In this article, we discuss 10 under-the-radar dividend stocks that Redditors love.
The onset of the pandemic in 2020 opened new avenues of trading for individual investors. What started as a trading frenzy has had a far-reaching impact on the stock market. According to a recent report by Brunswick, retail investors averaged nearly 14% of the ownership of the S&P 500 in the first quarter of 2022, up from 11% two years ago. The report further mentioned that only 20% of retail investors claimed that they understand financial markets for investments. However, the trend is here to stay as these investors held onto their investments during different market conditions, as reported by CNBC.
The resilient inflation in the US has agonized seasoned and retail investors alike, as they remain keen to find opportunities in the market. Analysts recommend putting money into companies with strong fundamentals and sustainable dividends. As a result of this, dividend investing is gaining a lot of traction this year. According to a report by New York Times, the companies in the S&P 500 are expected to pay over $500 billion in dividends and more than $1 trillion on share buybacks. The importance of dividend stocks was also emphasized by a senior index analyst for S&P Dow Jones Indices Howard Silverblatt in his interview with the same newspaper this August. He said that since 1926, dividends have represented 38.2% of the total return of the S&P 500. Some of the best dividend stocks that have outperformed the broader market in 2022 so far include The Coca-Cola Company (NYSE:KO), PepsiCo, Inc. (NASDAQ:PEP), and The Procter & Gamble Company (NYSE:PG).
Different finance-centric subreddits also provide investment-related guidance to their online communities as these platforms have determined the prices of some of the major stocks in the past. Moreover, they find it convenient to reap profits by investing from a single platform. According to a survey conducted by BNY Mellon and World Economic Forum, 67% of retail investors said that they would invest more if they had more trust in their investment platform. The survey also included that 61% of the participants said that their investment decision depends on the availability of a single trading channel. Further elaborating on these stances, we will discuss some under-the-radar dividend stocks that are recommended by Redditors.
Our Methodology:
For this list, we scanned through different Reddit forums like r/dividends, r/investing, and r/stocks to shortlist some under-the-radar dividend stocks. The companies mentioned below are relatively lesser-known but have caught the attention of retail investors in this current market environment due to their dividend policies. These stocks are ranked according to their dividend yields, as recorded on September 20.
Redditors Love These 10 Under-The-Radar Dividend Stocks
10. Domino’s Pizza, Inc. (NYSE:DPZ)
Dividend Yield as of September 20: 1.32%
Domino’s Pizza, Inc. is an American multinational pizza restaurant chain that also deals in a wide variety of menus. The stock is favored by the Reddit community because it has outperformed the broader market in the last ten years. In addition to this, the company has been raising its dividends for the past eight years since it first initiated its dividend policy. It currently pays a quarterly dividend of $1.10 per share and has a yield of 1.32%, as recorded on September 20.
Domino’s Pizza, Inc. is one of the best dividend stocks because of its free cash flow generation. In the two fiscal quarters of 2022, the company’s free cash flow came in at $120.8 million and its operating cash flow for the period stood at $153.4 million. At the end of June, the company had $114.4 million available in cash and cash equivalents and over $1.67 billion in total assets.
In July, Oppenheimer raised its price target on Domino’s Pizza, Inc. to $445 with an Outperform rating on the shares, appreciating the improvement in the company’s sale trends in Q2 and its growing delivery business.
At the end of Q2 2022, 32 hedge funds tracked by Insider Monkey presented a bullish stance on Domino’s Pizza, Inc., compared with 27 in the previous quarter. The stakes owned by these hedge funds hold a collective value of over $2.28 billion. Pershing Square was the company’s leading stakeholder in Q2.
In addition to famous dividend stocks like The Coca-Cola Company, PepsiCo, Inc., and The Procter & Gamble Company, Domino’s Pizza, Inc. can also be added to dividend portfolios due to its strong dividend policy.
Pershing Square Holdings mentioned Domino’s Pizza, Inc. in its Q2 2022 investor letter. Here is what the firm has to say:
“Since our last update, Domino’s Pizza, Inc. (NYSE:DPZ)’s near-term business performance has shown meaningful improvement, including three-year stacked growth for the second quarter of 17% in the U.S., up 560 basis points sequentially. This improvement was driven by the full impact of its recent pricing actions, operational changes leading to improved staffing and labor utilization, and the return of its signature Boost Week promotion. These positive developments caused a significant recovery in Domino’s share price and its valuation increased to more than 28 times our estimate of next twelve months’ earnings. In light of the company’s relatively high valuation in the context of a volatile market environment, we decided to exit our investment to raise cash for alternative investment opportunities. We have enormous respect for Domino’s and its management team led by Russell Weiner, and we expect the company to continue its long track record of success.”
