In this article, we will be taking a look at the top 12 high dividend stocks to buy according to hedge funds. If you want to skip our detailed analysis of dividend investing, you can go directly to the Top 5 High Dividend Stocks To Buy According To Hedge Funds.
With the stock market seemingly stuck in a rut over the past month and inflation threatening to eat away at profitable returns, many investors are beginning to question their investment practices regarding dividend stocks. Although extremely tempting, dividend investing is not without its own red flags. First and foremost, dividend investing, as an investment strategy, must almost always be considered to be long-term, since many companies pay their shareholders once-per-quarter. In this regard, experts often warn against using dividend yields as the sole metric when considering their investment choices, placing emphasis on the fundamentals of dividend stocks, payout ratio and price-to-book ratio to as additional metrics to gauge their stability and safety against market volatility before investing.
When considering dividend stocks in particular, though, one must take into account the chosen company’s dividend history. As such, companies that have managed to consistently increase their yields for a significant amount of time can be considered fruitful investment options. These usually consist of companies that have consistently increased their dividend yield for over 25 years of more, called Dividend Aristocrats (also known as Dividend Champions), and ones that did the same for over 50 years or more, known as Dividend Kings.
According to a report by Reuters, The Goldman Sachs Group predicted a 6% increase in dividend payouts in the S&P 500 for the current, and the next year. As such, Some of the most solid stock picks that have been known to increase their dividends for a considerable period of time include The Procter & Gamble Company (NYSE:PG), Verizon Communications Inc. (NYSE:VZ), Johnson & Johnson (NYSE:JNJ), and Chevron Corporation (NYSE:CVX).
Our Methodology
For our list, we have selected dividend stocks that record high dividend yields. Using the data tracked by Insider Monkey of about 873 hedge funds, we picked dividend stocks that are highly popular among these hedge funds today.
Why should we pay attention to hedge fund sentiment when choosing stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Top 12 High Dividend Stocks To Buy According to Hedge Funds
12. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Number of Hedge Fund Holders: 41
Dividend Yield as of October 13: 4.03%
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is a holding company that owns and operates the retail pharmacy chains, Walgreens and Boots, among other pharmaceutical manufacturing companies.
On October 15, Truist analyst David MacDonald raised his price target on Walgreens Boots Alliance, Inc. (NASDAQ:WBA) to $56 from $52, and kept a Hold rating on the shares of the company.
Out of the hedge funds being tracked by Insider Monkey, Stephen Dubois’ Camber Capital Management is a leading shareholder in Walgreens Boots Alliance, Inc. (NASDAQ:WBA), with 3.5 million shares worth more than $184 million.
Like The Procter & Gamble Company (NYSE:PG), Verizon Communications Inc. (NYSE:VZ), Johnson & Johnson (NYSE:JNJ), and Chevron Corporation (NYSE:CVX), Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is a notable stock to invest in.
11. Cardinal Health, Inc. (NYSE:CAH)
Number of Hedge Fund Holders: 40
Dividend Yield as of October 13: 4.06%
Headquartered in Ohio, Cardinal Health, Inc.(NYSE:CAH) is a multinational Healthcare services company that engages in the provision of pharmaceutical products and medical services to pharmacies and hospitals. The Healthcare company ranks eleventh on our list of the top 12 high dividend stocks to buy according to hedge funds.
The company last released its quarterly earnings report on August 5, with reported earnings per share of $0.77, missing estimates by $0.43. The company’s revenue came in at $42.59 billion, surpassing the estimated revenue by $2.37 billion.
Richard Pzena of Pzena Investment Management is one of the biggest stakeholders of Cardinal Health, Inc. (NYSE:CAH) as of the end of the second quarter, according to the data tracked by Insider Monkey. Overall, 40 hedge funds were bullish on the company by the end of the June quarter, up from 39 in the previous quarter.
This August, Deutsche Bank kept a Hold rating on shares of Cardinal Health, Inc. (NYSE:CAH), alongside a price target of $51.
10. The Kraft Heinz Company (NASDAQ:KHC)
Number of Hedge Fund Holders: 33
Dividend Yield as of October 13: 4.35%
Of the 873 elite funds tracked by Insider Monkey, 33 were long in The Kraft Heinz Company (NASDAQ:KHC) at the end of June. Warren Buffett’s Berkshire Hathaway is the leading stakeholder of the company, with over 325.6 million shares worth more than $13.2 billion.
On September 21, Morgan Stanley analyst Pamela Kaufman began coverage of The Kraft Heinz Company (NASDAQ:KHC) with an Equal Weight rating alongside a price target of $37 on the company’s shares.
