Dividend Capture Strategy: 10 High Yield Stocks To Buy in November
In this article, we discuss dividend capture strategy and high yield stocks to buy in November. You can skip our detailed analysis of the dividend capture approach and the performance of dividend stocks, and go directly to read Dividend Capture Strategy: 5 High Yield Stocks To Buy in November.
Investing in dividend stocks is easier said than done. The approach is not as simple as it appears on the surface and requires a much deeper analysis. While dividends are typically associated with long-term returns, some investors aim to profit in the short term through a strategy known as dividend capture. The strategy is used by investors to capitalize on dividend payments made by a stock. The goal of this strategy is to buy shares of a company just before it pays its dividend and then sell those shares shortly after receiving the dividend. Through this technique, investors aim to capture the dividend income while potentially benefiting from a stock's price increase leading up to the dividend announcement.
Several analysts have adapted and modified this strategy to make it work better in various ways and maximize their returns. Harry Domash, a publisher at DividendDetective.com, spoke about the special dividend capture strategy in one of his interviews with MoneyShow. He said that the key to this strategy is selling the stock just before the ex-dividend date. Typically, stock prices tend to rise after the dividend announcement and continue to increase until the ex-dividend date. On the ex-dividend date itself, they can drop significantly. He further highlighted that instead of waiting to see what happens on that day, investors should buy the stock the day before it goes ex-dividend. By following this approach or buying the day after the announcement, investors can potentially earn an average return of about 3% to 4% on each trade.
Dividends have consistently proven to be a valuable way for shareholders to earn strong returns. Investors often pay attention to dividend yields, which indicate how much income an investor can expect to earn from their investment in the form of dividends. Analysts advise investing in stocks with dividend yields ranging from 3% to 6%, as stocks with high yields normally have higher payout ratios, leaving them with less financial flexibility. This means that when a company's revenues or cash flows face challenges, the high dividends can strain the stock's prices because the company might struggle to maintain those dividend payments. Dan Lefkovitz, a strategist for Morningstar Indexes, provided advice to investors looking for high-yield investments in one of his columns at Morningstar. Here are some comments from the analyst:
“It’s really critical to be selective when it comes to buying dividend-paying stocks and chasing yield. Looking for the most yield-rich areas of the market can often lead you into troubled areas and dividend traps—companies that have a nice-looking yield that is ultimately unsustainable. You have to screen for dividend durability and reliability going forward.”
For this reason, investors favor companies that regularly increase their dividends. These are usually well-regarded businesses with steady earnings, a history of profitability and growth, robust fundamentals, and solid business models. Walmart Inc. (NYSE:WMT), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV) are some of the best dividend stocks that fall in the dividend growers category. In this article, we will discuss high-yield stocks that will be trading ex-dividend in November.
Photo by Dan Dennis on Unsplash
Our Methodology:
For this list, we selected dividend stocks that will trade ex-dividend in November 2023. Ex-dividend date indicates the cutoff day to buy a stock to receive its upcoming dividend payment. These stocks have dividend yields above 3%, as of October 24. We also measured hedge fund sentiment around each stock, according to Insider Monkey’s Q2 2023 data of 910 elite funds. The list is ranked in ascending order of their ex-dividend dates.
10. Citigroup Inc. (NYSE:C)
Ex-Dividend Date: November 3
Dividend Yield as of October 24: 5.41%
Citigroup Inc. (NYSE:C) is a global financial services company that offers various retail banking services, such as savings and checking accounts, mortgages, personal loans, and credit cards. The company recently announced its third quarter 2023 earnings and posted revenue of $20.1 billion, which showed an 8.8% growth from the same period last year. Its net income for the quarter amounted to over $3.5 billion.
Citigroup Inc. (NYSE:C) announced a quarterly dividend of $0.53 per share on October 19, which was in line with its previous dividend. In its most recent quarter, the company returned $1.5 billion to shareholders through dividends and share repurchases. The stock has a dividend yield of 5.41%, as of October 24. The stock will be going ex-dividend on November 3.
At the end of Q2 2023, 75 hedge funds tracked by Insider Monkey reported having stakes in Citigroup Inc. (NYSE:C), compared with 79 in the previous quarter. The consolidated value of these stakes is over $6.75 billion. Among these hedge funds, Berkshire Hathaway was the company's leading stakeholder in Q2.
