In this article we discuss the 10 best dividend stocks to buy according to Cathie Wood.
Catherine Wood of ARK Investment Management is a renowned name in the financial industry and is often referred to as the architect of the technology-led disruption in several sectors of the economy through her aggressive bets on high growth stocks. The secret to the impressive returns that Wood has managed since setting up ARK Investment more than seven years ago lies in her investments in companies that are working on futuristic products with explosive growth potential.
However, Wood’s portfolio has several dividend stocks as well.
In the latest 13F filing with the United States Securities and Exchange Commission (SEC), mandatory under the law for hedge funds with more than $100 million in assets under management, Wood has revealed new holdings in several big companies, including weapons manufacturer Lockheed Martin Corporation (NYSE: LMT). The Bethesda-based Lockheed Martin Corporation (NYSE: LMT) is one of the largest defense companies in the world with an impressive dividend history going back more than four decades.
The interest in American manufacturing extends beyond defense to the construction sector as well. There has been 56% increased ARK Investment activity on Caterpillar Inc. (NYSE: CAT) stock in the past few months, according to the latest data. Caterpillar Inc. (NYSE: CAT) is one of the big names in construction equipment manufacturing that has been touted by market experts as one of the companies that are uniquely placed to benefit from the American Jobs Plan of US President Biden that envisions spending hundreds of billions of dollars to improve infrastructure.
Wood has also increased her stakes in Novartis AG (NYSE: NVS) during the last quarter. The Swiss pharmaceutical firm is a leading innovator in the healthcare industry with a high dividend yield, a somewhat rare combination in the business world. Wood is often recognized as a market expert on biotechnology stocks and her bet on Novartis AG (NYSE: NVS) might prove to be a highly rewarding one for the New York-based hedge fund that is reeling from outside pressures related to the dramatic fall in prices of crypto-related stocks in recent weeks.
A bullish ARK position on American social networking firm Twitter, Inc. (NYSE: TWTR) has also emerged in recent weeks. ARK Investment has bought more than 7.7 million shares in Twitter, Inc. (NYSE: TWTR) worth over $495 million, representing close to 1% of their portfolio. The largest holding of Wood, however, remains the massive bet on California-based electric vehicle maker Tesla, Inc. (NASDAQ: TSLA). ARK holds more than 5.7 million shares of Tesla, Inc. (NASDAQ: TSLA) worth over $3.8 billion.
The flagship Innovation exchange-traded-fund (ETF) of ARK has slipped 12% year-to-date and seen more than $7 billion flown out of it by shaky investors. However, business news publication CNBC reports that the selling has subsided in recent days and market experts believe that some Cathie Wood growth stocks will roar back to new highs in the coming months. On the back of these positive developments and the Wood disclosures of new holdings in stable, dividend-paying firms, ARK Investment can expect another record year in returns ahead.
It remains to be seen whether Wood can navigate post-pandemic market dynamics that seem to be clouding the finance world. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Cathie Wood of ARK Investment Management
With this context in mind, here is our list of the 10 best dividend stocks to buy according to Cathie Wood.
Best Dividend Stocks to Buy According to Cathie Wood
10. Thermo Fisher Scientific Inc. (NYSE: TMO)
Number of Hedge Fund Holders: 79
Dividend Yield: 0.22%
Thermo Fisher Scientific Inc. (NYSE: TMO) is a Watham-based company that markets scientific instrumentation, consumables, and software services to the healthcare industry. It was founded in 1956 and is ranked tenth on our list of 10 best dividend stocks to buy according to Cathie Wood. ARK investment holds 241,791 shares in the company worth over $110 million, representing 0.21% of their portfolio. Some of the products the firm provides to clients include laboratory refrigerators and freezers, and cryopreservation storage tanks.
Thermo Fisher Scientific Inc. (NYSE: TMO) reported earnings for the first quarter of 2021 on April 29, posting earnings per share of $7.21, beating market predictions by $0.53. The revenue over the period was close to $10 billion, up 59% year-on-year.
At the end of the first quarter of 2021, 79 hedge funds in the database of Insider Monkey held stakes worth $6.2 billion in Thermo Fisher Scientific Inc. (NYSE: TMO), down from 89 the preceding quarter worth $5.4 billion.