9. Tractor Supply Company (NASDAQ:TSCO)
Dividend Yield as of September 20: 1.93%
Tractor Supply Company (NASDAQ:TSCO) is an American retail chain company that sells products related to home improvement, agriculture, lawn, and garden maintenance. In July, MKM Partners initiated its coverage of the stock with a Buy rating and a $230 price target. The firm appreciated the management’s decision of revitalizing the brand which will now contribute to its growth and productivity.
Tractor Supply Company is another under-the-radar dividend stock that Redditors love as the company is a dominant leader in its market and fuels its growth through acquisitions. In addition to this, its business could benefit from the rural and suburban population. It currently pays a quarterly dividend of $0.92 per share and has a dividend yield of 1.93%, as of September 20. Tractor Supply Company has been raising its dividends consistently for the past 13 years, coming through as one of the best dividend stocks in this environment.
In Q2 2022, Tractor Supply Company reported strong cash generation with its operating cash flow standing at $566.5 million, up from $59 million in the previous quarter. The company’s free cash flow came in at $413.6 million and it paid $102.6 million in dividends to shareholders, which shows that its FCF could smoothly cover its dividends. At the end of June, it had $530.8 million available in cash and cash equivalents.
As per Insider Monkey’s Q2 2022 database, 41 hedge funds owned stakes in Tractor Supply Company, compared with 43 in the previous quarter. The total value of these stakes is over $1.27 billion.
8. Cohen & Steers, Inc. (NYSE:CNS)
Dividend Yield as of September 20: 3.07%
Cohen & Steers, Inc. is a New York-based asset management company that provides real assets and income solutions to its consumers worldwide. The company is favored by Reddit investors as it managed to increase its earnings per share significantly in the past five years. Moreover, it is one of the best dividend stocks as its dividend history remained stable over the years. The company increased its payouts 12 years in a row. Cohen & Steers, Inc. pays a quarterly dividend of $0.55 per share, with a dividend yield of 3.07%, as of September 20.
In Q2 2022, Cohen & Steers, Inc. reported $87.9 billion in assets under management and $95.1 billion in average assets under management. The company’s revenue for the quarter grew by 2.3% year-over-year to $147.7 million. In addition to this, it also generated $58 million in operating cash flow during the quarter and $56.7 million in free cash flow.
At the end of Q2 2022, Cohen & Steers, Inc. was a part of 11 hedge fund portfolios, down from 14 a quarter earlier, according to Insider Monkey’s database. The stakes owned by these hedge funds hold a combined value of $76.5 million. With over $25 million worth of stakes, GAMCO Investors owned the largest position in the company in Q2.
7. Valero Energy Corporation (NYSE:VLO)
Dividend Yield as of September 20: 3.64%
Valero Energy Corporation (NYSE:VLO) is a Texas-based energy company that manufactures transportation fuels and other petrochemical products. According to a Reddit community, oil companies are some of the best dividend stocks as they are good for inflation due to price fluctuations and hefty payouts. The company currently pays a quarterly dividend of $0.98 per share and has a dividend yield of 3.64%, as of September 20.
In Q2 2022, Valero Energy Corporation reported a strong cash position, as its operating cash flow stood at $5.8 billion. The company ended the quarter with $5.4 billion available in cash and cash equivalents, up from $2.3 billion during the same period last year. Its revenue for the quarter also grew by 86.2% year-over-year to $51.6 billion.
In August, Piper Sandler raised its price target on Valero Energy Corporation to $150 with an Overweight rating on the shares, as the company gave a constructive outlook for the renewable diesel and biodiesel market. Moreover, the company’s different programs have improved the outlook for demand and underlying profitability.
At the end of Q2 2022, 43 hedge funds in Insider Monkey’s database owned stakes in Valero Energy Corporation, down from 47 in the previous quarter. These stakes hold a consolidated value of roughly $760 million.
