In this article, we discuss 12 very high yield dividend stocks with upside potential. You can skip our detailed analysis of dividend stocks and their performance in the past, and go directly to read 5 Very High Yield Dividend Stocks With Upside Potential.
Many investors are drawn to dividend investing for various reasons, but among them, dividend yield stands out as a top favorite. High-yield dividend stocks offer a reliable stream of income, making them attractive for investors seeking regular cash flow. Additionally, high dividend yields can indicate financial strength and stability in a company, as firms typically need consistent earnings to sustain such payouts. Historical analysis also shows that high-dividend stocks have shown stronger performance than the overall market. According to a report by Newton Investment Management, over the span of 1940 to 2021, stocks exhibiting high dividend yields often showcased a trend of outperforming the broader market during periods characterized by high inflation.
This year, dividend stocks have taken a back seat as technology stocks, driven by the expanding realm of artificial intelligence, have captured investors’ focus. Bloomberg Intelligence notes a relatively low influx of just $786 million into dividend ETFs, marking the smallest flow since 2006. Despite this, analysts hold an optimistic view of dividend growth stocks. These stocks typically offer investors a consistent and increasing stream of income over time. The appeal lies in their ability to provide shareholders with a reliable source of growing dividends, making them an attractive option despite the recent surge in interest toward tech-related investments.
Kirsten Cabacungan, an investment strategist at Merrill and Bank of America Private Bank, advises investors to consider both price gains and dividend income for their overall return. Dividend-paying stocks hold additional benefits as their regular income can offset losses during market dips, providing balance in a portfolio. Moreover, in times of low interest rates, these stocks might offer higher income compared to Treasury bonds, CDs, or corporate bonds. Here are some comments from the analyst:
“Companies that have consistently increased their dividends tend to be more stable, higher quality businesses, which historically have weathered downturns and are more likely to have the ability to pay dividends consistently.”
Cabacungan suggests that if your aim is to generate consistent income, focusing on stocks with higher-than-average dividend yields over an extended period could be beneficial. However, for investors seeking growth without an immediate need for income, she recommends considering stocks known for consistently increasing dividends as their cash flows and profits grow. This approach aligns with a more growth-oriented strategy, allowing investors to benefit from companies that demonstrate a track record of boosting dividends over time. Verizon Communications Inc. (NYSE:VZ), Altria Group, Inc. (NYSE:MO), and Pfizer Inc. (NYSE:PFE) are some of the best dividend stocks that offer high dividend yields but have also raised their payouts consistently for years. In this article, we will further take a look at high-dividend stocks with upside potential.
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Our Methodology:
For this list, we screened for dividend stocks with yields higher than 8% as of November 28. Then, we narrowed down the choices by finding stocks with an upside potential of over 8% according to analyst predictions. Finally, we selected companies with the most hedge fund investors holding stakes in them, using Insider Monkey’s Q3 2023 database.
12. Nordic American Tankers Limited (NYSE:NAT)
Number of Hedge Fund Holders: 15
Upside Potential as of November 28: 22.3%
Nordic American Tankers Limited (NYSE:NAT) is a company operating in the transportation sector, specifically in the niche of crude oil transportation and shipping. The company has a 28-year run of paying regular dividends to shareholders and it currently offers a quarterly dividend of $0.15 per share. With a dividend yield of 10.93%, as of November 28, NAT is one of the best dividend stocks on our list.
Verizon Communications Inc. (NYSE:VZ), Altria Group, Inc. (NYSE:MO), and Pfizer Inc. (NYSE:PFE) are some other best dividend stocks with high dividend yields.
At the end of Q3 2023, 15 hedge funds tracked by Insider Monkey reported having stakes in Nordic American Tankers Limited (NYSE:NAT), compared with 16 in the previous quarter. The consolidated value of these stakes is over $50.5 million.
11. Hercules Capital, Inc. (NYSE:HTGC)
Number of Hedge Fund Holders: 15
Upside Potential as of November 28: 11.09%
Hercules Capital, Inc. (NYSE:HTGC) is a specialty finance company, based in California. The company focuses on providing financing solutions to venture capital-backed companies at various stages of their growth. In the third quarter of 2023, the company reported a total investment income of $116.7 million, which showed a 38.5% growth from the same period last year. It ended the quarter with over $4.1 billion in assets under management, up 19.4% from the prior year period.
Hercules Capital, Inc. (NYSE:HTGC), one of the best dividend stocks on our list, offers a quarterly dividend of $0.40 per share. The company has been rewarding shareholders with growing dividends for the past five years. As of November 28, the stock has a dividend yield of 10.26%.
The number of hedge funds tracked by Insider Monkey owning stakes in Hercules Capital, Inc. (NYSE:HTGC) grew to 15 in Q3 2023, from 12 in the previous quarter. The consolidated value of these stakes is over $47 million.