Just like Lockheed Martin Corporation (NYSE: LMT), Caterpillar Inc. (NYSE: CAT), Twitter, Inc. (NYSE: TWTR), Tesla, Inc. (NASDAQ: TSLA), and Novartis AG (NYSE: NVS), Thermo Fisher Scientific Inc. (NYSE: TMO) is one of the best stocks to buy according to Cathie Wood.
In its Q4 2020 investor letter, Baron Health Care Fund, an asset management firm, highlighted a few stocks and Thermo Fisher Scientific Inc. (NYSE: TMO) was one of them. Here is what the fund said:
“We added to Thermo Fisher Scientific Inc., the leading global life sciences tools provider. Thermo is a “picks and shovels” company which offers a broad array of products and services (such as instruments, reagents, consumables, and manufacturing and other services) to pharmaceutical and biotechnology companies, hospitals and clinical diagnostic labs, universities, research institutions and government agencies, as well as environmental, industrial quality and process control settings. Thermo has benefited from sales of products and services related to COVID-19, such as diagnostic testing, personal protective equipment and pharmaceutical services, which we think demonstrates the company’s broad capabilities and critical role in the life sciences industry. Although some of this revenue will taper off as the pandemic subsides, we think Thermo will continue to benefit from longterm secular tailwinds, including increased investments in life sciences, diagnostics, vaccine/therapeutics and health care broadly. We think Thermo should be able to generate at least mid-to-high single-digit annual organic revenue growth well into the future driven by positive end-market trends and market share gains. We also expect Thermo to continue to use its strong free cash flow and balance sheet to create shareholder value through M&A and share repurchases.”
9. Teradyne, Inc. (NASDAQ: TER)
Number of Hedge Fund Holders: 44
Dividend Yield: 0.31%
Teradyne, Inc. (NASDAQ: TER) is a Boston-based automatic test equipment company founded in 1960. It is placed ninth on our list of 10 best dividend stocks to buy according to Cathie Wood. Teradyne stock has offered investors returns exceeding 99% in the past twelve months. ARK Investment owns more than 2.8 million shares in the company worth over $350 million, representing 0.69% of their portfolio. Teradyne has many famous companies availing the services it offers, including giants like electronics manufacturer Samsung.
Teradyne, Inc. (NASDAQ: TER) is a good option for income investors as the firm pays a regular and healthy dividend. On May 5, the company declared a quarterly dividend of $0.10 per share, in line with previous.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Teradyne, Inc. (NASDAQ: TER) with 128 million shares worth more than $493 million.
8. Deere & Company (NYSE: DE)
Number of Hedge Fund Holders: 51
Dividend Yield: 1.00%
Deere & Company (NYSE: DE) is an Illinois-based company that manufactures and sells heavy equipment. It was founded in 1837 and is ranked eighth on our list of 10 best dividend stocks to buy according to Cathie Wood. Deere stock has returned more than 131% to investors over the past year. The hedge fund run by Wood owns more than 354,000 shares in the firm worth over $132 million, representing 0.26% of their portfolio. Some of the sectors that Deere serves include agricultural, construction, and forestry, among others.
Deere & Company (NYSE: DE) is also one of the most dependable options when it comes to dividend payouts. Earlier this week, the company declared a quarterly dividend of $0.90 per share, in line with previous.
At the end of the first quarter of 2021, 51 hedge funds in the database of Insider Monkey held stakes worth $2 billion in Deere & Company (NYSE: DE), down from 54 in the previous quarter worth $1.8 billion.
Just like Lockheed Martin Corporation (NYSE: LMT), Caterpillar Inc. (NYSE: CAT), Twitter, Inc. (NYSE: TWTR), Tesla, Inc. (NASDAQ: TSLA), and Novartis AG (NYSE: NVS), Deere & Company (NYSE: DE) is one of the best stocks to buy according to Cathie Wood.
In its Q1 2021 investor letter, Harding Loevner, an asset management firm, highlighted a few stocks and Deere & Company (NYSE: DE) was one of them. Here is what the fund said:
“John Deere delivered stronger-than-expected quarterly earnings and raised its guidance for the full-year. Sales of Deere’s tractors and combine harvesters are underpinned by Chinese demand for agriculture products and the bioethanol market rebounding with oil prices.”
7. NXP Semiconductors N.V. (NASDAQ: NXPI)
Number of Hedge Fund Holders: 53
Dividend Yield: 1.10%
NXP Semiconductors N.V. (NASDAQ: NXPI) is a Netherlands-based semiconductor manufacturer founded in 1953. It is placed seventh on our list of 10 best dividend stocks to buy according to Cathie Wood. NXP stock has offered investors returns exceeding 107% over the course of the past twelve months. ARK Investment holds 580,421 shares in the company worth over $116 million, representing 0.23% of their portfolio. NXP serves customers in more than 35 countries around the world.
