In this article, we will discuss 10 dividend stocks to buy according to Thomas Bailard’s Hedge Fund.
Thomas Bailard, along with Larry Biehl and Ron Kaiser, co-founded Bailard Inc. in 1969. It is an independent wealth and investment management firm that focuses on achieving long-term returns. In addition to this, the firm uses innovative approaches to enhance its returns while managing risks. Thomas Bailard passed away in 2017, and currently, Sonya Thadhani Mughal is serving as chief executive officer.
In 1990, the firm expanded its asset management services to endowments, foundations, and pension funds. The firm’s investment strategies are designed to address real client needs and seek to provide stable returns in current market volatility. After assuming office in 2021, Sonya Mughal said that she aims to focus on growth while improving the firm’s investment performance. She further mentioned that the firm will use diverse investment strategies to meet its goals.
Bailard’s International Equity Strategy is a country-focused investment strategy that follows a quantitative approach. This equity strategy tracks the performance of the countries that are expected to outperform and have a tendency to be consistent over time. In addition to this, the fund also takes environmental factors into account to maximize the returns while managing risks. In the past five years, the fund delivered an 8.6% return to shareholders and its 3-year return came in at 14.2%.
At the end of Q2 2022, Bailard Inc.’s 13F portfolio had a value of over $2.54 billion, compared with roughly $3 billion in the previous quarter. The prominent holdings of the hedge fund include Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG). However, we will discuss the best dividend stocks in Bailard Inc.’s portfolio.
Source: pexels
Our Methodology:
The dividend stocks mentioned below are selected from Bailard Inc.’s 13F portfolio as of the second quarter of 2022. The stocks are ranked according to their stake value.
10 Best Dividend Stocks to Buy According to Thomas Bailard’s Hedge Fund
10. Sysco Corporation (NYSE:SYY)
Bailard Inc.’s Stake Value: $9,740,000
Sysco Corporation (NYSE:SYY) is a Texas-based multinational company that is involved in the distribution of food products, kitchen equipment, and related products. In August, Credit Suisse reiterated its Outperform rating on the stock as the company delivered mixed Q4 results in the current market environment.
Bailard Inc. started investing in Sysco Corporation (NYSE:SYY) during the fourth quarter of 2010, with stakes worth $270,000. In Q2 2022, the hedge fund owned 114,984 SYY shares, increasing its position in the company by 1%. The fund’s total stake in the company amounted to over $9.7 million, which represented 0.38% of its portfolio.
Sysco Corporation (NYSE:SYY) has been paying dividends to shareholders since 1970 and has raised its payouts every year since 1976. The company currently pays a quarterly dividend of $0.49 per share and has a yield of 2.37%, as recorded on August 31.
At the end of Q2 2022, 32 hedge funds tracked by Insider Monkey owned stakes in Sysco Corporation (NYSE:SYY), up from 31 in the previous quarter. The collective value of these stakes is over $1.5 billion. Trian Partners owned the largest stake in the company in Q2, worth $744.8 million.
In addition to Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG), Sysco Corporation (NYSE:SYY) is another prominent holding of Bailard Inc. in Q2.
9. Target Corporation (NYSE:TGT)
Bailard Inc.’s Stake Value: $11,258,000
Target Corporation (NYSE:TGT) is an American big-box store company and is one of the largest retailers in the US. The company has paid uninterrupted dividends since its IPO in 1967 and maintains a 51-year track record of consistent dividend growth. In June, the company declared a 20% hike in its quarterly dividend to $1.08 per share. As of August 31, the stock’s dividend yield stood at 2.71%.
Target Corporation (NYSE:TGT) has been a part of Bailard Inc.’s portfolio since 2016 when the hedge fund initiated its position in the company with stakes worth $406,000. In Q2 2022, the fund boosted its TGT stake by 2%, taking the total stake to over $11.2 million. The company accounted for 0.44% of the firm’s 13F portfolio.
After the company’s Q2 results, Street analysts presented a positive stance on its several key businesses. In August, both Truist and DA Davidson raised their price targets on Target Corporation (NYSE:TGT) to $165 and $203, respectively.
