Graphic Packaging Holding Company (NYSE: GPK) and Packaging Corporation of America (NYSE: PKG) are two great dividend stocks with high institutional support. Both companies carry a rough 90% institutional interest with GPK edging out PKG by less than 100 bps. The real takeaway from the institutional data is that both companies are tightly held with ownership on the rise but sell-side investors add to the volatility. 

The data shows institutions have been shedding Graphic Packaging Holding Company stock in favor of Packaging Corporation of America so the balance of ownership could shift over the next quarter or two. One reason could be the dividend. Packaging Corporation of America yields about 4.3% in the wake of the Q3 earnings report, while GPK pays just 1.7%. PKG has an established history of dividend growth. The institutions have been shedding GPK but netted about 5% of the company over the last year compared to a slightly stronger 6% in PKG. 

Analysts Have Been Pushing Graphic Packaging Holding Company Higher 

Analysts have displayed disparity in price action between GPK and PKG over the past few quarters. The analysts clearly favor GPK over PKG, perhaps due to its diversified nature. Both companies make fiberboard and other box-type solutions but GPK is exposed to more markets. Graphic Packaging Company also appears to be better positioned for the current environment after just raising its guidance for the current quarter, while competitors did the opposite. The analysts have GPK pegged at a "moderate buy" compared to a "firm hold" for PKG. There is a difference in the price targets as well. 

The price targets for both companies imply about a 13% to 15% upside for the underlying stock but the trends are different. The analysts have upped their targets for GPK and lowered the targets for PKG. This trend was extended following the Q3 earnings reports. The takeaway from this data is that analysts' activity is contrary to the institutions and may offset them to some degree.

What does this mean for investors? A position in both companies may be the best approach. 

PKG and GPK Delivery Capital Returns 

Both Packaging Corporation of America and Graphic Packaging Holding Company pay attractive dividends with a positive outlook for dividend growth. The difference here is that GPK pays a much lower yield and has a less established history of distribution growth. Graphic Packaging Holding Company has been a steady payer but raised its payout for the first time in years just last quarter. That has the payout at 1.7% relative to recent prices and the payout ratio near 15%. Those metrics support the idea of robust future increases. The last was worth 25%, but Packaging Corporation of America’s payout is still more attractive. PKG pays about a 4.3% yield with a 39% payout ratio, a 12% distribution CAGR and 11 years of increases under its belt. 

The Technical Outlook: GPK Outperforms PKG 

GPK and PKG stocks tend to have a high correlation but have become disconnected over the past two quarters. This disconnect is driven in large part by the institutions and may last into the new year. The odds are high that the two will come back into alignment sooner rather than later, which is the dilemma for investors. In this light, GPK may be a better stock to sell than buy and PKG the better to buy than sell. The deciding factor may come down to the dividend. PKG and its 4.3% dividend yield is the one to accumulate, but both are good buys.