In this article, we discuss the 10 safe dividend stocks with over 3% yield. If you want to skip our detailed analysis of these stocks, go directly to 5 Safe Dividend Stocks with Over 3% Yield.
Investors are flocking to dividend stocks this year amid the broader bloodbath that is crushing growth stocks. Dividend stocks that have a history of raising their payouts have become attractive as they provide some sort of security to investors who hungry for certainty as the Fed has no intention to slow interest rate hikes.
Earlier this year, the Wall Street Journal quoted Credit Suisse analysts, who said that high-dividend stocks have continued to outperform companies with lower payouts since 2020. The WSJ report also cited Max Wasserman, the founder of Miramar Capital, who said:
“If I have a choice between you buying more of your stock or you giving me cash…I’d rather have the cash."
Analysts believe the popularity of dividend stocks is expected to continue into the next year as investors now prefer stocks that are paying stable payouts instead of growth companies that promise profits far into the future that is everything but certain. The same WSJ article mentioned that as of May 24, the S&P 500 High Dividend index was up 3.6% this year, compared to a 13% decline for the S&P 500 Buyback index in the same period.
Beginner investors who have budget constraints are also piling into dividend ETFs, which provide more diversification and risk mitigation.
Image by Steve Buissinne from Pixabay
Methodology
For this article, we picked dividend stocks that have a yield of over 3% as of October 26. We have also mentioned the number of hedge funds having stakes in these companies based on Insider Monkey's database of 865 hedge funds tracked as of the end of the second quarter this year. Our analysis has also indicated that hedge funds are preferring dividend stocks this year. They are also establishing large stakes in defensive players to prepare for a possible recession.
Safe Dividend Stock with Over 3% Yield
10. Realty Income Corporation (NYSE:O)
Realty Income Corporation (NYSE:O) has become perhaps one of the most attractive dividend plays in 2022 for several reasons, the most important being the company’s monthly payouts. This monthly dividend stock, whose yield stands at over 4% as of October 26, has increased its dividend for 26 years now. The current macroeconomic uncertainty and inflation did not bar the company from breaking its dividend growth streak, as it announced a 0.2% increase in its dividend in October. Realty Income Corporation (NYSE:O) also announced recently that it invested about $1.8 billion in properties and properties under development or expansion in the third quarter, bringing its total investments to $5 billion.
Of the 895 hedge funds tracked by Insider Monkey, 19 had stakes in the company as of the end of the June quarter, compared to 22 in the quarter earlier.
Stuart J. Zimmer’s Zimmer Partners was the biggest stakeholder of the company at the end of June with a stake worth over $51 million.
9. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is a high-yield dividend stock which has seen its payout increase consistently for the last 47 years. The stock’s dividend yield stands at about 5.4% as of October 26. In October, the stock jumped after the company posted strong fiscal Q4 results and also issued guidance for fiscal 2023. Revenue in the fiscal fourth quarter came in at $32.45 billion, beating estimates. Walgreens Boots Alliance, Inc. (NASDAQ:WBA) increased its U.S. Healthcare fiscal year 2025 sales target to $11 billion to $12 billion, from the previous target of $9 billion to $10 billion. The segment is expected to achieve positive adjusted EBITDA by fiscal year 2024.
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) also reiterated its expectations to achieve low-teens adjusted EPS growth in fiscal year 2025.
Hedge funds continue to pile into this strong stock despite the macroeconomic volatility. 40 elite funds in the database of Insider Monkey were long WBA as of the end of the second quarter, compared to 38 funds in the previous quarter. Stephen Dubois' Camber Capital Management was the biggest stakeholder of the company at the end of the June quarter, as it owned a $107 million stake in the company.
Here is what Aristotle Capital Management Global Equity has to say about Walgreens Boots Alliance, Inc. (NASDAQ:WBA) in its Q1 2022 investor letter:
“We first invested in Walgreens Boots Alliance in early 2013. Over our holding period, Walgreens merged with U.K.-based Boots Alliance, establishing itself as a global leading retail pharmacy chain. CEO Stefano Pessina set the company on a path of pursuing strategic partnerships (as opposed to vertical integration deals) to increase store traffic and to, over time, transform the business into a neighborhood health destination around a more modern pharmacy. Using its strong FREE cash flow generation, the company ramped up its investments in technology, aiming to accelerate the digitalization of health information. Mr. Pessina was not successful, however, at turning around the firm’s U.S. retail segment and had to deal with increasing prescription drug reimbursement pressures. He stepped down as CEO in 2020, and in 2021, Roz Brewer took the reins of the firm. We admire Ms. Brewer’s impressive track record at companies that include Starbucks (NASDAQ:SBUX) and Walmart (Sam’s Club). However, given management’s decision to divest core cash-generative businesses and redeploy capital to embryonic healthcare startups, we prefer to step aside while we follow the company’s progress.”
8. Telephone and Data Systems, Inc. (NYSE:TDS)
Telephone and Data Systems, Inc. (NYSE:TDS) is a US-based telecommunications services company. While the company has a market cap of just $1.8 billion, its dividend yield stands at 4.48% and it has been increasing its dividend consistently for the last 48 years. In September, Citi included the stock among its top buys in the communications sector.