On May 4, investment bank Wells Fargo maintained an Overweight rating on NXP Semiconductors N.V. (NASDAQ: NXPI) stock amid semiconductor chip shortages in the industry that were driving up prices and the NXP sales growth in the automotive sector.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in NXP Semiconductors N.V. (NASDAQ: NXPI) with 1 million shares worth more than $211 million.
Just like Lockheed Martin Corporation (NYSE: LMT), Caterpillar Inc. (NYSE: CAT), Twitter, Inc. (NYSE: TWTR), Tesla, Inc. (NASDAQ: TSLA), and Novartis AG (NYSE: NVS), NXP Semiconductors N.V. (NASDAQ: NXPI) is one of the best stocks to buy according to Cathie Wood.
In its Q1 2021 investor letter, Alger, an asset management firm, highlighted a few stocks and NXP Semiconductors N.V. (NASDAQ: NXPI) was one of them. Here is what the fund said:
“NXP Semi conductors was among the top contributors to performance during the quarter. NXP Semiconductors provides high performance semiconductor solutions for a wide variety of applications, including automotive, mobile communications, consumer technology, computing, wireless infrastructure, lighting and industry. We believe NXP has an attractive cyclical tailwind with the economic reopening due to its exposure to the automotive industry and the growth of the Internet of Things. NXP’s shares performed strongly after the company said it has generated revenue growth and provided healthy forward guidance driven by an improving global macro that is evident in decreasing channel inventory levels and solid pricing.”
6. Intercontinental Exchange, Inc. (NYSE: ICE)
Number of Hedge Fund Holders: 58
Dividend Yield: 1.17%
Intercontinental Exchange, Inc. (NYSE: ICE) is a Georgia-based firm that operates global exchanges, clearing houses and provides mortgage technology, data and listing services. It is ranked sixth on our list of 10 best dividend stocks to buy according to Cathie Wood. Intercontinental stock has returned more than 18% to investors over the past year. ARK Investment Management holds more than 5.6 million shares in the company worth over $627 million, representing close to 1.25% of their portfolio.
Intercontinental Exchange, Inc. (NYSE: ICE) is a dependable option when it comes to dividend payouts to shareholders. On April 29, the company declared a quarterly dividend of $0.33 per share, in line with previous.
At the end of the first quarter of 2021, 58 hedge funds in the database of Insider Monkey held stakes worth $3.3 billion in Intercontinental Exchange, Inc. (NYSE: ICE), up from 53 in the previous quarter worth $3.2 billion.
Just like Lockheed Martin Corporation (NYSE: LMT), Caterpillar Inc. (NYSE: CAT), Twitter, Inc. (NYSE: TWTR), Tesla, Inc. (NASDAQ: TSLA), and Novartis AG (NYSE: NVS), Intercontinental Exchange, Inc. (NYSE: ICE) is one of the best stocks to buy according to Cathie Wood.
In its Q1 2021 investor letter, Spree Capital Advisers, an asset management firm, highlighted a few stocks and Intercontinental Exchange, Inc. (NYSE: ICE) was one of them. Here is what the fund said:
“Intercontinental Exchange was founded in the year 2000 after Western Power Group executive Jeff Sprecher bought Continental Power Exchange from MidAmerican Energy for $1. Sprecher made the acquisition because he recognized that the deregulation of the electric power industry in the United States had opened a market for surplus energy to be traded between power plants. Using eBay as a model, Sprecher aimed to develop a transparent marketplace for over-the-counter energy trading. Acquisitions of International Petroleum Exchange, New York Board of Trade, Creditex, Climate Exchange, NYSE Euronext, Interactive Data Corporation, and Ellie Mae followed, with the commonalities of successful acquisition consisting of small companies early in their growth trajectory that could be scaled on ICE’s platform, and large mature companies where ICE’s technological and operating expertise could reinvigorate and scale their growth trajectory.
