When the market drops, many institutions search for stocks paying high dividends so they can at least benefit from the additional sources of income.
Many investors watch institutional purchases very closely because of their ability to buy a large number of shares at a time, called blocks of shares. These large purchases can have a significant impact on the stock price. And since these hedge funds house some of the smartest and most experienced traders, they are often referred to as "smart money," and it is considered a strong vote of confidence when they net purchase a stock.
Since the market dropped, there are many stocks trading at lower prices, but we wanted to look at stocks trading in extremely oversold conditions. For this, we used the relative strength index (RSI) readings over the last 14 days. A level under 40 indicates oversold conditions.
Business section: Investing ideas
The list below has dividend yields between 1%-7%, with positive payout ratios under 50%.
We took that list and checked for oversold conditions according to the RSI(14) with levels under 30.
Then we used those names and checked for stocks that are showing institutional purchases. Do you agree with the "smart money"?
List sorted by dividend yield. (Click here to access free, interactive tools to analyze these ideas.)
1. Campbell Soup
5. Cal-Maine Foods
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Danny Guttridge does not own any of the shares mentioned above. Institutional data sourced from Fidelity, all other data sourced from Finviz.