In this article, we discuss the 10 best dividend stocks according to John Overdeck and David Siegel’s Two Sigma Advisors.
John Overdeck and David Siegel co-founded Two Sigma Advisors, a New York-based hedge fund, in 2001. The hedge fund utilizes technological advances and data sciences in global financial markets to make investments while managing risks. The use of a scientific approach in investment management comes with the founders’ propensity for data and technology, especially machine learning and distributed computing.
Before founding Two Sigma, both Overdeck and Siegel worked at some of the most prominent hedge funds, like D E Shaw and Tudor Investments. This polished their strategy of deploying scientific rules in financial markets. Currently, the hedge fund has over 1600 employees in research and development roles. In 2019, Overdeck and Siegel received a lifetime achievement award at Institutional Investors’ 17th annual Hedge Fund Industry Awards. The data-driven hedge fund managed to generate positive returns over the years through its technology-based investment methods. The hedge fund’s Compass Fund rebounded in 2021, gaining 8.75% through November, after posting a loss of 12.21% in 2020.
As of Q3 2021, Two Sigma Advisors’ portfolio value stands at over $38.5 billion, up from $37.9 billion in the preceding quarter. The hedge fund invests heavily in technology, healthcare, and services sectors, among others. Some of the hedge fund’s major holdings in Q3 include Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL), and Meta Platforms, Inc. (NASDAQ:FB). However, in this article, we will focus on the dividend stocks in Two Sigma Advisors’ 13F portfolio as of Q3.
David Siegel of Two Sigma Advisors
John Overdeck of Two Sigma Advisors
Our Methodology:
In this article, we will focus on the dividend stocks in Two Sigma Advisors’ portfolio. For this list, we considered the hedge fund’s 13F portfolio as of Q3.
10 Best Dividend Stocks According to John Overdeck And David Siegel’s Two Sigma Advisors
10. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 45
Dividend Yield as of January 18: 7.10%
Altria Group, Inc. (NYSE:MO) is an American manufacturing company that mainly specializes in tobacco, cigarettes, and related products. In Q3 2021, Two Sigma Advisors increased its stake in the company significantly by 481% and now holds roughly 2.6 million shares, worth over $118 million. Altria Group, Inc. (NYSE:MO) represented 0.3% of John Overdeck and David Siegel’s portfolio in Q3.
On December 9, Altria Group, Inc. (NYSE:MO) announced a quarterly dividend of $0.90 per share, with a dividend yield of 7.10%. 2021 marked the company’s 56th dividend increase in the past 52 years. Moreover, Altria Group, Inc. (NYSE:MO)’s long-term payout ratio target of 80% indicates that the company will continue to distribute a significant amount of its cash flow to shareholders. Recently, Morgan Stanley set a $52 price target on Altria Group, Inc. (NYSE:MO), while keeping an Equal Weight rating on the shares.
At the end of Q3 2021, 45 hedge funds tracked by Insider Monkey reported owning stakes in Altria Group, Inc. (NYSE:MO), down from 47 in the previous quarter. These stakes hold a consolidated value of roughly $830 million. With over 5.1 million shares, Harris Associates was the company’s largest shareholder in Q3.
Like Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL), and Meta Platforms, Inc. (NASDAQ:FB), Altria Group, Inc. (NYSE:MO) is one of the most notable stocks in Two Sigma Advisors’ Q3 portfolio.
Broyhill Asset Management mentioned Altria Group, Inc. (NYSE:MO) in its Q2 2021 investor letter. Here is what the firm has to say:
“Altria (MO) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 20%. We shared our thoughts on these regulations during the quarter, which are available here.
MO Valuation. MO is up ~ 18% YTD (even accounting for the recent sell-off). We expect MO to generate close to $5 in annual FCF per share over the next few years, putting the stock at ~ 10x, which is less than half the market’s multiple today. Over the last decade, shares have traded at an average multiple of 15x and within a range of ~ 10x – 20x (+/-1 standard deviation). The stock yields 7.2% at the current price, close to a 6% premium to treasuries. Historically, shares have traded closer to a 3% premium to the 10Y, which would imply a ~ $75 share price.”
9. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 66
Dividend Yield as of January 18: 7.60%
AT&T Inc. (NYSE:T) is an American holding company that offers telecommunications, media, and tech services to its consumers. On December 16, the company announced a quarterly dividend of $0.52 per share, with a dividend yield of 7.60%. Though AT&T Inc. (NYSE:T) has been increasing dividends for the past 36 years, analysts are expecting dividend cuts in 2022 and 2023.
As per Insider Monkey’s Q3 data, 66 hedge funds tracked by Insider Monkey held stakes in AT&T Inc. (NYSE:T), down from 68 in the preceding quarter. The consolidated value of these stakes is over $3.2 billion, up from $2.8 billion in Q2.
Recently, Citigroup added AT&T Inc. (NYSE:T) to its ‘positive catalyst watchlist’ as the company is expected to see growth in postpaid phone net sales. The firm lifted its price target on the stock to $29, while keeping a Buy rating on the shares. In Q3 2021, Two Sigma Advisors increased its stake in AT&T Inc. (NYSE:T) by 99%, which now represents 0.87% of its 13F portfolio.
Nelson Capital Management mentioned AT&T Inc. (NYSE:T) in its Q1 2021 investor letter. Here is what the firm has to say:
“Nelson Capital stayed busy in the first quarter, making several adjustments within our core portfolio. In the communication services sector, we sold AT&T (tkr: T). Over the years, AT&T has made several poor acquisitions, especially in the content realm, leaving the company saddled with debt and unable to change directions.”
8. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 61
Dividend Yield as of January 18: 1.64%
An American multinational beverage corporation, The Coca-Cola Company (NYSE:KO) has a 59-year track record of consistent dividend growth.
Two Sigma Advisors started investing in The Coca-Cola Company (NYSE:KO) during the fourth quarter of 2010. In Q3 2021, the hedge fund increased its stake in The Coca-Cola Company (NYSE:KO) by 58%, which represented 0.88% of its 13F portfolio. As The Coca-Cola Company (NYSE:KO) reported growth in its on-premise sales despite low vaccination rates, in January, Guggenheim upgraded the stock’s shares to Buy, while lifting its price target to $66.
With stakes worth $25.1 billion, 61 hedge funds tracked by Insider Monkey held positions in The Coca-Cola Company (NYSE:KO) in Q3, compared with 62 in the previous quarter.
7. Medtronic plc (NYSE:MDT)
Number of Hedge Fund Holders: 62
Dividend Yield as of January 18: 2.34%
Medtronic plc (NYSE:MDT) is an American-Irish medical device company, which is best known for its revolutionary cardiac devices. Two Sigma Advisors started investing in the company during the third quarter of 2016. In Q3 2021, the hedge fund owned a stake worth over $373.4 million in Medtronic plc (NYSE:MDT), which accounted for 0.96% of its 13F portfolio.
On December 10, Medtronic plc (NYSE:MDT) announced a quarterly dividend of $0.63 per share, with a dividend yield of 2.34%. The company has maintained a 44-year streak of consistent dividend growth. However, the dividend growth rate has declined to 8% in the past three years, which was previously recorded at 16%. Recently, Morgan Stanley set a $120 price target on Medtronic plc (NYSE:MDT), with an Equal Weight rating on the shares.
In Q3 2021, 62 hedge funds tracked by Insider Monkey were bullish on Medtronic plc (NYSE:MDT), down from 68 in the previous quarter. The total value of these stakes is over $2.27 billion. Diamond Hill Capital was the company’s largest shareholder in Q3, owning shares worth over $575.6 million.
6. Mondelez International, Inc. (NASDAQ:MDLZ)
Number of Hedge Fund Holders: 46
Dividend Yield as of January 18: 2.08%
Mondelez International, Inc. (NASDAQ:MDLZ) is an American confectionery and food holding company based in Chicago. In January, Morgan Stanley appreciated the company’s strong pricing power and lifted its price target on the stock to $73, with an Overweight rating on the shares.
At the end of Q3 2021, 46 hedge funds tracked by Insider Monkey reported owning stakes in Mondelez International, Inc. (NASDAQ:MDLZ), compared with 53 in the previous quarter. The consolidated value of these stakes is roughly $2 billion.
