In this article, we will discuss the 10 best dividend stocks to buy according to Sculptor Capital.
Sculptor Capital, formerly known as OZ Capital Management, is a publicly listed asset management firm. It was founded by Daniel Och in 1994, who stepped down from his position as the CEO of the fund in 2019. Currently, Jimmy Levin is serving as the Chief Investment Officer and CEO of Sculptor Capital.
Sculptor Capital manages roughly $38 billion in assets. Sculptor Capital was one of the funds that benefitted during the pandemic. The hedge fund’s Credit Opportunities Fund gained 17% in 2021 by investing in beaten-down assets, as reported by Bloomberg. As of 2022, the hedge fund is down 17.04%.
As of Q3 2021, Sculptor Capital holds a 13F portfolio value of over $12.1 billion. The hedge fund invests in technology, services, finance, and healthcare stocks. Some of the hedge fund’s major holdings in Q3 are Amazon.com, Inc. (NASDAQ:AMZN), Netflix, Inc. (NASDAQ:NFLX), and Tesla, Inc. (NASDAQ:TSLA).
Our Methodology:
In this article, we will focus on the dividend stocks in Sculptor Capital’s portfolio. For this list, we considered Sculptor Capital’s 13F portfolio as of Q3.
10 Best Dividend Stocks to Buy According to Sculptor Capital
10. Becton, Dickinson and Company (NYSE:BDX)
Number of Hedge Fund Holders: 51
Dividend Yield as of February 4: 1.29%
Sculptor Capital’s Stake Value: $31,103,000
Becton, Dickinson and Company (NYSE:BDX), an American medical technology company, is one of the Dividend Aristocrats as 2021 marked the company’s 50th consecutive year of dividend growth. In 2021, the company increased its dividend by 4.8% at $0.87 per share, with a dividend yield of 1.29%.
As per Insider Monkey’s Q3 data, 51 hedge funds held stakes in Becton, Dickinson and Company (NYSE:BDX), down from 52 in the previous quarter. The total value of these stakes is over $2.33 billion. Among these hedge funds, Generation Investment Management was the company’s largest stakeholder in Q3, holding shares worth over $932.8 million.
Madison Funds mentioned Becton, Dickinson and Company (NYSE:BDX) in its Q2 2021 investor letter. Here is what the firm has to say:
“Becton, Dickinson and Company (“BD”) is one of the world’s largest medical supply, devices, laboratory equipment, and diagnostic products manufacturers. We like BD because it is a leader in the medical and life science industries with a durable mid-single digit growth profile and attractive returns on capital. They generate about 85% of revenue from consumables and 15% from equipment, and each year, they manufacture billions of needles, syringes, catheters, tubes, and medical devices which results in significant economies of scale that can be matched by few competitors. Their Life Sciences segment produces products that provide diversity in the steadily growing diagnostic testing and life sciences research fields.
Regarding the short-term issues, it’s been a challenging past 18 months for the company. In February 2020, they announced the FDA required an updated 510(k) clearance for their Alaris infusion pump. As a result, BD had to suspend selling new pumps until the updated regulatory filing received FDA clearance. In addition to the regulatory headwind, BD’s business was negatively impacted by the COVID-19 pandemic as individuals postponed doctor office visits and hospitals deferred non-emergency medical procedures. We believe these postponements are just now normalizing. Lastly, while BD’s Life Sciences business swiftly brought COVID-19 tests to market, there is uncertainty over the magnitude and duration of these revenues.
We believe these negative dynamics will be resolved over time, and meanwhile, base business growth and managerial actions should move per share earnings power higher. First, BD’s management is confident that the Alaris infusion pump has maintained its market share over the last 18 months and many hospitals have even added to their fleet of pumps with BD shipping them under medical necessity provisions. The new 510(k) filing was submitted in April 2021 and is expected to receive approval sometime in the next year, which will fully alleviate the concern. Second, we believe that hospital utilization and diagnostic testing volumes will return towards normal levels as vaccination rates increase and global economies reopen (the U.S. is reportedly currently at 95% and 100% utilization for inpatient and outpatient volumes, respectively). While COVID testing revenues (about 10% of 2021 BD revenue) are expected to decline, management’s choice to accelerate the depreciation of those production assets and to spend a portion of the excess 2021 profits will dampen the earnings cyclicality. Base diagnostic testing revenue will otherwise recover with patient volumes, and combination flu-COVID tests will help maintain some COVID testing revenues into the future. Third, BD’s balance sheet has improved markedly over the past year, and we expect them to reinitiate share repurchases at a meaningful level. This will lead to the first material share count reductions since 2014.
