Published on January 25th, 2021
This is a guest contribution from SwaggyStocks.
The terms “hype” and “dividend stocks” don’t usually come together in the same sentence very often. In fact, the term “dividend growth stock” might almost be looked at as an oxymoron. Dividend stocks have always been known as a stable, less exciting source of investing income, so how can they be classified as growth stocks?
On the other side, growth stocks known to have lots of hype come with higher rewards, but also much higher risks. Not everyone is able to stomach the wild swings, which can frequently be within the range of 10% daily. What if I told you it was possible to have the best of both worlds with a risk-averse dividend stock that also has the potential of a growth stock, is that something you might be interested in?
Let me introduce you to SwaggyStocks, a website designated to following the most hyped stocks on Reddit, and more specifically, the WallStreetBets forum. If you follow the markets closely or watch Jim Cramer on the FastMoney program you might have caught on to him mentioning the short-squeeze in Gamestop (GME) being caused by a wild group on reddit.
Similar to what RobinTrack did for displaying the holdings of Robinhood users, SwaggyStocks is currently one of the top platforms for monitoring stock sentiment and hype on Finance Reddit. Today they are bringing us the most hyped dividend stocks they caught in 2020.
As a preface, all of the stock sentiment data is available on the SwaggyStocks website and each ticker can be analyzed individually.
- Dividend Yield: 0.6%
Let’s start with one of the “safer” dividend stocks on this list, Apple (AAPL). Apple had a 78% return in 2020 and currently offers a 0.60% dividend yield. Apple first started gaining traction on WallStreetBets early January of 2020 as users prepared for an expected “earnings blowout”. Not surprisingly, with the growth in share price the hype surrounding the ticker remained quite high over the course of the year. Peak sentiment occurred October 13, 2020 when the stock price was trading around $120 at the time. Apple, currently sitting at $139, makes the list of top performing “hype” stocks that also offer a dividend.
- Dividend Yield: 1.0%
Next in line for popularity we have Microsoft (MSFT). Anyone who was a member of the wild sub-reddit back in early 2020 might remember the infamous MSFT March $200 call that was one of the most popular plays back then. Unfortunately, that contract expired worthless, but that’s besides the point. Let’s take a look at the hype surrounding this stock. In 2020 Microsoft shares had a return of nearly 40%, quite high for a company that offers a 1% dividend.
Initial hype on the stock began early January when the stock was trading at approximately $150, as it quickly shot up to $183 where it peaked and left a lot of those March-expiration call-holders in shambles. The stock has since fully recovered and is currently trading at $226.
ARK Genomic Revolution ETF (ARKG)
- Dividend Yield: 0.85%
It’s tough to go wrong with blue chip stocks like Apple and Microsoft. Now let’s take a look at a newly “discovered” ticker on WallStreetBets. ARKG is part of the genomic research series within the ARK ETFs. ARKG had an incredible 2020 return of 187%. However, the stock didn’t start gaining popularity with retail traders until December 2020. What happened to get the stock discovered? It had shot up from $82 to $94 per share in just 4 trading days. That was enough to get the ticker on WallStreetBets’ radar.
Although it hasn’t been as popular as say GameStop (GME) or Tesla (TSLA) in terms of comment volume, it has still provided some stealthy returns. From the time it was noticed until EOY 2020 it provided a 10% return to shareholders in those three weeks. This is another high-beta stock with a dividend that can provide growth-stock-like returns in the coming years.
Clean Energy ETF (ICLN)
- Dividend Yield: 0.34%
Another recent ticker is clean energy ETF, with the ticker ICLN. ICLN produced a 137% return in 2020 and has been a lot of WallStreetBets’ top picks in the forecasting of the Biden presidency. ICLN didn’t get noticed on the WallStreetBets sub-reddit until October 8th, 2020 when the average comment volume mentioning the ticker shot up from 15 comments per day to a peak of 230 comments in just one trading session. From that time until today the return on ICLN is approximately 100%. Not a bad return for a stock that also provides a (small) dividend.
Other popular tickers that had high volume of mentions as provided by SwaggyStocks were: Boeing (BA), Bank of America (BAC), Target (TGT), Activision Blizzard (ATVI), MGM Resorts (MGM), Walmart (WMT), Intel (INTC), Nvidia (NVDA), UPS (UPS), FedEx (FDX), and AstraZeneca (AZN). Looking at this list you might be asking yourself why these tickers? Most of them had great performance and almost all of them are part of a trend. Whether they are a lockdown play, or vaccine/re-opening play, you can find a trend somewhere by reading between the lines and doing some form of due diligence.
These gains look too good to be true, does WallStreetBets have predictive power? I wouldn’t say they have a crystal ball to predict where stocks are going. However, I do believe they are very quick to find trends and jump on the bandwagon immediately upon confirmation. Seeing a stock jump 8% in a day is enough confirmation bias for them to push all their savings into a lotto play.
No one can guarantee the success of this type of strategy, but looking at the data, we’ve noticed that if you zoom out to a longer time frame instead of you-only-live-once options expiring next week, the odds are more likely to be in your favor. The trends the users at WallStreetBets have recognized usually had a high rate of success if you look at 6-month and 12-month returns.