Much like The Procter & Gamble Company (NYSE:PG), Verizon Communications Inc. (NYSE:VZ), Johnson & Johnson (NYSE:JNJ), and Chevron Corporation (NYSE:CVX), The Kraft Heinz Company (NASDAQ:KHC) is a notable stock to buy.
9. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 41
Dividend Yield as of October 13: 4.66%
International Business Machines Corporation (NYSE:IBM) is a multinational technology company that is involved in the production, manufacture and sales of computer hardware and software. The company also offers integrated solutions and services to its customers. The IT company ranks ninth on our list of the top 12 high dividend stocks to buy according to hedge funds.
In the second quarter of 2021, International Business Machines Corporation (NYSE: IBM) reported an EPS of $2.33, beating market estimates by $0.04. The company’s revenue for the quarter was $18.75 billion, surpassing estimates by $447.5 million.
On October 5, Credit Suisse analyst Matthew Cabral raised his price target on International Business Machines Corporation (NYSE:IBM) to $176 from $167 and kept an Outperform rating on the shares.
Out of the hedge funds being tracked by Insider Monkey, Boston-based Arrowstreet Capital is a leading shareholder in International Business Machines Corporation (NYSE:IBM), with 3.46 million shares worth more than $508 million.
Much like The Procter & Gamble Company (NYSE:PG), Verizon Communications Inc. (NYSE:VZ), Johnson & Johnson (NYSE:JNJ), and Chevron Corporation (NYSE:CVX), International Business Machines Corporation (NYSE:IBM) is a notable dividend stock.
8. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 50
Dividend Yield as of October 13: 4.97%
Chevron Corporation (NYSE:CVX) is a multinational energy company based in California. The oil and gas giant comes in at eighth on our list of the top 12 high dividend stocks to buy according to hedge funds, and has a market capitalization of $208.46 billion.
On October 7, Truist analyst Neal Dingmann raised his price target on Chevron Corporation (NYSE:CVX) to $150 from $145, and kept a Buy rating on the shares of the company.
As of the end of the second quarter, 50 hedge funds tracked by Insider Monkey reported owning stakes in Chevron Corporation (NYSE:CVX). The total worth of these stakes is $4.27 billion. This shows the hedge fund sentiment is positive for the energy company as 41 hedge funds had stakes in the company in the previous quarter, with a total worth of $4.86 billion.
7. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 63
Dividend Yield as of October 13: 4.99%
In the second quarter of 2021, Verizon Communications Inc. (NYSE: VZ) had an EPS of $1.37, beating estimates by $0.07. The company’s revenue was $33.76 billion, up 10.89% year over year and beating estimates by $1.03 billion.
On September 20, Loop Capital analyst Stephan Bisson initiated coverage of Verizon Communications Inc. (NYSE:VZ) with a Hold rating and $57 price on its shares.
By the end of the second quarter of 2021, 63 hedge funds out of the 873 tracked by Insider Monkey held stakes in Verizon Communications Inc. (NYSE: VZ) worth roughly $11 billion. This is compared to 69 hedge funds in the previous quarter with a total stake value of approximately $11.4 billion.
Out of the hedge funds being tracked by Insider Monkey, Warren Buffett’s Berkshire Hathaway is the largest stakeholder in the company, with over 158.8 million shares worth more than $8.89 billion.
6. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 68
Dividend Yield as of October 13: 5.7%
On October 7, Truist analyst Neal Dingmann raised his price target on Exxon Mobil Corporation (NYSE:XOM) to $66 from $64, and kept a Hold rating on the shares.
Of the 873 elite funds tracked by Insider Monkey, 68 were long in Exxon Mobil Corporation (NYSE:XOM) at the end of June, up from 65 in the first quarter of 2021. Jean-Marie Eveillard of First Eagle Investment Management is the leading stakeholder of the company.
In its Q2 2021 investor letter, First Eagle Investment Management stated that Exxon Mobil Corporation (NYSE:XOM) was one of the leading contributors in the fund for the quarter. Here is what they said:
“Leading contributors in the First Eagle Global Fund this quarter included Exxon Mobil Corporation. The continued recovery in oil prices as economies reopen helped fuel another strong performance across the energy complex, including shares of Exxon Mobil. Exxon Mobil recently lost a proxy fight with an activist investor that took three of the company’s 12 board seats. While the press was focused on the investor’s concerns over Exxon Mobil’s long term energy transformation strategy, other factors fundamental to shareholder returns—like capital discipline and balance sheet management—were also at play.”
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Disclosure: None. Top 12 High Dividend Stocks To Buy According To Hedge Funds is originally published on Insider Monkey.
