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15 Best Dividend Stocks Right Now

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Ma’k Almario
·13 min read
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In this article, we will take a look at the 15 best dividend stocks right now. You can skip our detailed analysis of the merits of dividend investing and go to the 5 Best Dividend Stocks Right Now.

The COVID-19 pandemic highlighted the importance of steady and predictable income. In the course of the global pandemic, many investors turned to dividend stocks to cope with the economic downfall. According to a December article that cited research from S&P Global, in 2020, dividend payments for S&P 500 rose to 0.7% to $58.28 per share compared to the previous year. In a 12-month study published by S&P Global, companies paying dividends post higher returns than those which don't offer dividends.

Dividend Stock Strategy

Various expert investors and hedge fund managers pay a lot of attention to dividend stocks, including legendary Warren Buffett. The billionaire investor enjoys buying dividend stocks at a discounted price and holds these stocks with the aim of value generation and returns. As of January 2021, Berkshire Hathaway’s portfolio has 31 securities that pay dividends.

While most beginner investors believe in investing in high-paying dividend stocks because of their low risk and greater potential for capital gains, the best strategy is to invest in dividend stocks for the long term to generate income. In income investing, it's recommended to prefer those dividend-paying companies that have a history of steady dividend hikes. For instance, dividend aristocrat Procter & Gamble (NYSE: PG) has consistently been paying its dividends for 130 years and has been increasing its dividends for 64 years. Despite the global pandemic, in February 2021, PG reported a dividend yield of 2.45%. Investing in P&G would be more feasible than to invest in a high-yield dividend stock with a weak dividend history. This is especially true in times of financial volatility.

Dividend Money, High Dividends
Dividend Money, High Dividends

Copyright: mozakim / 123RF Stock Photo

Why Invest In Dividend Stocks?

The COVID-19 pandemic resulted in massive job losses in different industries across the world. According to a study by the International Labor Organization (ILO), in 2020, the worldwide unemployment rate grew by 33 million. Most investors started relying on dividend stocks as a steady source of income. This is because most dividend-paying companies often reward their shareholders despite the overall financial market underperforming and capital appreciation from other stocks is hard to foresee. In a report published by S&P Global, in 2011, dividend income accounted for 6.12% of per capita personal income in 2011.

Risk in Investing in Dividend Stocks

During an economic crisis, companies may decrease or even cancel payouts. In a report published by Reuters, from April to December 2020, numerous companies were forced to cut back on their dividends. However, as the world starts to come back to normal, companies are beginning to reinstate their dividends.

Dividend and value stocks are back into the limelight, thanks to the rising financial volatility, which is also clobbering the hedge fund industry. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, 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 124 percentage points since March 2017. Between March 2017 and February 26th, 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. 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.

To identify the 15 best dividend stocks right now, we ranked the top 30 holdings from the Schwab U.S. Dividend Equity ETF using the hedge fund sentiment data and listed the 15 most popular hedge fund dividend stocks. Let's start our list of the 15 best dividend stocks right now.

15. Amgen, Inc. (NASDAQ:AMGN)

No of HFs: 49

Total Value of HF Holdings: $1.03 Billion

We start our list of the 15 best dividend stocks right now with Amgen, Inc. (AMGN). The company is one of the leading biotechnology companies worldwide. Based in California, the company is behind top-selling drugs like XGEVA, Aranesp, and Enbrel. AMGN began paying its shareholders quarterly dividend in 2011 and they currently offer a dividend yield of 2.83% with a market cap of close to $144 billion. The company’s revenue in the full year 2020 came in at $25.4 billion. Shares of AMGN jumped 19.31% over the past twelve months.

In March 2021, the company acquired Rodeo Therapeutics Corporation, a small-molecule therapies company that specialized in the repair of multiple tissues.

With a $239 million stake in AGMN, Cliff Asness’ AQR Capital Management owns 1.05 million shares of the company as of the end of the fourth quarter of 2020. Distillate Capital mentioned that AMGN was one of the biggest additions to their portfolio in their Q4 2020 investor letter:

“One of the biggest additions to the portfolio in the rebalance was Amgen Inc. The company underperformed the S&P 500 Index last quarter even though its free cash flow estimates increased. Because the portfolio’s weighting methodology is linked to free cash flow, position sizes increased to reflect improving fundamentals relative to prices, and the more attractive valuations that result.”

