In this article, we discuss 10 high dividend S&P 500 stocks. If you want to see some more high yielding stocks, click 5 High Dividend S&P 500 Stocks.
The Standard and Poor’s 500 Index tracks the performance of the biggest 500 companies listed on American stock exchanges. The market capitalization-weighted S&P 500 Index is one of the most notable US equity benchmarks to measure performance. As of April 25, the 1-year returns for the S&P 500 Index came in at 2.77%.
Performance of the S&P 500 Index
In June 2021, Goldman Sachs reported that 10-year stock market returns have averaged 9.2% for the last 140 years. The S&P 500 names performed relatively better than the 10-year average between 2010 and 2020. The index, according to Goldman Sachs, has turned an annual average return of 13.6% in the past decade.
The aggressive Fed policies are set to trigger a bear market, with the S&P 500 names joining the same fate as the broader market, according to Morgan Stanley’s top US equity strategist, Mike Wilson. Wilson believes that investors are aware of the market crackdown, which is why they are piling into cyclical and defensive names. The S&P 500 Index is already down 9.8% year-to-date, and a further 20% pullback from its January high of 4,800 would “complete” the current bear market hypothesis. Deutsche Bank research strategist Jim Reid on April 26 said that the S&P 500 is at a risk of delivering the worst monthly returns since the pandemic-driven 2020 if it falls lower than January 2022’s -5.26% return.
The S&P 500 Index is host to the largest US equities, and amid the crashing stock market, these are some of the safest stocks to invest in due to strong historical performance, fortress balance sheets, and the significant market positioning of the companies. Some of the most notable S&P 500 constituents include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Tesla, Inc. (NASDAQ:TSLA). However, we discuss some of the high dividend S&P 500 stocks in this article.
We picked high dividend S&P 500 stocks with yields over 4% as of April 26. For better context on the companies, we have mentioned latest analyst ratings, dividend payments, and earnings. Insider Monkey’s database tracks 900+ elite hedge funds as of Q4 2021, and it was used to gauge the hedge fund sentiment around the holdings.
High Dividend S&P 500 Stocks
10. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 39
Dividend Yield as of April 26: 6.48%
Altria Group, Inc. (NYSE:MO) was founded in 1822 and is headquartered in Richmond, Virginia. The company manufactures and distributes smokeable and oral tobacco products in the United States. Altria Group, Inc. (NYSE:MO) is one of the highest yielding S&P 500 dividend stocks, with a history of 52 years of consecutive dividend growth.
Altria Group, Inc. (NYSE:MO) delivers a dividend yield of 6.48% as of April 26. The company declared on February 25 a $0.90 per share quarterly dividend, in line with previous. The dividend is payable on April 29, for shareholders of record on March 25.
On January 27, Altria Group, Inc. (NYSE:MO) reported earnings for the fourth quarter of 2021. The company announced an EPS of $1.09, beating analysts’ predictions by $0.01. The $5.09 billion revenue also outperformed market consensus by $88.06 million.
Cowen analyst Vivien Azer on April 7 raised the firm’s price target on Altria Group, Inc. (NYSE:MO) to $53 from $51 and maintained a Market Perform rating on the shares. The analyst revisited the possibility of a merger with Philip Morris International Inc. (NYSE:PM), although the management reiterated in November that it is not reconsidering the notion. She observed that Philip Morris pulling out of Russia has put its earnings at risk, offering management a chance to reevaluate its opportunity set.
According to Insider Monkey’s Q4 data, 39 hedge funds were bullish on Altria Group, Inc. (NYSE:MO), compared to 45 funds in the preceding quarter. The total stakes owned in the fourth quarter amounted to $1.05 billion. Rajiv Jain’s GQG Partners held the biggest position in the company, with more than 9 million shares worth approximately $435 million. The hedge fund boosted its position in Altria Group, Inc. (NYSE:MO) by almost 48000% in Q4 2021.
In addition to Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Tesla, Inc. (NASDAQ:TSLA), Altria Group, Inc. (NYSE:MO) is on the radar of elite investors.
Here is what Broyhill Asset Management has to say about Altria Group, Inc. (NYSE:MO) in its Q2 2021 investor letter:
“Altria (MO) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 20%. We shared our thoughts on these regulations during the quarter, which are available here.
