Research and mentioned that since 1979, dividend-payers outplayed non-dividend companies in periods where 10-year Treasury was rising.
When following a dividend investment strategy, investors seek stocks with healthy yields in order to supplement their income. Moreover, these securities also have a potential for capital appreciation and can help investors diversify their portfolios. In 2021, high-yield dividend stocks in the US Total Cap outperformed non-dividend payers by 39.6%, as reported by IHS Markit. Similarly, high-dividend stocks performed better than non-dividend stocks in developed Europe during the same year. In addition to dividend yields, shareholders also evaluate these stocks in light of the respective company’s financial health, growth prospects, and future dividend policy. With decades-long dividend growth streaks under their belt, dividend growers become investors’ top choices when the market is uncertain. Some examples of such stocks are The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG). Further in this article, we will discuss high-yield stocks to buy in February.
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Our Methodology:
For this list, we selected dividend stocks that will trade ex-dividend in February and March. Ex-dividend date indicates the cutoff day to buy a stock to receive its upcoming dividend payment. These stocks have dividend yields above 3%, as of February 6. We also measured hedge fund sentiment around each stock, according to Insider Monkey’s Q3 2022 data of 920 elite funds. The list is ranked according to their ex-dividend dates.
Dividend Capture Strategy: 10 High-Yield Stocks to Buy in February
10. International Business Machines Corporation (NYSE:IBM)
Ex-Dividend Date: February 9
Dividend Yield as of February 6: 4.86%
International Business Machines Corporation (NYSE:IBM) is an American multinational tech company, based in New York. The company has operations in over 175 countries. On January 31, the company declared a quarterly dividend of $1.65 per share, which fell in line with its previous dividend. It has been raising its dividends consistently for the past 27 years. The stock has a dividend yield of 4.86%, as of February 6, which makes it one of the high-yield stocks to buy. IBM will be trading ex-dividend on February 9.
In addition to The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG), investors are also loading up on International Business Machines Corporation (NYSE:IBM) due to the company’s dividend growth streak.
In Q4 2022, International Business Machines Corporation (NYSE:IBM) reported revenue of $16.7 billion, consistent with revenue recorded during the same period last year. In FY22, the company generated $10.4 billion in operating cash flow and its free cash flow for the year came in at $9.3 billion.
Following the company’s Q4 earnings, BMO Capital raised its price target on International Business Machines Corporation (NYSE:IBM) to $155, with a Market Perform rating on the shares.
As of the close of Q3 2022, 40 hedge funds in Insider Monkey’s database owned stakes in International Business Machines Corporation (NYSE:IBM), the same as in the previous quarter. The collective value of these stakes is over $868.7 million. With over 4.3 million shares, Arrowstreet Capital was the company’s leading stakeholder in Q3.
9. Exxon Mobil Corporation (NYSE:XOM)
Ex-Dividend Date: February 13
Dividend Yield as of February 6: 3.27%
Exxon Mobil Corporation (NYSE:XOM) specializes in the distribution of oil and natural gas. The company is headquartered in Texas, US. In FY22, the company’s cash position remained strong with an operating cash flow of $76.8 billion. Its free cash flow amounted to $62.1 billion, which was sufficient to fulfill nearly $30 billion of shareholder returns.
On January 31, Exxon Mobil Corporation (NYSE:XOM) declared a quarterly dividend of $0.91 per share. The company holds a 40-year track record of consistent dividend growth. The stock’s dividend yield on February 6 came in at 3.27%. This high-yield dividend stock’s ex-dividend date is February 13.
In February, Argus raised its price target on Exxon Mobil Corporation (NYSE:XOM) to $133 with a Buy rating on the shares, highlighting the company’s recent quarterly earnings. The firm also appreciated the company’s overall performance in 2022.
As of the close of Q3 2022, 75 hedge funds tracked by Insider Monkey owned stakes in Exxon Mobil Corporation (NYSE:XOM), up from 72 in the previous quarter. The collective value of these stakes is $5.5 billion. GQG Partners owned the largest stake in the company, worth nearly $3 billion.