At today’s share price, we deem this to be value-creative capital allocation. Fourth, BD recently announced its intention to spin off its slower-growing diabetes business in 2022; our observations in recent years suggest that separations such as this have been value-creative for health care investors. Fifth, this year’s earnings quality is high by dint of management underutilizing its production assets to lean out inventories and to accelerate its R&D programs, both which positively impact future cash earnings power. Thus, while there is near-term uncertainty regarding the resolution of the issues mentioned, we think they’ll resolve. We believe that management’s actions and the resumption of base demand leave BD positioned to return to a good long-term growth profile.
The stock trades at less than 19x Wall Street’s consensus earnings estimate for 2022, which is approximately 90% of the earnings multiple of the S&P 500 and an even steeper discount to BD’s medical technology peer group. We think the stock is attractively priced and a good value for a leader in the growing medical technology and life science industries.”
9. Stanley Black & Decker, Inc. (NYSE:SWK)
Number of Hedge Fund Holders: 37
Dividend Yield as of February 4: 1.81%
Sculptor Capital’s Stake Value: $53,373,000
Stanley Black & Decker, Inc. (NYSE:SWK) is an American tool and storage company that also manufactures security products. In Q3 2021, Sculptor Capital held shares worth $53.3 million in the company, after increasing its stake by 4%. Stanley Black & Decker, Inc. (NYSE:SWK) constituted 0.44% of the hedge fund’s portfolio in Q3.
Stanley Black & Decker, Inc. (NYSE:SWK) has been paying dividends to shareholders for the past 54 years while maintaining a 50-year streak of dividend growth. The company’s 5-year dividend growth rate stands at 5.69%, which is considered safe among Wall Street analysts.
In February, Citigroup’s analyst Eric Lau expressed his concern over supply chain issues but asserted that Stanley Black & Decker, Inc. (NYSE:SWK) is well-positioned to overcome such constraints. The analyst resumed its coverage on the stock with a Buy rating and a $215 price target.
In Q3 2021, 37 hedge funds tracked by Insider Monkey were reported owning stakes in Stanley Black & Decker, Inc. (NYSE:SWK), valued at over $776 million. In the previous quarter, 44 hedge funds held stakes in the company.
Saturna Capital mentioned Stanley Black & Decker, Inc. (NYSE:SWK) in its Q3 2021 investor letter. Here is what the firm has to say:
“Stanley Black &Decker performed well through the first part of the year but struggled over the summer. China accounts for much of its production, and their zero-tolerance approach to pandemic safety measures has led to disruption, compounded by shipping difficulties and rising materials expenses. We still believe one outcome of the pandemic will be a buoyant home improvement market, given that one never knows when the next pandemic lockdown may occur.”
8. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 72
Dividend Yield as of February 4: 1.81%
Sculptor Capital’s Stake Value: $398,218,000
Bank of America Corporation (NYSE:BAC) is an American multinational financial services company and an investment bank. On February 3, JPMorgan highlighted the bank’s loan growth and recovery in consumer spending in its investors’ note. The firm lifted its price target on Bank of America Corporation (NYSE:BAC) to $53.50, while maintaining an Overweight rating on the shares.
The number of hedge funds tracked by Insider Monkey having stakes in Bank of America Corporation (NYSE:BAC) declined to 72 in Q3, from 87 in the previous quarter. These stakes hold a consolidated value of over $46.4 billion. Warren Buffett’s Berkshire Hathaway was the company’s largest shareholder in Q3, with shares worth over $42.8 billion.
In 2021, Bank of America Corporation (NYSE:BAC) increased its dividend by 17% at $0.21 per share. Bank of America Corporation (NYSE:BAC) was the fourth-largest holding of Sculptor Capital in Q3, as the hedge fund increased its stake in the company by 24% during the quarter. The company represented 3.28% of the fund’s 13F portfolio.
Oakmark Funds mentioned Bank of America Corporation (NYSE:BAC) in its Q3 2021 investor letter. Here is what the firm has to say:
“Earlier this year, one of our holdings, Bank of America, announced that it was raising its minimum hourly wage from $15 to $20 and would increase it to $25 by 2025. The company received great press for placing the well-being of its employees above profits. But was it really either/or? Bank of America Corporation (NYSE:BAC)’s chief human resources officer spoke to the bigger picture: “A core tenet of responsible growth is our commitment to being a great place to work…that includes providing strong pay and competitive benefits to help them and their families, so that we continue to attract and retain the best talent.” Bank of America Corporation (NYSE:BAC) understood that engaged, high-caliber employees are more productive, less prone to turnover and, therefore, less expensive in the long run. Increasing the pay for employees wasn’t elevating employees above shareholders; it was the right thing to do for employees and for shareholders.
