McDonald’s (MCD), Johnson & Johnson (JNJ) Among Hedge Funds’ Favorite Dividend Aristocrats

#3 Lowe’s Companies, Inc. (NYSE:LOW)

– Number of Hedge Fund Shareholders (as of June 30): 67
– Total Value of Hedge Funds’ Holdings (as of June 30): $3.3 billion
– Hedge Funds’ Holdings as Percent of Float (as of June 30): 4.70%

Although its annual dividend yield of around 1.94% may not be as attractive as the yields of other names on our list, Lowe’s Companies, Inc. (NYSE:LOW)’s dividend is definitely one of the safest, as the company’s payout ratio is only in the 34.8% range. Lowe’s also has one of the longest histories of raising its dividend, having upped its payout for 53 straight years. The smart money is also growing more optimistic about the stock. According to our records, 67 funds that we track had a long position in Lowe’s Companies, Inc. (NYSE:LOW) at the end of June, up by three funds quarter-over-quarter.

#2 Walgreens Boots Alliance Inc (NASDAQ:WBA)

– Number of Hedge Fund Shareholders (as of June 30): 67
– Total Value of Hedge Funds’ Holdings (as of June 30): $4.43 billion
– Hedge Funds’ Holdings as Percent of Float (as of June 30): 4.90%

Walgreens Boots Alliance Inc (NASDAQ:WBA)’s dividend is about as dependable as it can get in the healthcare sector. The company has raised its dividend for 40 straight years to its current annualized payout of $1.50 per share, good for a 1.82% yield. Given that the pharmacy chain is only paying one-third of its profits in the form of dividends, Walgreens Boots Alliance’s management has been free to use the excess money to make long-term accretive acquisitions such as buying Rite Aid Corporation (NYSE:RAD), in a deal that is expected to close by the end of the year. Giving the aging population, robust drug price inflation (though this is coming under government scrutiny), and increasing health coverage in the United States, 67 funds in our system were long the stock as of June 30. Among them was Eric W. Mandelblatt‘s Soroban Capital Partners, which raised its stake in it by 183% in the second quarter, to over 5.24 million shares at the end of June.

#1 Johnson & Johnson (NYSE:JNJ)

– Number of Hedge Fund Shareholders (as of June 30): 82
– Total Value of Hedge Funds’ Holdings (as of June 30): $5.59 billion
– Hedge Funds’ Holdings as Percent of Float (as of June 30): 1.70%

With 82 hedge funds that we track owning shares of Johnson & Johnson (NYSE:JNJ) at the end of June, the stock ranks as the smart money’s top pick among dividend aristocrats. Not only has Johnson & Johnson increased its payout for 53 straight years, the company’s payments also amount to a solid annual yield of almost 2.69%. As has been the case for several decades now, analysts believe the right move is to either buy more of, or hold onto, Johnson & Johnson’s stock. Of the 22 analysts covering the stock, ten have ‘Buy’ ratings, 11 have ‘Hold’ ratings, and only one has a ‘Sell’ rating.

Disclosure: None