Today, Intercontinental Exchange is a transactional marketplace and subscription database business with global scale. Entrenched network effects in a wide range of asset class marketplaces provide a platform from which ICE usesits technology and operating expertise to layer on growth opportunities. After applying digital technology to increase the efficiency of marketplaces, ICE rolls out new innovations on top of its scalable infrastructure. Core competencies in collecting and cleansing unstructured data to build databases enforce ICE’s ability to capture the data exhaust from its marketplaces to provide recurring subscription-based revenue streams.
Despite ICE’s repeatable business model and proven ability to continuously innovate driving a 14-year EPS CAGR of 17%, investors are currently skeptical of ICE due to a February 2020 news leak that ICE was talking to eBay about a transaction, and due to the sticker price of ICE’s October 2020 acquisition of Ellie Mae being higher than its valuation the prior year. In Intercontinental Exchange, we see five paths to value creation.
5. PACCAR Inc (NASDAQ: PCAR)
Number of Hedge Fund Holders: 28
Dividend Yield: 1.50%
PACCAR Inc (NASDAQ: PCAR) is a Washington-based company that makes and sells medium and heavy duty trucks. It was founded in 1905 and is placed fifth on our list of 10 best dividend stocks to buy according to Cathie Wood. PACCAR stock has offered investors returns exceeding 22% in the past year. The hedge fund run by Cathie Wood owns more than 3.1 million shares in the truck maker worth over $293 million, representing 0.58% of their portfolio. This holding was disclosed in the latest ARK Investment filing with the SEC.
PACCAR Inc (NASDAQ: PCAR) is among the best stocks in the ARK portfolio that pay a regular and healthy dividend to shareholders. In late April, PACCAR declared a quarterly dividend of $0.34 per share, a more than 6% increase from the previous dividend of $0.32 per share.
Out of the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm AQR Capital Management is a leading shareholder in PACCAR Inc (NASDAQ: PCAR) with 1.1 million shares worth more than $109 million.
In its Q1 2020 investor letter, Diamond Hill Capital, an asset management firm, highlighted a few stocks and PACCAR Inc (NASDAQ: PCAR) was one of them. Here is what the fund said:
“Shares of truck manufacturer PACCAR, Inc. fell as the North American Class 8 market continued its cyclical decline, and the outlook for sales and production took another step back with the economic impact from the pandemic.”
4. Caterpillar Inc. (NYSE: CAT)
Number of Hedge Fund Holders: 53
Dividend Yield: 1.74%
Caterpillar Inc. (NYSE: CAT) is an Illinois-based company that makes and sells machinery, engines, and financial products. It was founded in 1925 and is ranked fourth on our list of 10 best dividend stocks to buy according to Cathie Wood. Caterpillar stock has returned more than 96% to investors over the past year. ARK Investment owns 381,967 shares in the company worth over $88 million, representing 0.17% of their portfolio. Caterpillar stock has soared in recent weeks amid speculation around increased government spending on public infrastructure.
On April 29, Caterpillar Inc. (NYSE: CAT) stock jumped close to 1.6% as the firm posted strong earnings results for the first quarter of 2021, reporting net income rose to $1.53 billion or $2.77 per share, compared to just over $1 billion over the same period in the previous year.
At the end of the first quarter of 2021, 53 hedge funds in the database of Insider Monkey held stakes worth $4.9 billion in Caterpillar Inc. (NYSE: CAT)), the same as in the preceding quarter worth $4.1 billion.
3. Lockheed Martin Corporation (NYSE: LMT)
Number of hedge fund holders: 50
Dividend Yield: 2.70%
Lockheed Martin Corporation (NYSE: LMT) is a Maryland-based company that deals in aerospace, arms, defense, security, and advanced technologies. It was founded in and is placed third on our list of 10 best dividend stocks to buy according to Cathie Wood. Lockheed stock has returned more than 12% to investors over the past three months. The hedge fund managed by Wood holds more than 276,000 shares in the defense company worth over $102 million, representing 0.2% of their portfolio. This holding was also disclosed to the public in the latest filing with the SEC by ARK Investment.
When it comes to dividend payouts, Lockheed Martin Corporation (NYSE: LMT) is one of the best options in the ARK Investment portfolio. On April 21, the company declared a quarterly dividend of $2.60 per share, in line with previous.
Out of the hedge funds being tracked by Insider Monkey, New York-based firm Arrowstreet Capital is a leading shareholder in Lockheed Martin Corporation (NYSE: LMT) with 1.5 million shares worth more than $590 million.