As per Insider Monkey’s Q2 2022 database, 46 hedge funds reported owning stakes in Target Corporation (NYSE:TGT), compared with 50 in the previous quarter. These stakes hold a combined value of over $1.2 billion.
Smead Capital Management mentioned Target Corporation (NYSE:TGT) in its Q2 2022 investor letter. Here is what the firm has to say:
“Target Corporation (NYSE:TGT) got blistered by excess inventories as the consumers woke up from their COVID-19 hibernation and associated purchasing patterns. When we tell you that we hold winners to a fault, Target proves the downside of that practice. We view it as a very strong long-term hold.”
8. Waste Management, Inc. (NYSE:WM)
Bailard Inc.’s Stake Value: $11,261,000
Waste Management, Inc. (NYSE:WM) provides comprehensive waste and environmental services to its consumers in North America. According to Insider Monkey’s data, 37 hedge funds invested in the company in Q2 2022, compared with 40 in the previous quarter. These investments hold a collective value of over $3.7 billion. With 18.6 million shares, Bill & Melinda Gates Foundation Trust was the company’s leading stakeholder in Q2.
In Q2 2022, Bailard Inc. owned 73,611 shares in Waste Management, Inc. (NYSE:WM), slashing its position by 14% during the quarter. The fund’s total stake in the company stood at over $11.26 million, which accounted for 0.44% of its portfolio.
On August 23, Waste Management, Inc. (NYSE:WM) declared a quarterly dividend of $0.65 per share, consistent with its previous dividend. The company has a strong dividend policy, raising its payouts consistently for the past 15 years. In addition to this, its 5-year dividend CAGR stands at 6%. The stock’s dividend yield stood at 1.53%, as of August 31.
In July, BMO Capital maintained its Market Perform rating on Waste Management, Inc. (NYSE:WM), highlighting the company’s favorable price and volume outlook.
Diamond Hill Capital mentioned Waste Management, Inc. (NYSE:WM) in its Q1 2022 investor letter. Here is what the firm has to say:
“We also initiated a position in Waste Management (NYSE:WM), one of the largest providers of waste collection services in the US. We believe it is a high-quality business with ownership of key landfill assets that provide pricing power over the long term. Its stock was trading at a discount to our estimate of intrinsic value due to short-term market concerns over an increase in growth investments—we expect these investments to be value-creating over the long term.”
7. BlackRock, Inc. (NYSE:BLK)
Bailard Inc.’s Stake Value: $12,764,000
BlackRock, Inc. (NYSE:BLK) is an American multinational investment management company that provides advisory and risk management solutions. In Q2 2022, Bailard Inc. owned 20,957 shares in the company, valued at over $12.7 million. The hedge fund reduced its position in the company by 2% during the quarter. The company represented 0.5% of the firm’s 13F portfolio.
BlackRock, Inc. (NYSE:BLK) ceased its dividends during the recession of 2008 but the company has raised its dividends every year since then. It currently pays a quarterly dividend of $4.88 per share and has a yield of 2.93%, as recorded on August 31. In the last five years, the company has raised its dividends at a CAGR of 13%.
In August, Deutsche Bank raised its price target on BlackRock, Inc. (NYSE:BLK) to $860 with a Buy rating on the shares, expecting a rebound in the equity market in Q3 as the sector has shown solid fundamentals in the recent quarter.
As of the end of June 2022, 50 hedge funds tracked by Insider Monkey owned stakes in BlackRock, Inc. (NYSE:BLK), valued at over $1.56 billion. In the previous quarter, 49 hedge funds owned positions in the company, with stakes holding a total value of over $1.8 billion.
Carillon Tower Advisers mentioned BlackRock, Inc. (NYSE:BLK) in its Q1 2022 investor letter. Here is what the firm has to say:
“BlackRock (NYSE:BLK) shares underperformed due to a decline in equity market performance. As a reminder, market weakness typically drives assets under management lower, which in turn leads to lower revenues.”