6. Clearway Energy, Inc. (NYSE:CWEN)
Dividend Yield as of September 20: 3.89%
Clearway Energy, Inc. (NYSE:CWEN) is one of the world’s largest developers and operators of clean energy in the US. The company was a part of 21 hedge fund portfolios in Q2 2022, compared with 24 in the previous quarter, according to Insider Monkey’s data. These stakes are collectively valued at over $177.4 million. Renaissance Technologies owned the largest position in the company in Q2.
Clearway Energy, Inc. is one of the most favored under-the-radar dividend stocks on Reddit because it is a clean energy stock and has solid growth potential because of its business model. The company has also seen sustained growth in the past year. In Q2 2022, it reported $186 million in operating cash flow and $176 million in cash available for distribution. At the end of June, the company had $955 million in cash and cash equivalents, up from $179 million six months ago.
On August 2, Clearway Energy, Inc. declared a 2% hike in its quarterly dividend to $0.3604 per share. This was the company’s second dividend raise this year, which makes it one of the best dividend stocks in this list. As of September 20, the company’s shares yield at 3.89%.
In September, BofA reiterated its Neutral rating on Clearway Energy, Inc. with a $40 price target, expressing concerns due to rising interest rates.
Alongside popular companies like The Coca-Cola Company, PepsiCo, Inc., and The Procter & Gamble Company, Clearway Energy, Inc. is also one of the prominent dividend stocks to consider.
ClearBridge Investments mentioned Clearway Energy, Inc. in its Q4 2021 investor letter. Here is what the firm has to say:
“Clearway Energy primarily owns and operates contracted renewable generation assets. It also owns and operates conventional generation and thermal infrastructure assets. Clearway Energy’s share price continued to benefit from the completed sale of its thermal assets, which was above expectations, generating USD$1.3 billion in incremental proceeds. Additionally, there was optimism surrounding a stimulus bill passthrough which contains renewables subsidies.”
5. The Buckle, Inc. (NYSE:BKE)
Dividend Yield as of September 20: 4.24%
The Buckle, Inc. (NYSE:BKE) is a Nebraska-based fashion retailer that sells clothes, footwear, and accessories and operates over 450 stores across the US. The company’s growing e-commerce business caught the attention of the Reddit community as it would cater to its customer base in rural America. Moreover, the company also went through a major inventory reset that would grow its sales.
In August, The Buckle, Inc. reported a 4.6% year-over-year growth in its comparable sales. Net sales for the period stood at $118 million, up 5.8% from the same period last year. In Q2 2022, the company generated $40 million in free cash flow, compared with $14.3 million in the previous quarter. Its operating cash flow also grew to $48 million, from $21.5 million in the preceding quarter.
On September 13, The Buckle, Inc. declared a quarterly dividend of $0.35 per share, consistent with its previous dividend. The company has raised its dividends three years in a row. As of September 20, the stock’s dividend yield came in at 4.24%.
As of the end of June 2022, 23 hedge funds tracked by Insider Monkey owned stakes in The Buckle, Inc., compared with 29 in the previous quarter. These stakes hold a collective value of over $98.2 million. Jim Simons and Ken Griffin were some of the company’s most prominent stakeholders in Q2.
Miller Value Partners mentioned The Buckle, Inc. in its Q2 2022 investor letter. Here is what the firm has to say:
“Another name with a nice dividend yield, attractive valuation and significant shareholder alignment is clothing retailer The Buckle. Based in Omaha, NE, management owns almost 40% of the company and is shifting its focus to online sales. The company is very well run and has been onto something for a long time. In each of the last 27 consecutive calendar years, The Buckle has generated positive free cash flow (not “adjusted” free cash flow), something that few companies can say. Despite this track record, the company trades at a trailing free cash flow yield in the teens with a rock-solid balance sheet, in our opinion, and a highly aligned management team in Warren Buffett’s backyard.”
4. Citizens Financial Group, Inc. (NYSE:CFG)
Dividend Yield as of September 20: 4.56%
Citizens Financial Group, Inc. (NYSE:CFG) is an American financial services company that provides banking, credit card, and loan-related services to its consumers. In Q2 2022, the company reported revenue of nearly $2 billion, which showed a 23.6% growth from the same period last year. Its pre-provision net revenue also grew by 45% quarter-over-quarter to $850 million. The company’s management authorized the repurchase of its common stocks worth $1 billion.