10. British American Tobacco p.l.c. (NYSE:BTI)
Number of Hedge Fund Holders: 17
Upside Potential as of November 28: 9.84%
British American Tobacco p.l.c. (NYSE:BTI) is one of the world’s largest multinational tobacco companies, engaged in the manufacturing, distribution, and sale of tobacco and nicotine products. The company has been making uninterrupted dividend payments to shareholders for the past 25 years. It currently offers a quarterly dividend of $0.7006 per share for a dividend yield of 8.89%, as recorded on November 28.
As of the close of Q3 2023, 17 hedge funds in Insider Monkey’s database reported owning stakes in British American Tobacco p.l.c. (NYSE:BTI), compared with 22 a quarter earlier. These stakes have a total value of roughly $330 million. Orbis Investment Management owned over 6.7 million BTI shares, becoming the company’s leading stakeholder in Q3.
9. Medical Properties Trust, Inc. (NYSE:MPW)
Number of Hedge Fund Holders: 18
Upside Potential as of November 28: 39.21%
Medical Properties Trust, Inc. (NYSE:MPW) is an American real estate investment trust company that primarily focuses on investing in and owning healthcare-related real estate. In the third quarter of 2023, the company posted an FFO of $0.38, which beat analysts’ consensus by $0.02. It ended the quarter with over $340 million available in cash and cash equivalents and its total assets for the period amounted to over $19 billion.
Medical Properties Trust, Inc. (NYSE:MPW) has been paying regular dividends to shareholders since 2005. The company currently pays a quarterly dividend of $0.15 per share and has a dividend yield of 12.45%, as of November 28.
At the end of September 2023, 18 hedge funds tracked by Insider Monkey held investments in Medical Properties Trust, Inc. (NYSE:MPW), down from 20 in the preceding quarter. The stakes owned by these funds have a total value of nearly $150 million.
8. Nu Skin Enterprises, Inc. (NYSE:NUS)
Number of Hedge Fund Holders: 19
Upside Potential as of November 28: 28.9%
Nu Skin Enterprises, Inc. (NYSE:NUS) operates as a global direct-selling company focused on personal care and wellness products. On November 1, the company announced a quarterly dividend of $0.39 per share, which was in line with its previous dividend. Overall, the company holds a 22-year streak of consistent dividend growth, which makes NUS one of the best dividend stocks on our list. The stock’s dividend yield on November 28 came in at 9.36%.
In the third quarter of 2023, Nu Skin Enterprises, Inc. (NYSE:NUS) remained committed to its shareholder return, as the company distributed approximately $19.5 million among investors through dividends. The company’s cash position also remained strong with over $233.3 million available in cash and cash equivalents.
As of the end of the September quarter of 2023, 19 hedge funds in Insider Monkey’s database owned stakes in Nu Skin Enterprises, Inc. (NYSE:NUS), up from 18 in the previous quarter. The total value of these stakes is over $93.3 million. Among these hedge funds, Marshall Wace LLP was the company’s leading stakeholder in Q3.
7. NextEra Energy Partners, LP (NYSE:NEP)
Number of Hedge Fund Holders: 19
Upside Potential as of November 28: 72.4%
NextEra Energy Partners, LP (NYSE:NEP) is a renewable energy company that operates as a subsidiary of NextEra Energy, Inc., a leading clean energy company in the US. The company holds a very strong dividend growth streak as it has raised its payouts every quarter since 2015. It currently offers a quarterly dividend of $0.8675 per share and has a dividend yield of 14.96%, as of November 28.
NextEra Energy Partners, LP (NYSE:NEP) was a part of 19 hedge fund portfolios at the end of Q3 2023, compared with 23 in the previous quarter, according to Insider Monkey’s database. The stakes owned by these hedge funds have a total value of roughly $191 million.
6. Medifast, Inc. (NYSE:MED)
Number of Hedge Fund Holders: 20
Upside Potential as of November 28: 14.69%
Medifast, Inc. (NYSE:MED) is a company specializing in the development, manufacturing, and distribution of weight management and health products. In the third quarter of 2023, the company posted an EPS of $2.12, which surpassed analysts’ estimates by $1.06. Its revenue for the quarter came in at $236 million and its net income stood at $23.1 million. During the quarter, it returned $18 million to shareholders through dividends, which makes MED one of the best dividend stocks on our list.
Medifast, Inc. (NYSE:MED) has been raising its dividends for eight consecutive years and it currently offers a quarterly dividend of $1.65 per share. As of November 28, the stock has a dividend yield of 10.16%. In addition to MED, analysts are also paying attention to Verizon Communications Inc. (NYSE:VZ), Altria Group, Inc. (NYSE:MO), and Pfizer Inc. (NYSE:PFE).
At the end of Q3 2023, 20 hedge funds owned stakes in Medifast, Inc. (NYSE:MED), up from 18 in the previous quarter, as per Insider Monkey’s database. Their collective stake value is more than $56 million. Ken Griffin’s Citadel Investment Group was the largest stakeholder of the company in Q3.
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Disclosure. None. 12 Very High Yield Dividend Stocks With Upside Potential is originally published on Insider Monkey.