MO Valuation. MO is up ~ 18% YTD (even accounting for the recent sell-off). We expect MO to generate close to $5 in annual FCF per share over the next few years, putting the stock at ~ 10x, which is less than half the market’s multiple today. Over the last decade, shares have traded at an average multiple of 15x and within a range of ~ 10x – 20x (+/-1 standard deviation). The stock yields 7.2% at the current price, close to a 6% premium to treasuries. Historically, shares have traded closer to a 3% premium to the 10Y, which would imply a ~ $75 share price.”
9. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 44
Dividend Yield as of April 26: 4.74%
International Business Machines Corporation (NYSE:IBM) is one of the highest yielding technology dividend stocks from the S&P 500 list. The American multinational technology company specializes in computer hardware, middleware and software, hosting and consulting services, blockchain, automation, robotics, artificial intelligence, and cloud computing.
On April 19, International Business Machines Corporation (NYSE:IBM) reported its Q1 2022 results, posting earnings per share of $1.40, above market consensus by $0.01. Revenue for the period stood at $14.20 billion, topping analysts’ predictions by about $353 million.
International Business Machines Corporation (NYSE:IBM) declared on April 26 a $1.65 per share quarterly dividend, a 0.6% increase from its prior dividend of $1.64. The dividend is payable on June 10, to shareholders of the company as of May 10. The company’s dividend yield on April 26 stood at 4.74%.
Morgan Stanley analyst Erik Woodring on April 20 maintained an Overweight rating on International Business Machines Corporation (NYSE:IBM) and raised the firm’s price target on the shares to $157 from $150, citing a “relatively clean quarter”. The analyst contended that International Business Machines Corporation (NYSE:IBM)’s stronger 2022 revenue outlook reflects improving execution and a constructive IT market environment. He is “incrementally more constructive” after two consistent quarters of outperformance.
Among the hedge funds tracked by Insider Monkey, 44 hedge funds were bullish on International Business Machines Corporation (NYSE:IBM) at the end of December 2021, compared to 41 funds in the prior quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is a significant shareholder of the company, with 3.2 million shares worth $440.5 million.
Here is what St. James Investment Company has to say about International Business Machines Corporation in its Q4 2021 investor letter:
“IBM was not the first company to build computers. The distinction belongs to Sperry-Rand’s subsidiary UNIVAC, which introduced the first commercially successful computers in the early 1950s. In this era, IBM did possess the largest research and development department of the business machines industry and quickly caught up, introducing cost-competitive computers a few years after UNIVAC. By the late 1950s, IBM held the dominant market share in computers. IBM also touted a vastly superior sales organization, which used a sales tactic called “paper machines” (the equivalent of today’s “vaporware”). If a competitor’s product was selling well in a market segment that IBM had yet to penetrate, the company would announce a competing product and start taking orders for the “paper machine” long before it was available.
One cannot overstate how powerful IBM was in the computer industry in the 1950s and 1960s. Every competitor rightly worried that if their product worked too well for too long, it was only a matter of time before an army of IBM salesforce representatives mobilized. In their easily recognizable uniforms of starched white shirts, red ties, and blue suits, IBM marketers marched on their customers and offered a more expensive, but much more defensible, choice. “Nobody gets fired for buying IBM” was a common phrase. Even competitors acknowledged that the company excelled at sales. As a UNIVAC executive once complained, ‘It doesn’t do much good to build a better mousetrap if the other guy selling mousetraps has five times as many salesmen.’” (Click here to see the full text)
8. Lumen Technologies, Inc. (NYSE:LUMN)
Number of Hedge Fund Holders: 39
Dividend Yield as of April 26: 9.16%
Lumen Technologies, Inc. (NYSE:LUMN) is a tech firm based in Monroe, Louisiana, offering cloud services, IT solutions, unified communication and collaboration solutions, colocation and data center services, and managed security services.
On February 24, Lumen Technologies, Inc. (NYSE:LUMN) declared a quarterly dividend of $0.25 per share. The dividend was distributed to shareholders of the company on March 18. Lumen Technologies, Inc. (NYSE:LUMN) delivers a dividend yield of 9.16% as of April 26.
In 2021, Lumen Technologies, Inc. (NYSE:LUMN)’s full-year revenue came in at $19.6 billion, compared to a revenue of $20.7 billion in 2020. The net income in 2021 rebounded strongly to more than $2 billion from the $1.2 billion net loss in the prior year.