14. Newmont Corporation (NYSE: NEM)

No of HFs: 50

Total Value of HF Holdings: $1.21 Billion

The Colorado-based Newmont Corporation ranks 14th in our list of the best dividend stocks right now. They operate different mines located in Nevada, Colorado, Quebec, Mexico, Peru, and Suriname. NEM started publicly trading in 1925 and currently offers a quarterly dividend yield of 3.50%. The company also focuses on mining essential metals such as silver, lead, and copper.

Last month, the company announced their full acquisition of GT Gold Corporation's common shares at $2.58 per share, totaling $312.28 million. The company’s revenue in the full year 2020 came in at $11,497 million.

First Eagle Investment Management mentioned that NEM has been taking initiative in supervising its mines to protect local communities while reducing COVID-19 impacts on their company in its Q2 2020 investor letter:

“Given what we view as a high-quality management team and robust balance sheet, Colorado’s Newmont is a prime example of a miner that was prepared to meet the challenges of Covid19. With rigorous protocols already in place, the company has been proactive in managing its mines to protect local communities and infrastructure while at the same time mitigating the pandemic’s impact on its business. In contrast with broad market trends that have companies cutting or suspending dividend payments, Newmont recently increased its quarterly dividend by 79%.”

13. International Business Machines Corp (NYSE: IBM)

No of HFs: 51

Total Value of HF Holdings: $998 Million

Ranking 13th in our list of the 15 best dividend stocks right now is International Business Machines, Corporation. New York-based computer giant IBM has been in the industry since 1911 offering computer hardware, middleware, and software. The tech company has consistently rewarded its shareholders with a dividend for a total of 21 years. As of April 7, the company offers a dividend yield of 4.86% with a market cap of $119.94 billion. In the full year 2020, the company reported a revenue of $73.6 billion.

In 2020, the company announced its plans to diversify its operations with a cloud computing company. The company will temporarily be named NewCo. The new cloud company will focus on infrastructure and begin operations in late 2021.

Shares of IBM surged 16.77% over the past twelve months. The biggest stakeholder of the company is the hedge fund run by Peter Rathjens, Bruce Clarke and John Campbell with 2.7 million shares, worth $344 million.

12. BlackRock, Inc. (NYSE:BLK)

No of HFs: 53

Total Value of HF Holdings: $1.15 Billion

Ranking 12th on the list of best dividend stocks right now is BlackRock, Inc. The New York-based investment firm is one of the world’s largest firms operating in over 30 countries worldwide. BLK offers access to mutual funds and investments related to college funds and retirement income. The company currently offers a dividend yield of 2.11% and has a market cap of $119.32 billion.

The company's revenue in 2020 surged 11.46% to $16.2 billion. Shares of BLK climbed 76.41% over the last twelve months. Tom Gayner’s Markel Gayner Asset Management is the biggest stakeholder of the stock with 220 thousand shares, worth $158 million.

11. Lockheed Martin Corporation (NYSE: LMT)

No of HFs: 53

Total Value of HF Holdings: $2.52 Billion

Maryland-based defense giant Lockheed Martin Corporation ranks 11th on the list of the 15 best dividend stocks right now. LMT continues to influence the aerospace and military equipment market with four main segments including Aeronautics, Missiles and Fire Control, Rotary, and Mission Systems and Space. The company was recently awarded by the Missile Defense Agency a $3.7 billion contract to create the Next Generation Interceptor (NGI), an advanced missile defense system. LMT currently offers a dividend yield of 2.74% and has a market cap of $106.15 billion.

In RiverPark Advisors, LLC’s Q4 2020 investor letter, they mentioned that LMT shares were weak for the quarter. Here is what they had to say:

“Despite better-than-expected third-quarter results, LMT shares were weak for the quarter as defense spending is expected to be flat for the coming year. With a record $150 billion backlogs and almost 30% of its revenue coming from building F-35 aircraft with deliveries forecast to reach 180 per year in 4-5 years (3Q’s revenue upside was from the F-35), we believe LMT should grow at a higher rate than overall defense budget growth and Street expectations over the next several years. Further, strategic acquisitions (LMT acquired AJRD for $4 billion in late December), debt paydown, a 3% dividend yield, and continued share buybacks from $6 billion per year of free cash flow should lead to even greater shareholder returns.”