In Q2 2021, Mondelez International, Inc. (NASDAQ:MDLZ) increased its quarterly dividend by 11% to $0.35 per share, with a dividend yield of 2.08%. The company has been raising its dividend consecutively for the past eight years and has increased its dividend at a CAGR of 13.4% in the past five years. In Q3 2021, Two Sigma Advisors increased its stake in Mondelez International, Inc. (NASDAQ:MDLZ) by 40%, which represented 0.99% of its 13F portfolio.
Mondelez International, Inc. (NASDAQ:MDLZ) is one of the most prominent stocks in Two Sigma Advisors’ portfolio, like Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL), and Meta Platforms, Inc. (NASDAQ:FB), Altria Group, Inc. (NYSE:MO).
5. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 74
Dividend Yield as of January 18: 3.33%
Bristol-Myers Squibb Company (NYSE:BMY) is an American multinational pharmaceutical company and is also known for its biological research. In Q3 2021, the number of hedge funds having stakes in the company increased to 74, from 73 in the previous quarter. These stakes hold a consolidated value of $4.75 billion. Berkshire Hathaway held a stake worth $1.3 billion in Bristol-Myers Squibb Company (NYSE:BMY), becoming its largest shareholder in Q3.
On December 13, 2021, Bristol-Myers Squibb Company (NYSE:BMY) announced a quarterly dividend of $0.54 per share, an increase of 10% from the previous quarter. The stock’s current dividend yield stands at 3.33%. Bristol-Myers Squibb Company (NYSE:BMY) has been increasing its dividend for the past 15 years consecutively. This December, JPMorgan lifted its price target on Bristol-Myers Squibb Company (NYSE:BMY) to $80, while maintaining an Overweight rating on the shares.
Two Sigma Advisors started investing in Bristol-Myers Squibb Company (NYSE:BMY) during the fourth quarter of 2010, with shares worth over $5.2 million. In Q3 2021, the hedge fund increased its stake in the company by 710%, which accounted for 1.01% of its 13F portfolio.
4. Amgen Inc. (NASDAQ:AMGN)
Number of Hedge Fund Holders: 52
Dividend Yield as of January 18: 3.32%
Amgen Inc. (NASDAQ:AMGN) announced a 10.2% increase in its quarterly dividend on December 3, 2021, at $1.94 per share. The stock’s current dividend yield stands at 3.32%. Amgen Inc. (NASDAQ:AMGN) has been paying dividends for the past 11 years and has increased its dividend at a CAGR of 11.97% in the past five years.
In January, RBC Capital set a $255 price target on Amgen Inc. (NASDAQ:AMGN), with a Neutral rating on the shares. In Q3 2021, Two Sigma Advisors increased its position in the company by 45% and now holds a stake worth roughly $394 million. Amgen Inc. (NASDAQ:AMGN) accounted for 1.04% of John Overdeck and David Siegel’s 13F portfolio.
As per Insider Monkey’s data for Q3, 52 hedge funds held stakes in Amgen Inc. (NASDAQ:AMGN), down from 53 in the previous quarter. The total value of these stakes is over $1.44 billion. Among these hedge funds, D E Shaw was one of the company’s largest shareholders in Q3, with shares worth over $267 million.
ClearBridge Investments mentioned Amgen Inc. (NASDAQ:AMGN) in its recently-published Q3 2021 investor letter. Here is what the firm has to say:
“In health care, Amgen, a biotechnology company, has endured several pipeline setbacks recently, including a slow transition of its Lumakras treatment into first-line lung cancer, a slower than expected development of its treatment for myeloma as well as the company’s asthma treatment Tezepelumab missing its primary endpoint in a Phase III study. We remain positive on the stock, with Amgen’s investments in biosimilars and its pipeline part of our long-term thesis.”
3. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 66
Dividend Yield as of January 18: 2.57%
Intel Corporation (NASDAQ:INTC) was recently added to Citigroup’s ‘Positive Catalyst Watch’ list and expects the stock to trade well in the coming months. The firm lifted its price target on the stock to $58, with a Neutral rating on the shares.
In 2021, Intel Corporation (NASDAQ:INTC) announced a 5% increase in its quarterly dividend to $0.3475 per share, marking a 7th consecutive year of dividend growth. The stock’s current dividend yield stands at 2.57%. Two Sigma Advisors made its first investment worth $7.2 million in Intel Corporation (NASDAQ:INTC) during the fourth quarter of 2010. In Q3 2021, the hedge fund increased its position in the company by 12%, and now holds a stake worth $444.07 million. The company represented 1.15% of John Overdeck and David Siegel’s 13F portfolio in Q3.