Morgan Stanley analyst Simon Flannery noted that the CFO transition at Lumen Technologies, Inc. (NYSE:LUMN) was “not anticipated” and “comes at an interesting time for the company”. While the company has reassured that there are “no changes to our previously issued financial outlook and expectations associated with this announcement”, the analyst noted that he will be “keen to learn more about what drove this transition, and what the new CFO’s priorities are from a capital allocation point of view”. In the meanwhile, he maintained an Underweight rating and $9.50 price target on Lumen Technologies, Inc. (NYSE:LUMN) shares.
Hedge fund sentiment around Lumen Technologies, Inc. (NYSE:LUMN) was extremely bullish in Q4 2021. According to Insider Monkey’s fourth quarter database, 39 funds were long Lumen Technologies, Inc. (NYSE:LUMN), up from 25 funds in the previous quarter. Fred Knoll’s Knoll Capital Management reported owning 100,000 shares of the company in Q4, worth $1.25 million.
Here is what Longleaf Partners Global Fund has to say about Lumen Technologies, Inc. (NYSE:LUMN) in its Q4 2021 investor letter:
“In a year that saw various times when the stock market acted like the pre-COVID, during-COVID and post-COVID “environments” (not necessarily in that order), the good news was that our two largest holdings – which we feel can thrive in all three of these environments – Lumen and EXOR, were among our top contributors for the year. We believe that both remain underappreciated by the market and offer significant upside from today’s discounted prices.
Lumen (40%, 3.06%; 3%, 0.31%), the global fiber company, was the top contributor for the year. CEO Jeff Storey took two actions this year to substantially increase the business’s value and address the stock’s enormous discount (it trades below 35% of our appraisal value). First, during the third quarter, Lumen sold its Latin American fiber for a good price [9x earnings before interest, taxes and depreciation (EBITDA)] and the weaker half of its US consumer business for an encouraging 5.5x EBITDA. Both multiples came in above our appraisals and demonstrate how cheap the consolidated Lumen RemainCo is today at less than 6x P/FCF and EV/EBITDA. The majority of Lumen’s remaining EBITDA comes from its US Enterprise and Small and Medium Business (SMB) segments, which grow faster than Lumen’s disposed LatAm fiber and are worth higher multiples. The weakest segment of the new Lumen, the western half of Consumer, is superior to the assets the company just sold for 5.5x EBITDA. Second, Storey quickly repurchased 7% of Lumen’s shares, adding meaningfully to value per share and free cash flow per share. When the dispositions close, proceeds will reduce debt meaningfully, putting net debt right at the company’s leverage ratio target even though that target was based on the prior, inferior business mix. We are pleased that our engagement since filing an amended 13D helped the company begin to deliver positive corporate actions. The market has fixated on the potential for another dividend cut, but Lumen’s FCF is more than sufficient to cover the $1/share payout while investing aggressively into high-return, edge-out capex to grow revenues.”
7. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 47
Dividend Yield as of April 26: 4.86%
Philip Morris International Inc. (NYSE:PM) is a Swiss-American multinational company that manufactures and sells cigarettes, nicotine products, smoke-free products, and related electronic devices and accessories. Philip Morris International Inc. (NYSE:PM)’s dividend yield on April 26 stood at 4.86%.
Philip Morris International Inc. (NYSE:PM) posted above consensus earnings for the first quarter of 2022 on April 21. The company reported an EPS of $1.56, beating market estimates by $0.07. The $7.75 billion revenue grew 2.12% from the prior-year quarter, exceeding analysts’ predictions by $315.53 million.
On March 10, Philip Morris International Inc. (NYSE:PM) declared a $1.25 per share quarterly dividend, in line with previous. The dividend was distributed on April 12, to shareholders of the company on March 24.
BofA analyst Lisa Lewandowski on April 22 raised the firm’s price target on Philip Morris International Inc. (NYSE:PM) to $117 from $107 and maintained a Buy rating on the shares. Despite adversities in 2022, the analyst expects Philip Morris International Inc. (NYSE:PM) to shift its focus to different high potential markets and survive the temporary cost challenges of moving production away from Russia. She also believes that Philip Morris International Inc. (NYSE:PM)’s core business is solid and offers upside potential. Philip Morris International Inc. (NYSE:PM)’s attractive yield and its commitment to shift smokers to higher margin, less harmful alternatives partly offset the short-term issues in Europe, the analyst told investors.
Among the hedge funds tracked by Insider Monkey in Q4 2021, 47 funds reported owning stakes in Philip Morris International Inc. (NYSE:PM) worth $6.1 billion, compared to 48 funds in the prior quarter, holding stakes in the company valued at $5.9 billion. Terry Smith’s Fundsmith LLP is the biggest position holder in Philip Morris International Inc. (NYSE:PM), with 20.4 million shares worth $1.94 billion.