According to a Reddit community, Citizens Financial Group, Inc. has shown strong loan growth and dividend hikes over the past few years. The bank’s performance has also remained stable during the pandemic, compared with other larger banks in the US. It has raised its dividends at a CAGR of 22.35% in the last five years. On July 19, the company declared a 7.7% hike in its quarterly dividend to $0.42 per share. As of September 20, this under-the-radar dividend stock’s yield came in at 4.56%.
In September, Deutsche Bank maintained its Buy rating on Citizens Financial Group, Inc. with a $50 price target, presenting a positive outlook on the company’s performance.
The number of hedge funds tracked by Insider Monkey owning stakes in Citizens Financial Group, Inc. grew to 43 in Q2 2022, from 41 in the previous quarter. These stakes hold a consolidated value of $525.2 million.
3. Getty Realty Corp. (NYSE:GTY)
Dividend Yield as of September 20: 5.59%
Getty Realty Corp. (NYSE:GTY) is a New York-based real estate investment trust company that is focused on the ownership, leasing, and financing of different automotive properties. The company is famous among Redditors as it has expanded its footprint in the country over the years and has shown strong financials. In addition to this, it has been raising its dividends consistently for the past 9 years. The company currently pays a quarterly dividend of $0.41 per share, with a dividend yield of 5.59%, as recorded on September 20.
In Q2 2022, Getty Realty Corp. generated $22.5 million in free cash flow, up from $20.8 million in the previous quarter. The company’s revenue for the quarter came in at $40.8 million, up 6.7% from the same period last year. It invested over $50.5 million across 17 properties in the US.
In August, BofA upgraded Getty Realty Corp. to Neutral with a $33 price target, as the company’s management has shown a higher appetite for external growth which would accelerate earnings growth in the coming years.
At the end of Q2 2022, 8 hedge funds tracked by Insider Monkey owned stakes in Getty Realty Corp., compared with 11 in the previous quarter. These stakes are collectively valued at over $51 million. Hill Winds Capital owned one of the company’s most prominent stakeholders in Q2.
2. The Western Union Company (NYSE:WU)
Dividend Yield as of September 20: 6.57%
The Western Union Company (NYSE:WU) is a Colorado-based multinational financial services company that helps businesses and individuals transfer money around the globe. In August, Northland maintained its Outperform rating on the stock with a $22 price target, following the company’s Q2 results. The firm expects the company to grow its revenues in the upcoming quarters.
Redditors widely talked about The Western Union Company’s cash flow and balance sheet which gives the company a prominent position among its competitors. However, the Redditors also showed concerns about its higher fees in comparison with its peers. The Western Union Company has been raising its dividends consistently for the past seven years, with a five-year dividend CAGR of 6.53%, which places it as one of the best dividend stocks on this list. It currently pays a quarterly dividend of $0.235 per share, with a dividend yield of 6.57%, as recorded on September 20.
In the first half of 2022, The Western Union Company generated $307 million in operating cash flow. The company had over $1.2 billion in cash and cash equivalents and $8.7 billion in total assets. During Q2 2022, the company returned $112 million to shareholders, $91 million of which represented dividend payments.
As per Insider Monkey’s Q2 2022 database, 21 hedge funds tracked by Insider Monkey owned stakes in The Western Union Company, down from 25 in the previous quarter. The consolidated value of these stakes is over $286 million, compared with $281 million worth of stakes owned by hedge funds in the preceding quarter.
1. Medical Properties Trust, Inc. (NYSE:MPW)
Dividend Yield as of September 20: 8.80%
Medical Properties Trust, Inc. (NYSE:MPW) is an Alabama-based real estate investment trust company that mainly invests in healthcare facilities. It is one of the best dividend stocks according to Redditors as it managed to raise its dividends consistently for the past nine years. Moreover, it has a dividend yield of 8.80%, up from a sector median of 4.3%. The company currently offers a quarterly dividend of $0.29 per share.
Following the company’s strong earnings in Q2 2022 and appreciating its stable balance sheet, Barclays maintained its Overweight rating on Medical Properties Trust, Inc. in August, with a $23 price target.
As of the close of Q2 2022, 15 hedge funds tracked by Insider Monkey owned stakes in Medical Properties Trust, Inc., compared with 16 a quarter earlier. These stakes hold a total value of over $238.5 million.
You can also take a look at Redditors Recommend These 10 Dividend Stocks for College Students and 10 Best Cheap DRIP Stocks to Buy Now
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This article is originally published at Insider Monkey.