If an increase to $20 was good, why stop there? Why not $50 per hour? Because the benefits the business receives at $50 don’t justify the expense. The bank would no longer be able to price its products competitively and would lose business. The employees would “win” in the short term, but eventually the lost business would lead to job cuts, meaning both employees and shareholders would lose. The negative effects of stakeholder overreach are no different than when CEOs overreach to inflate short-term profits. Both hurt shareholders and stakeholders.”
7. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 53
Dividend Yield as of February 4: 2.03%
Sculptor Capital’s Stake Value: $95,069,000
Sculptor Capital started investing in NextEra Energy, Inc. (NYSE:NEE), an American energy company, during the third quarter of 2019. In Q3 2021, the hedge fund increased its stake in the company by 12% and owned shares worth over $95 million. NextEra Energy, Inc. (NYSE:NEE) made up 0.78% of the hedge fund’s portfolio.
This December, BMO Capital raised its price target on NextEra Energy, Inc. (NYSE:NEE) to $98, with an Outperform rating on the shares. The company has been raising dividends consistently for the past 26 years, falling into the category of Dividend Aristocrats. In 2021, NextEra Energy, Inc. (NYSE:NEE) increased its quarterly dividend by 10% to $0.385 per share, with a dividend yield of 2.03%.
At the end of Q3 2021, 53 hedge funds tracked by Insider Monkey reported owning stakes in NextEra Energy, Inc. (NYSE:NEE), down from 59 in the previous quarter. The total value of these stakes is over $2.37 billion.
6. Himax Technologies, Inc. (NASDAQ:HIMX)
Number of Hedge Fund Holders: 18
Dividend Yield as of February 4: 2.57%
Sculptor Capital’s Stake Value: $3,582,000
Himax Technologies, Inc. (NASDAQ:HIMX) is a semiconductor manufacturer based in Taiwan. Sculptor Capital held a stake worth $3.5 million in Himax Technologies, Inc. (NASDAQ:HIMX) as of Q3.
Currently, Himax Technologies, Inc. (NASDAQ:HIMX) pays a quarterly dividend of $0.27 per share, up 170% from the previous dividend of $0.10 per share.
At the end of Q3 2021, the number of hedge funds tracked by Insider Monkey having positions in Himax Technologies, Inc. (NASDAQ:HIMX) increased to 18, from 16 in the preceding quarter. The total value of these stakes is over $206 million. Among these hedge funds, Renaissance Technologies was one of the company’s major shareholders in Q3, holding a stake worth $16.8 million.
5. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 101
Dividend Yield as of February 4: 2.69%
Sculptor Capital’s Stake Value: $209,320,000
JPMorgan Chase & Co. (NYSE:JPM) is an American multinational investment bank and financial services company. This January, UBS appreciated the bank’s Q4 earnings beat and set a $197 price target on the stock, with a Buy rating on the shares.
JPMorgan Chase & Co. (NYSE:JPM) holds an 11-year track record of consistent dividend growth. In 2021, the company increased its dividend by 11.1% at $1.00 per share, with a dividend yield of 2.69%. In Q3 2021, Sculptor Capital held roughly 1.3 million shares in JPMorgan Chase & Co. (NYSE:JPM), worth over $209.3 million. The hedge fund increased its position in the company by 34% during the quarter.
In Q3 2021, 101 hedge funds in Insider Monkey’s database held stakes in JPMorgan Chase & Co. (NYSE:JPM), down from 108 in the previous quarter. The total value of these stakes is over $5.63 billion. Ken Fisher’s Fisher Asset Management was the company’s largest shareholder in Q3, owning a stake worth over $1.16 billion.
Giverny Capital mentioned JPMorgan Chase & Co. (NYSE:JPM) in its Q4 2021 investor letter. Here is what the firm has to say:
“I sold some of our JP Morgan Chase in the fourth quarter, redeploying the proceeds and a bit of available cash into M&T Bank. JP Morgan is the nation’s best giant bank and I am optimistic about its
future. GCAM still owns some. But M&T has a multi-decade record of excellent results, a strong balance sheet and conservative loan loss reserves. Importantly, it is extremely sensitive to rising interest rates.JP Morgan generates income from traditional bank lending, but also from trading, investment banking and wealth management. It is the nation’s largest credit card issuer and also does business with about 80% of the Fortune 500. M&T is more oriented to commercial real estate lending and could be a major beneficiary of higher interest rates, as it has a lot of excess cash on its balance sheet and a stable core deposit base. As rates rise, it will have plenty of ability to make loans. Alternatively, M&T could buy back a lot of stock with that surplus cash.”
4. The AES Corporation (NYSE:AES)
Number of Hedge Fund Holders: 47
Dividend Yield as of February 4: 2.90%
Sculptor Capital’s Stake Value: $22,088,000
In Q3 2021, The AES Corporation (NYSE:AES) experienced a positive hedge fund sentiment, as 47 hedge funds tracked by Insider Monkey held stakes in the company, up from 39 in the preceding quarter. These stakes hold a consolidated value of over $1.48 billion.