6. Bristol-Myers Squibb Company (NYSE:BMY)
Bailard Inc.’s Stake Value: $16,724,000
Bristol-Myers Squibb Company (NYSE:BMY) is a multinational pharmaceutical company that develops innovative medical solutions for patients with serious illnesses. In July, JPMorgan appreciated the company’s performance in the recent quarter and its expanding portfolio. The firm raised its price target on the stock to $85 with an Overweight rating on the shares.
Bailard Inc. opened its position in Bristol-Myers Squibb Company (NYSE:BMY) in the second quarter of 2011 with shares worth over $2.6 million. In Q2 2022, the hedge fund owned stakes worth over $16.7 million in the company, which accounted for 0.65% of its 13F portfolio. The company is another prominent holding of the firm along with Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG).
On June 15, Bristol-Myers Squibb Company (NYSE:BMY) announced a quarterly dividend of $0.54 per share, raising it by 10% in December 2021. This marked the company’s 16th consecutive year of dividend growth. As of August 31, the stock’s dividend yield stood at 3.20%.
With stakes worth over $2.1 billion, 69 hedge funds tracked by Insider Monkey owned positions in Bristol-Myers Squibb Company (NYSE:BMY) in Q2 2022. In the previous quarter, 70 hedge funds owned stakes in the pharmaceutical company, worth over $2.4 billion. Two Sigma Advisors was the company’s leading stakeholder in Q2.
Baron Funds mentioned Bristol-Myers Squibb Company (NYSE:BMY) in its Q2 2022 investor letter. Here is what the firm has to say:
“We established a position in Bristol-Myers Squibb Company, a global biopharmaceutical company focused on discovering, developing, and selling medicines for patients in the therapeutic areas of oncology, immunology, cardiovascular, and neurology. The stock trades at a low valuation relative to its current earnings because the company faces loss of exclusivity on several key drugs over the next eight years, including Revlimid, Eliquis, and Opdivo.
At the same time, Bristol-Myers has multiple new products in the early stages of launch (e.g., Opdualag, Camzyos, Breyanzi, and Reblozyl), a robust new product pipeline (e.g., Deucravacitinib, Milvexian, and CELMoD agents), and a strong balance sheet combined with strong free cash flow generation that the company can use for acquisitions. Management believes these growth drivers can more than offset the loss of exclusivity and drive revenue growth through the end of the decade. Given the company’s low valuation, if the company can execute, we think there is substantial upside in the stock.”
5. Costco Wholesale Corporation (NASDAQ:COST)
Bailard Inc.’s Stake Value: $18,247,000
Costco Wholesale Corporation (NASDAQ:COST) is an American operator of discount stores and is one of the largest retailers in the world. In August, Erste Group upgraded the stock to Buy as the company showed strong sales growth and increased its key profitability ratios in recent quarters.
Costco Wholesale Corporation (NASDAQ:COST) currently pays a quarterly dividend of $0.90 per share and has a yield of 0.69%, as of August 30. The company maintains an 18-year track record of consistent dividend growth.
Bailard Inc. started investing in Costco Wholesale Corporation (NASDAQ:COST) during the second quarter of 2011, purchasing shares worth over $2 million. The hedge fund grew its position in the company over the years and currently owned COST stakes worth over $18.2 million. The company represented 0.71% of the firm’s 13F portfolio in Q2.
At the end of Q2 2022, 64 hedge funds tracked by Insider Monkey owned stakes in Costco Wholesale Corporation (NASDAQ:COST), up from 61 in the preceding quarter. These stakes are collectively valued at over $4.76 billion. With stakes over $2 billion, Fisher Asset Management owned the largest position in the company in Q2.
ClearBridge Investments mentioned Costco Wholesale Corporation (NASDAQ:COST) in its Q4 2021 investor letter. Here is what the firm has to say:
“Portfolio gains were led by a diverse group of contributors. Also in consumer discretionary, Costco, which operates a chain of membership-only big-box retail stores, continues to impress as it takes to share and becomes more relevant for the consumer even as the world opens up.”