With a stake worth $6.47 billion, 66 hedge funds tracked by Insider Monkey held positions in Intel Corporation (NASDAQ:INTC) in Q3, down from 78 in the preceding quarter. Among these hedge funds, Fisher Asset Management was the company’s largest shareholder in Q3, holding a 1.7 billion worth of stake.
Andaz Private Investments mentioned Intel Corporation (NASDAQ:INTC) in its Q3 2021 investor letter. Here is what the firm has to say:
“Intel (INTC) is trading on a high single digit earnings multiple and is essentially: 1) an oligopolistic foundry set to benefit from large government incentives; and 2) a semiconductor business that is returning to competitiveness after years of being a laggard.”
2. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 77
Dividend Yield as of January 18: 3.39%
Merck & Co., Inc. (NYSE:MRK), an American pharmaceutical company, was the fifth-largest holding of Two Sigma Advisors in Q3. The hedge fund increased its stake in the company by 15%, which accounted for 1.22% of John Overdeck and David Siegel’s 13F portfolio.
Arrowstreet Capital was one of the most prominent shareholders of Merck & Co., Inc. (NYSE:MRK) in Q3, owning a stake worth $493.2 million. Overall, 77 hedge funds tracked by Insider Monkey held positions in the company in Q3, compared with 79 in the previous quarter. These stakes hold a consolidated value of over $4.5 billion.
On November 30, 2021, Merck & Co., Inc. (NYSE:MRK) announced a quarterly dividend of $0.69 per share, presenting a 6% growth from the previous dividend. This December, Mizuho presented a positive outlook on Merck & Co., Inc. (NYSE:MRK) due to its Covid-19 pill and lifted its price target to $100, while keeping a Buy rating on the shares.
Miller Howard Investments mentioned Merck & Co., Inc. (NYSE:MRK) in its Q3 2021 investor letter. Here is what the firm has to say:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We hold three pharmaceutical companies, (which includes) Merck (MRK). All three have strong cash flows and balance sheets, making their high dividends reasonably safe. The investment controversy surrounding these pharma companies is whether they can develop or acquire new products to replace their current blockbuster drugs. The low valuations on these stocks reflects what we believe to be undue pessimism by investors on the prospects for new drugs.”
1. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 88
Dividend Yield as of January 18: 2.52%
An American healthcare company, Johnson & Johnson (NYSE:JNJ) has been increasing its dividend for the past 59 years consistently. The company’s dividend growth rate for the past five years stands at 6%.
In Q3 2021, Two Sigma Advisors increased its stake in Johnson & Johnson (NYSE:JNJ) by 16%. The hedge fund held shares worth roughly $528 million in the company, which represented 1.36% of John Overdeck and David Siegel’s portfolio. This December, Credit Suisse lifted its price target on Johnson & Johnson (NYSE:JNJ) to $200, while keeping an Outperform rating on the shares as the company’s November sales grew by 15.4% versus the firm’s estimates of 5.7%.
Of the 867 elite funds tracked by Insider Monkey, 88 hedge funds held stakes in Johnson & Johnson (NYSE:JNJ) in Q3, the same as in the previous quarter. The total value of these stakes is over $6.87 billion.
Distillate Capital mentioned Johnson & Johnson (NYSE:JNJ) in its Q2 2021 investor letter. Here is what the firm has to say:
“The largest additions in the rebalance, Johnson & Johnson was around 50 and 40 basis points incrementally. J&J underperformed in the quarter while its normalized free cash flows held steady and so its position size was topped off to match the stable cash flows.”
You can also take a look at 10 High Dividend Stocks for 2022 and 10 Dividend Aristocrats to Buy for 2022
Follow Insider Monkey on Twitter
Suggested articles:
- 10 Dividend Stock Picks of Ira Unschuld’s Brant Point Investment
- 10 Canadian Dividend Stocks to Buy
- 10 Healthcare Dividend Stocks with Over 3% Yield
Disclosure. None. 10 Best Dividend Stocks According to John Overdeck And David Siegel’s Two Sigma Advisors is originally published on Insider Monkey.