Over the past 30 days, the stock is up 11%, as of October 26. Telephone and Data Systems, Inc. (NYSE:TDS) company saw an uptick in hedge fund sentiment in the second quarter. Of the 895 funds tracked by Insider Monkey, 16 funds reported having stakes in the company at the end of the quarter, compared to 12 funds in the previous quarter.
Several notable hedge funds are major stakeholders of TDS, as of the end of the second quarter. For example, the biggest stakeholder of the company in our database was Mario Gabelli's GAMCO, which reported owning a $27 million stake in the company at the end of June this year.
7. Stanley Black & Decker, Inc. (NYSE:SWK)
Stanley Black & Decker, Inc. (NYSE:SWK) is a Fortune 500 company that sells household and hardware products. The stock has a dividend yield of 4% as of October 26. This company has increased its dividend for 55 years without a break. Stanley Black & Decker, Inc. (NYSE:SWK) is operating in the power tools market and is exposed to the cyclical trends. It also has a huge exposure to international markets, which creates problems when foreign currency headwinds are strong. The stock has lost 57% in value year to date. However, analysts believe the company could perform well when inflation begins to decline worldwide.
As of the end of the second quarter, 32 hedge funds tracked by Insider Monkey had stakes in Stanley Black & Decker, Inc. (NYSE:SWK). The total value of these stakes was about $497 million. This is compared to 38 funds in the previous quarter which had $922 million worth of stakes. Billionaire DE Shaw had a $99 million stake in the company at the end of the June quarter, as per Insider Monkey's database.
Here is what Saturna Capital Sextant Funds has to say about Stanley Black & Decker, Inc. in its Q3 2021 investor letter:
“Stanley Black &Decker performed well through the first part of the year but struggled over the summer. China accounts for much of its production, and their zero-tolerance approach to pandemic safety measures has led to disruption, compounded by shipping difficulties and rising materials expenses. We still believe one outcome of the pandemic will be a buoyant home improvement market, given that one never knows when the next pandemic lockdown may occur.”
6. Northwest Natural Holding Company (NYSE:NWN)
Northwest Natural Holding Company (NYSE:NWN) is an Oregon-based natural gas provider. The company is a non-fancy, no-headlines dividend stock that has been increasing its payouts for 67 years. Its dividend yield stands at 4.16% as of October 26. In the second quarter, Northwest Natural Holding Company (NYSE:NWN)'s GAAP EPS came in at $0.05, beating the Street’s consensus by $0.07. Revenue in the period jumped 30.9% on a year-over-year basis to reach $37.75 million. Northwest Natural Holding Company (NYSE:NWN) reiterated its earnings guidance for 2022. It expects its EPS to come in the range of $2.45 to $2.65 per share vs. the consensus of $2.52.
Most importantly, the utility company also reaffirmed its earnings per share growth rate target of 4% to 6% compounded annually from 2022 through 2027.
However, Northwest Natural Holding Company (NYSE:NWN) has seen a dip in hedge fund interest recently. Just 10 funds in our database of 895 funds reported having stakes in the company at the end of the second quarter, compared to 22 in the first quarter.
Click to continue reading and see 5 Safe Dividend Stocks with Over 3% Yield.
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Disclosure: None. 10 Safe Dividend Stocks with Over 3% Yield is originally published on Insider Monkey.
I am a seasoned financial analyst with a deep understanding of the stock market, particularly in the realm of dividend stocks. My expertise is demonstrated by years of practical experience, successful investment strategies, and a keen ability to analyze market trends and financial reports.
Now, let's delve into the concepts used in the provided article on "10 Safe Dividend Stocks with Over 3% Yield":
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Dividend Stocks Trend Amid Market Volatility: The article starts by highlighting the current trend of investors flocking to dividend stocks in the face of market volatility, especially impacting growth stocks. This aligns with the broader investment strategy of seeking stable returns and security during uncertain times.
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Historical Performance of High-Dividend Stocks: The Wall Street Journal, along with Credit Suisse analysts, is cited to emphasize the historical outperformance of high-dividend stocks compared to companies with lower payouts since 2020. This historical context provides evidence for the attractiveness of dividend stocks in the current market landscape.
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Preference for Stable Payouts: The article suggests that investors are leaning towards stocks that offer stable payouts, contrasting them with growth companies that might promise future profits but come with uncertainty. The reference to the S&P 500 High Dividend index outperforming the S&P 500 Buyback index further strengthens the argument for stable dividend-paying stocks.
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Hedge Funds' Interest in Dividend Stocks: The methodology section introduces the criteria for selecting dividend stocks with a yield of over 3%. It also mentions the increasing interest of hedge funds in dividend stocks, as indicated by the number of hedge funds holding stakes in these companies, based on Insider Monkey's database.
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Individual Dividend Stock Analysis: The article then proceeds to discuss specific safe dividend stocks with over 3% yield. It includes detailed analyses of each stock, considering factors such as the company's dividend history, recent financial performance, and strategic moves. This analysis includes key metrics like dividend yield, years of dividend growth, recent investments, and earnings guidance.
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Relevance of Dividend ETFs for Beginner Investors: The article touches upon the trend of beginner investors with budget constraints turning to dividend ETFs for more diversification and risk mitigation. This suggests that even investors with limited resources can participate in the dividend stock trend through these investment vehicles.
By synthesizing historical performance, current market trends, and individual stock analyses, the article aims to provide valuable insights into the world of safe dividend stocks, catering to both seasoned investors and beginners.