8. ALLETE, Inc. (NYSE:ALE)
Ex-Dividend Date: February 14
Dividend Yield as of February 6: 4.38%
ALLETE, Inc. (NYSE:ALE) is a Minnesota-based company that specializes in electricity generation, transmission, and distribution assets. The company also has a water management business. In December, Mizuho lifted its price target on the stock to $65, appreciating the management’s greater transmission spending. The firm maintained a Neutral rating on the stock.
On February 3, ALLETE, Inc. (NYSE:ALE) declared a 4.23% hike in its quarterly dividend to $0.6775 per share. It has been making uninterrupted dividend payments to shareholders for the past 73 years. The stock will trade ex-dividend on February 14. The company is among the high-yield stocks on our list because of its dividend yield of 4.38%, as recorded on February 6.
At the end of Q3 2022, 19 hedge funds tracked by Insider Monkey owned stakes in ALLETE, Inc. (NYSE:ALE), worth roughly $60 million collectively. Among these hedge funds, Point72 Asset Management was the company’s leading stakeholder in Q3.
7. Chevron Corporation (NYSE:CVX)
Ex-Dividend Date: February 15
Dividend Yield as of February 6: 3.56%
An American energy company, Chevron Corporation (NYSE:CVX) is another high-yield dividend stock on our list. In January 2023, the company declared a 36th consecutive dividend hike which took its quarterly dividend to $1.51 per share. As of February 6, the stock has a dividend yield of 3.56% and has an ex-dividend date of February 15.
Truist raised its price target on Chevron Corporation (NYSE:CVX) in January to $179 and maintained a Hold rating on the shares, appreciating the company’s recently announced repurchase authorization worth $75 billion.
In the fourth quarter of 2022, Chevron Corporation (NYSE:CVX) reported revenue of $56.4 billion, which showed a 17.3% growth from the same period last year. In FY22, it reported an operating cash flow of $49.6 billion and its free cash flow came in at $37.6 billion.
The number of hedge funds tracked by Insider Monkey owning stakes in Chevron Corporation (NYSE:CVX) grew to 66 in Q3 2022, from 59 in the previous quarter. These stakes have a total value of over $27 billion.
Diamond Hill Capital mentioned Chevron Corporation (NYSE:CVX) in its Q1 2022 investor letter. Here is what the firm had to say:
“Other top contributors in Q1 included multinational energy company Chevron Corp. (NYSE:CVX). The company benefited from increased energy demand as COVID-related economic restrictions eased in tandem with concerns regarding supply interruptions related to Russia’s invasion of Ukraine.”
6. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Ex-Dividend Date: February 15
Dividend Yield as of February 6: 5.25%
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) owns the retail pharmacy chains Walgreens and Boots and other pharmaceutical manufacturing companies. In January, Truist maintained a Hold rating on the stock with a $42 price target, following the company’s quarterly earnings. The firm also appreciated the company’s sales guidance for FY23.
On January 27, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) declared a quarterly dividend of $0.48 per share, which fell in line with its previous dividend. The company has been raising its dividends consistently for the past 47 years. The stock’s dividend yield on February 6 came in at 5.25%, which makes it one of the high-yield stocks on our list. WBA will be trading ex-dividend on February 15. The company can be added to dividend portfolios alongside popular dividend stocks like The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG).
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) posted a revenue of $33.3 billion, which beat Street estimates by $340 million. The company also raised its healthcare fiscal 2025 sales target to $14.5 billion to $16 billion, up from $11 billion to $12 billion.
As of Q3 2022, 39 hedge funds tracked by Insider Monkey owned stakes in Walgreens Boots Alliance, Inc. (NASDAQ:WBA), compared with 40 in the previous quarter. These stakes are collectively worth over $712.6 million. With nearly 6 million shares, Arrowstreet Capital was the company’s leading stakeholder.
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Disclosure. None. Dividend Capture Strategy: 10 High-Yield Stocks to Buy in February is originally published on Insider Monkey.