In its Q4 2020 investor letter, RiverPark Advisors, LLC, an asset management firm, highlighted a few stocks and Lockheed Martin Corporation (NYSE: LMT) was one of them. Here is what the fund said:
“Despite better-than-expected third quarter results, LMT shares were weak for the quarter as defense spending is expected to be flat for the coming year. With a record $150 billion backlog and almost 30% of its revenue coming from building F-35 aircraft with deliveries forecast to reach 180 per year in 4-5 years (3Q’s revenue upside was from the F-35), we believe LMT should grow at a higher rate than overall defense budget growth and Street expectations over the next several years. Further, strategic acquisitions (LMT acquired AJRD for $4 billion in late December), debt pay down, a 3% dividend yield, and continued share buybacks from $6 billion per year of free cash flow should lead to even greater shareholder returns.”
2. Bristol-Myers Squibb Company (NYSE: BMY)
Number of hedge fund holders: 81
Dividend Yield: 2.94%
Bristol-Myers Squibb Company (NYSE: BMY) is a New York-based pharmaceutical company founded in 1887. It is ranked second on our list of 10 best dividend stocks to buy according to Cathie Wood. Bristol stock has offered investors more than 10% in returns over the past year. ARK Investment Management holds more than 2.1 million shares in the company worth over $137 million, representing 0.27% of their portfolio. Bristol is one of the largest pharmaceutical companies in the world and posted over $40 billion in revenue in 2020.
On April 30, investment bank Morgan Stanley downgraded Bristol-Myers Squibb Company (NYSE: BMY) stock to Equal Weight from Overweight with a price target of $62, slashed more than 11% from the previous target.
At the end of the first quarter of 2021, 81 hedge funds in the database of Insider Monkey held stakes worth $5 billion in Bristol-Myers Squibb Company (NYSE: BMY), down from 131 in the preceding quarter worth $6 billion.
In its Q4 2020 investor letter, Wedgewood Partners, an asset management firm, highlighted a few stocks and Bristol-Myers Squibb Company (NYSE: BMY) was one of them. Here is what the fund said:
“Bristol-Myers Squibb recently reported accelerating sales as much of the medical services industry returned to work. The Company continues to expect double-digit earnings growth over the next few years, driven by existing drugs, in addition to a broad pipeline of new drugs and indications. While the market remains fixated on a couple of patent expirations that could occur over the next several years, we think this is well-known at this point, yet the market still undervalues a couple of key acquisitions the Company has made in the past few years, particularly Celgene, which was acquired for a song.”
1. Novartis AG (NYSE: NVS)
Number of Hedge Fund Holders: 19
Dividend Yield: 3.59%
Novartis AG (NYSE: NVS) is a Switzerland-based company that markets health products. It was founded in 1996 and is ranked first on our list of 10 best dividend stocks to buy according to Cathie Wood. Novartis stock has returned more than 3.3% to investors over the past twelve months. ARK Investment holds more than 7.2 million shares in the healthcare firm worth over $618 million, representing more than 1.2% of their investment portfolio. Novartis markets biotechnology and pharmaceutical products.
Back in February, Novartis AG (NYSE: NVS) stock was downgraded to Market Perform from Outperform by investment advisory Cowen with a revised price target of $105 from $110 on the back of new pressures to the latest drug offering from the biotech firm.
At the end of the first quarter of 2021, 19 hedge funds in the database of Insider Monkey held stakes worth $1.7 billion in Novartis AG (NYSE: NVS), down from 23 the preceding quarter worth $1.6 billion.
In its Q4 2020 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Novartis AG (NYSE: NVS) was one of them. Here is what the fund said:
“Novartis is one of Europe’s largest pharmaceutical companies and possesses a highly diversified portfolio of innovative products. Its share price underperformed both the broader market and its pharma peers during 2020, largely due to a few disappointing late-stage trials and the company’s lack of Covid-19-related therapeutics or vaccines. These short-term issues provided us with an attractive entry point to invest in a leading pharmaceutical franchise with compelling economics. We estimate that the market is currently ascribing almost no value to Novartis’ pipeline despite the company’s excellent track record in new drug development. We expect that Novartis will deliver mid-single-digit, top-line growth and expand margins over the next five years as a result of its cost-savings plan. The company possesses one of the most diversified product portfolios in the pharma industry with 15 $1b+ compounds, which reduces its reliance on any single compound.”
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Disclosure: None. 10 Best Dividend Stocks to Buy According to Cathie Wood is originally published on Insider Monkey.
