We see it time and time again: Wall Street whisperings turn into front-page news, especially when hedge funds start pouring cash into high-yield dividend stocks like British American Tobacco p.l.c. (NYSE:BTI). Let’s take a quick jaunt through the peculiar intricacies of dividend stocks, and why BTI stands out in a crowd of high-yield contenders.
Our methodology for ranking the best dividend stocks steers clear of the mundane. We sifted through Insider Monkey’s gilded database, featuring some 900 hedge funds as of Q3 2024. Our aim? To pick dividend luminaries that boast yields soaring above 5%—think of it as curating a list of the Beyoncé or Jay-Zs of dividends. These stocks are ranked on hedge funds’ sentiment, ascending naturally, like cabs lining up outside Grand Central Station.
Contents
British American Tobacco: A Juicy Yield
If you’re entertaining thoughts of throwing your money into the flavor wheelhouse of British American Tobacco, you’re not alone. With 24 hedge funds holding stakes, BTI is like that black-and-white cookie that never goes out of style. What’s got people gabbing is its dividend yield—a hearty 7.25% as of February 5, akin to a cushy rent-stabilized apartment amid inflation chaos.
This steadfast London-based company has boldly ventured away from traditional tobacco. They’re eyeing a fresher, smokeless horizon. Vuse, their flagship e-cigarette brand, is already claiming a solid 40.3% share in key markets. It’s clear BTI isn’t just lounging on laurels; they’re paving a path with intention.
The Dividend Debate: Yield vs. Growth
The saga of dividend yield vs. growth is as old as Katz’s Deli pastrami on rye. Investors love a juicy yield but also crave growth like a New Yorker pines for pizza at 3 AM. BTI’s playing both sides. While cigarette sales dipped 6.8% in the first half of FY24, the company rebounded by hiking prices—proof profits don’t just vanish like a tourist holding an open subway map.
That’s a strategy echoed in the Dividend Aristocrats Index. These companies are golden geese, increasing dividends for 25 straight years without letting yields falter—a feat as rare as a Mets World Series win. Over 26 years, these aristocrats averaged yields around 2.5%, outpacing the measly market average by a full percentage point.
Hedge Funds and High Yields
Hedge fund maestros chase dividends for a reason. Stocks dancing at the 3% to 6% yield range, like BTI, often hit the sweet spot. Think of it as balancing your bagel’s cream cheese—just enough to savor without sending your cholesterol through the roof. Reports from Newton Investment Management back this up. During inflation spikes from 1940 to 2021, high-yield dividend portfolios brought home the bacon, surmounting low-yield portfolios by 199 basis points.
Nuance matters here, though. Not all high-yield stocks are created equal, and analysts harp on those showing a solid dividend growth track record. They frown upon companies that lure with high yields but fall apart under scrutiny, like a dollar slice at the wrong kind of pizza place.
Tables & Figures: Dividend Yields Comparison
| Company | Dividend Yield (%) | Hedge Fund Holders |
|---|---|---|
| British American Tobacco | 7.25 | 24 |
| Other Top Dividend Stocks | 5-6 | Various |
Hot tip: British American Tobacco is just one player in a field worth gambling on. If you’re fishing for something more tech-savvy, check out AI stocks with the potential for higher returns; some analysts think they’re the Park Slope of investments right now.
Still curious? Dive into these reads:
- 10 Best Dividend Stocks Yielding at Least 7% According to Analysts
- 20 Best AI Stock To Buy Now
- Complete List of 59 AI Companies Under $2 Billion in Market Cap
This New Yorker advice? Choose your dividends wisely and hedge your bets like only a local would. Earning 275% since 2014 doesn’t happen every day. And remember, past performance isn’t always a guarantee, but a little street smarts goes a long way.