Broyhill Asset Management mentioned Philip Morris International Inc. (NYSE:PM) in its Q2 2021 investor letter. Here is what the firm had to say:
“Philip Morris (PM) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 23%. We shared our thoughts on these regulations during the quarter, which are available here.
‘PM Valuation. PM is up ~ 15% YTD and would have the most to gain under a nicotine cap. A cap would likely accelerate conversion to iQOS, which is 100% incremental for PM (PM also has zero exposure to combustible cigarettes in the U.S. and licenses its IQOS product for MO to distribute domestically). As such, the decline in PM was much more muted, with the stock hitting new 52 week highs a day after the Biden headline, driven by yesterday’s earnings release. It didn’t take long for investors to shift their attention back to fundamentals and the fundamentals here are best in class. In short, results beat estimates across the board (a recurring theme here), and management raised guidance for the full year (another recurring theme). IQOS continued to deliver impressive growth, recording continued market share gains on the heels of continued user acquisition growth, up 1.5M to 19.1M total users. Importantly, IQOS now represents nearly 30% of PM net revenues (management expects “smoke-free” products to represent more than half of their business by 2025, which should make the ESG folks happy), which is driving top-line growth and margin expansion. Hard to believe that they have created a product with higher margins than combustible cigarettes!! We expect PM operating margins to increase by 100bps – 200bps annually as IQOS continues to gain share. The stock trades at ~ 15x today or 2/3 of the market’s multiple for a business likely to generate $35B in cash flow – or 25% of the market cap – in just the next three years. Over the last decade, shares have traded at an average multiple of 18x and within a range of ~ 14x – 22x (+/-1 standard deviation). The stock yields 5.1% at the current price, and we expect management to resume share purchases in the back half of this year.’”
6. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 70
Dividend Yield as of April 26: 5.73%
AT&T Inc. (NYSE:T) is an American multinational telecommunications and technology company that is based in Dallas, Texas. AT&T Inc. (NYSE:T) offers a dividend yield of 5.73% as of April 26. AT&T Inc. (NYSE:T) reported earnings for Q1 2022 on April 21, posting an EPS of $0.77, above market estimates by $0.08. The $38.11 billion revenue also outperformed Street consensus estimates by $8.68 billion.
On March 25, AT&T Inc. (NYSE:T) declared a $0.2775 per share quarterly dividend, which is in line with the company’s annual dividend of $1.11 per share after the conclusion of the pending WarnerMedia spin-off. The dividend is payable on May 2, to shareholders of record on April 14.
Goldman Sachs analyst Brett Feldman reinstated coverage of AT&T Inc. (NYSE:T) on April 25 with a Buy rating and a $23 price target, which represents a 23.5% potential total return, including its 5.7% dividend yield. AT&T Inc. (NYSE:T)’s communications-themed business strategy and refocused capital allocation priorities after its recently completed spin-off of WarnerMedia positions AT&T Inc. (NYSE:T) to finance the key growth opportunities in fiber and 5G, and “sustain more durable trends” in revenues and adjusted earnings, the analyst told investors in a research note. The analyst believes that AT&T Inc. (NYSE:T)’s valuation is attractive, especially as compared to its large cap peers, especially Verizon Communications Inc. (NYSE:VZ).
According to Insider Monkey’s Q4 data, 70 hedge funds were long AT&T Inc. (NYSE:T), up from 66 funds in the preceding quarter, holding stakes in the company worth roughly $5 billion. Ken Griffin’s Citadel Investment Group is the largest shareholder of the company, with 43.7 million shares valued at more than $1 billion.
Like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Tesla, Inc. (NASDAQ:TSLA), institutional investors are pouring into AT&T Inc. (NYSE:T).
In its Q1 2021 investor letter, Nelson Capital Management, an asset management firm, highlighted a few stocks and AT&T Inc. (NYSE:T) was one of them. Here is what the fund said:
“Nelson Capital stayed busy in the first quarter, making several adjustments within our core portfolio. In the communication services sector, we sold AT&T Inc. (NYSE:T). Over the years, AT&T Inc. (NYSE:T) has made several poor acquisitions, especially in the content realm, leaving the company saddled with debt and unable to change directions.”
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Disclosure: None. 10 High Dividend S&P 500 Stocks is originally published on Insider Monkey.