10. Texas Instruments Incorporated (NASDAQ: TXN)

No of HFs: 56

Total Value of HF Holdings: $2.49 Billion

The semiconductor manufacturer Texas Instruments Incorporated ranks 10th on the list of the 15 best dividend stocks right now. The company has been paying a dividend since 2004 with a growth rate of 26% from 2004-2020. As of April 7, the company offers a dividend yield of 2.10%. TXN regularly holds an annual contest for students to create innovative AI solutions relevant to the world. This year is the fourth year of the contest and the company decided to focus on solutions relating to health, wellness, or medicine that will enhance the way we live today.

The company's revenue in the fourth quarter of 2020 came in at $4.09 billion, owing to higher revenue from electronics, industrial, and automotive.

9. PepsiCo, Inc. (NASDAQ: PEP)

No of HFs: 56

Total Value of HF Holdings: $4.28 Billion

New York-based food and beverage corporation PepsiCo, Inc. ranks 9th in our list of the best dividend stocks right now. The firm creates food and beverage with an excellent brand base such as Pepsi-Cola, Quaker, and Tropicana. The company started paying dividends regularly in 1965. In 2020, PEP rewarded its shareholders with their 48th consecutive annual dividend increase. They currently offer a dividend yield of 2.85% and have a market cap of $198.27 billion.

The company’s overall net revenue for 2020 was $70.37 billion, up 4.8% year-over-year. Shares of PEP grew 8.34% over the past twelve months. With a $1.43 billion stake in PEP, Terry Smith’s Fundsmith LLP owns 9.6 billion shares of the company as of the fourth quarter of 2020.

8. Broadcom, Inc (NASDAQ: AVGO)

No of HFs: 59

Total Value of HF Holdings: $3.34 Billion

Global semiconductor leader Broadcom, Inc. ranks 8th in our list of the 15 best dividend stocks right now. AVGO offers networking, software, wireless, and storage products to data centers. The company currently offers a dividend yield of 2.98% and has a market cap of $197.57 billion. During the COVID-19 pandemic, demand for semiconductor chips grew as a result of increased remote work and entertainment at home. As a result, in the fourth quarter of 2020, the company’s revenue came in at $6.5 billion, up 12% compared to the same period from 2019.

The biggest stakeholder of the stock is Cantillon Capital Management, which had 1.2 million shares, worth $505.7 million. Shares of AVGO jumped 85% over the past twelve months.

7. Cisco Systems, Inc. (NASDAQ: CSCO)

No of HFs: 60

Total Value of HF Holdings: $4.97 Billion

The IT and networking company Cisco Systems Inc. ranks 7th in our list of 15 best dividend stocks right now. CSCO is one of the most valuable cloud computing companies worldwide that offers IP-based networking products such as web security and access points. The company has been consistently increasing its dividends for the last 10 years. Currently, CSCO offers a dividend yield of 2.84% and has a market cap of $219.83 billion. Recently, the company partnered with Intel to deliver products such as the Cisco USC B200 M6, C220 M6, and C240 M6 servers that allow enhanced performance in complicated hybrid cloud environments.

The company’s total revenue in the full year 2020 decreased 5% year over year to $49.3 billion. With a $1.04 billion stake in Cisco Systems, David Blood and Al Gore’s Generation Investment Management owns 23.3 million shares of the company as of the end of the fourth quarter of 2020.

6. US Bancorp (NYSE: USB)

No of HFs: 60

Total Value of HF Holdings: $8.13 Billion

Ranking 6th on the list of the 15 best dividend stocks right now is US Bancorp. Founded in 1968, the company operates various financial services such as lending, cash management, and investment management services among others. USB has been around for quite some time with over 18.7 million customers, with its largest market in California. The company currently offers a dividend yield of 2.96% and has a market cap of $85.36 billion.

The company’s net revenue in 2020 came in at $23.3 billion, up 1.5% year over year. One of the biggest hedge funds having stakes in the company is Warren Buffett’s Berkshire Hathaway which had 131 million shares, worth $6 billion at the end of December.

Mairs & Power mentioned that USB was affected by the difficult interest rate environment and credit cycle concerns in its Q4 2020 investor letter:

“On the negative side, one of the Fund’s biggest detractors in 2020 was U.S. Bancorp (USB). Like all banks, U.S. Bank was hurt by the difficult interest rate environment and credit cycle concerns. We believe banks are strong enough to survive the current sector doldrums, and they remain some of the market’s most attractive opportunities.”

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Disclosure: None. 15 Best Dividend Stocks Right Now is originally published on Insider Monkey.