On December 3, 2021, The AES Corporation (NYSE:AES) announced a 5% increase in its quarterly dividend at $0.158 per share. The stock’s dividend yield stands at 2.90%. In January, Morgan Stanley boosted its price target on The AES Corporation (NYSE:AES) to $32, while maintaining an Overweight rating on the shares.
Sculptor Capital started investing in The AES Corporation (NYSE:AES) during the second quarter of 2021, with a $9 million worth of stake. In Q3 2021, the hedge fund increased its position in the company significantly by 182% and held shares worth over $22 million. The AES Corporation (NYSE:AES) accounted for 0.18% of the hedge fund’s 13F portfolio.
3. DTE Energy Company (NYSE:DTE)
Number of Hedge Fund Holders: 22
Dividend Yield as of February 4: 2.95%
Sculptor Capital’s Stake Value: $13,586,000
DTE Energy Company (NYSE:DTE), an American diversified energy company, has increased its dividends in the past but announced a dividend cut earlier in 2021 as it saw a decline in cash flows. However, on October 27, 2021, the company reported a 7% increase in its quarterly dividend at $0.885 per share, with a dividend yield of 2.95%.
In Q3 2021, Sculptor Capital held a roughly $13.6 billion worth of stake in DTE Energy Company (NYSE:DTE), which represented 0.11% of its 13F portfolio. The hedge fund started building its position in the company with shares worth only $4 million, during the first quarter of 2021. In January, Edward Jones showed confidence in DTE Energy Company’s (NYSE:DTE) earnings growth and upgraded the shares to Buy from Hold.
The number of hedge funds tracked by Insider Monkey having stakes in DTE Energy Company (NYSE:DTE) declined to 22, from 32 in the previous quarter. These stakes hold a consolidated value of over $426 million. Among these hedge funds, Ken Griffin’s Citadel Investment Group held the largest stake in the company in Q3, worth $66.2 million.
2. Dominion Energy, Inc. (NYSE:D)
Number of Hedge Fund Holders: 27
Dividend Yield as of February 4: 3.30%
Sculptor Capital’s Stake Value: $4,358,000
Dominion Energy, Inc. (NYSE:D), an American power and energy company, was one of the latest holdings of Sculptor Capital in Q3. The hedge fund started investing in the company with a stake worth $4.3 million, which accounted for 0.03% of its 13F portfolio.
At the end of Q3 2021, 27 hedge funds tracked by Insider Monkey held stakes in Dominion Energy, Inc. (NYSE:D), up from 34 in the previous quarter. These stakes hold a consolidated value of over $545 million.
Dominion Energy, Inc. (NYSE:D) cut its dividend by 33% in 2020 due to the pandemic. However, by the end of 2021, the company announced a 6% increase in its quarterly dividend at $0.6675 per share. Though the stock’s current dividend yield of 3.30% is below the industry’s average yield, analysts believe that the payout ratio of 65% signals dividend growth in the coming years. In its January investor note, UBS appreciated the ESG-focused schemes of Dominion Energy, Inc. (NYSE:D) and lifted the stock’s price target to $98. The firm also upgraded the shares to Buy from Neutral.
1. American Electric Power Company, Inc. (NASDAQ:AEP)
Number of Hedge Fund Holders: 36
Dividend Yield as of February 4: 3.46%
Sculptor Capital’s Stake Value: $20,095,000
American Electric Power Company, Inc. (NASDAQ:AEP) is an American electric utility company that has over five million customers in 11 states across the country. This January, Morgan Stanley set a $110 price target on the stock while maintaining an Overweight rating on the shares.
In 2021, American Electric Power Company, Inc. (NASDAQ:AEP) increased its dividend by 5%, which marked the company’s consecutive 12th year of dividend growth. Currently, the company pays a quarterly dividend of $0.78 per share, with a dividend yield of 3.46%. In Q3 2021, Sculptor Capital increased its stake in American Electric Power Company, Inc. (NASDAQ:AEP) by 137%, reaching over $20 million. The company represented 0.16% of the hedge fund’s 13F portfolio.
Renaissance Technologies held a stake worth roughly $190 million in American Electric Power Company, Inc. (NASDAQ:AEP), becoming the company’s largest shareholder in Q3. Overall, 36 hedge funds tracked by Insider Monkey held stakes in the company in Q3, up from 29 in the previous quarter. The consolidated value of these stakes is over $751.5 million.
You can also take a look at 15 Fastest Growing Dividend Stocks and 10 Best Material Dividend Stocks To Buy Now
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Disclosure. None. 10 Best Dividend Stocks to Buy According to Sculptor Capital is originally published on Insider Monkey.