9. Pfizer Inc. (NYSE:PFE)
Ex-Dividend Date: November 9
Dividend Yield as of October 24: 5.36%
Pfizer Inc. (NYSE:PFE) is an American leading pharmaceutical company that is involved in various aspects of the healthcare industry. The company currently pays a quarterly dividend of $0.41 per share and has a dividend yield of 5.36%, as of October 24. It has been raising its dividends consistently for the past 13 years. The stock will trade ex-dividend on November 9.
Pfizer Inc. (NYSE:PFE) reported a 54% year-over-year decline in its Q2 revenues at $12.73 billion. However, the company's cash position remained stable as it returned $4.6 billion to shareholders through dividends during the quarter.
As of the close of Q2 2023, 73 hedge funds in Insider Monkey's database owned stakes in Pfizer Inc. (NYSE:PFE), which remained unchanged from the previous quarter. These stakes have a total worth of over $1.5 billion. With roughly 7 million shares, Diamond Hill Capital was the company's leading stakeholder in Q2.
8. International Paper Company (NYSE:IP)
Ex-Dividend Date: November 14
Dividend Yield as of October 24: 5.58%
International Paper Company (NYSE:IP) is a Tennessee-based company that is involved in the manufacturing of a wide range of paper products and packaging solutions. The company also manufactures cellulose fibers used in a range of products, such as diapers, baby wipes, feminine hygiene products, and more.
In the first six months of 2023, International Paper Company (NYSE:IP) reported a strong cash position. The company's operating cash flow came in at $873 million and it generated $265 million in free cash flow. It also returned $160 million to shareholders through dividends during this period.
International Paper Company (NYSE:IP) currently pays a quarterly dividend of $0.4625 per share and has a dividend yield of 5.58%, as recorded on October 24. The stock will go ex-dividend on November 14.
At the end of June 2023, 23 hedge funds tracked by Insider Monkey reported having stakes in International Paper Company (NYSE:IP), down from 25 in the previous quarter. The collective value of these stakes is over $492 million. Among these hedge funds, Greenhaven Associates was the company's largest stakeholder in Q2.
7. Consolidated Edison, Inc. (NYSE:ED)
Ex-Dividend Date: November 14
Dividend Yield as of October 24: 3.69%
Consolidated Edison, Inc. (NYSE:ED) is an American major energy company that is responsible for delivering electricity to customers in the New York City area. This includes maintaining and upgrading the electrical grid, ensuring a reliable supply of electricity, and responding to power outages and emergencies.
On October 19, Consolidated Edison, Inc. (NYSE:ED) declared a quarterly dividend of $0.81 per share, which was consistent with its previous dividend. The company holds a 49-year streak of consistent dividend growth. The stock's dividend yield on October 24 came in at 3.69%. The stock will be trading ex-dividend on November 14.
The number of hedge funds tracked by Insider Monkey owning stakes in Consolidated Edison, Inc. (NYSE:ED) grew to 30 in Q2 2023, from 27 in the preceding quarter. The overall value of these stakes is over $302.3 million.
6. The J. M. Smucker Company (NYSE:SJM)
Ex-Dividend Date: November 16
Dividend Yield as of October 24: 3.77%
The J. M. Smucker Company (NYSE:SJM) is an American food and beverage company that specializes in a wide range of consumer food products. In fiscal Q1 2024, the company reported an operating cash flow of $218 million and its free cash flow for the quarter came in at $67.6 million. It ended the quarter with over $241 million available in cash and cash equivalents.
The J. M. Smucker Company (NYSE:SJM) currently pays a quarterly dividend of $1.06 per share, having raised it by 4% in July this year. Through this increase, the company stretched its dividend growth streak to 22 years. The stock's dividend yield on October 24 came in at 3.77%. The stock will go ex-dividend on November 16.
At the end of June 2023, 29 hedge funds, down from 33 in the previous quarter, owned stakes in The J. M. Smucker Company (NYSE:SJM) as per Insider Monkey's database. The total value of these stakes is nearly $464 million. Among these hedge funds, Ariel Investments was the company's leading stakeholder in Q2.
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Disclosure. None. Dividend Capture Strategy: 10 High Yield Stocks To Buy in November is originally published on Insider Monkey.