4. QUALCOMM Incorporated (NASDAQ:QCOM)
Bailard Inc.’s Stake Value: $18,740,000
QUALCOMM Incorporated (NASDAQ:QCOM) is an American multinational company that manufactures semiconductors and software and also provides services related to wireless technologies. In Q2 2022, Bailard Inc. owned 146,708 shares in the company, boosting its position by 20% during the quarter. The fund’s total QCOM stake amounted to over $18.7 million, which represented 0.73% of its 13F portfolio.
QUALCOMM Incorporated (NASDAQ:QCOM) has been consistently paying dividends to shareholders since 2003 and raised its payouts at a CAGR of 6% in the last five years. Currently, it pays a quarterly dividend of $0.75 per share, with a dividend yield of 2.27%, as recorded on August 31.
In July, Mizuho raised its price target on QUALCOMM Incorporated (NASDAQ:QCOM) to $175 with a Buy rating on the shares, calling the stock a buying opportunity.
As per Insider Monkey’s Q2 2022 database, 71 hedge funds owned $2.8 billion worth of stakes in QUALCOMM Incorporated (NASDAQ:QCOM). In the previous quarter, 73 hedge funds had positions in the company, with stakes valued at over $3.5 billion.
3. The Procter & Gamble Company (NYSE:PG)
Bailard Inc.’s Stake Value: $23,045,000
The Procter & Gamble Company (NYSE:PG) is an Ohio-based multinational consumer goods company that provides a wide range of personal care and hygiene products. The company holds one of the strongest dividend histories, offering dividends to shareholders for the past 132 years. Moreover, in 2022, it extended its dividend growth streak to 66 years. The company pays a quarterly dividend of $0.9133 per share, with a yield of 2.65%, as of August 31.
In Q2 2022, Bailard Inc. owned 160,268 shares in The Procter & Gamble Company (NYSE:PG), after raising its position by 8%. The hedge fund’s total stake in the company stood at over $23 million, which accounted for 0.9% of its 13F portfolio.
Following the company’s fiscal Q4 earnings report, Barclays reiterated its Overweight rating on the stock in August and mentioned that its business model is more defensive in this economic cycle.
Ray Dalio’s Bridgewater Associates owned stakes worth over $970 million in The Procter & Gamble Company (NYSE:PG), becoming its largest stakeholder in Q2. Overall, 71 hedge funds tracked by Insider Monkey presented a bullish stance on the company in Q2, with stakes valued at over $5.5 billion.
2. Johnson & Johnson (NYSE:JNJ)
Bailard Inc.’s Stake Value: $23,394,000
Johnson & Johnson (NYSE:JNJ) is one of the most popular names in Big Pharma. The company was a part of 83 hedge fund portfolios in Q2 2022, the same as in the previous quarter, according to Insider Monkey’s data. The stakes owned by these funds hold a consolidated value of over $6.7 billion.
Bailard Inc. resumed its position in Johnson & Johnson (NYSE:JNJ) during the first quarter of 2016, after selling its stake worth $3.2 million in the third quarter of 2015. In a recent quarter, the hedge fund owned 131,790 JNJ shares, valued at nearly $23.4 million. The company constituted 0.92% of the firm’s 13F portfolio.
Johnson & Johnson (NYSE:JNJ) pays a quarterly dividend of $1.13 per share, growing it by 6.6% in April. This marked the company’s 60th consecutive year of dividend growth. As of August 31, the stock’s dividend yield came in at 2.80%.
In July, SVB Securities maintained its Outperform rating on Johnson & Johnson (NYSE:JNJ) as the underlying demand for its key products remained strong and the management is focusing on controlling costs.
Mayar Capital mentioned Johnson & Johnson (NYSE:JNJ) in its Q2 2022 investor letter. Here is what the firm has to say:
“J&J is currently our largest position and a long-standing holding. The majority of the group’s sales comes from its collection of pharmaceutical franchises, but a large majority (~45%) comes from its collection of medical device businesses and its consumer brands.
Here’s how JNJ make and spend a dollar of revenues: As of 2021, about 55 cents of that dollar comes from its pharmaceutical sales – sales of drugs to pharmacies and distributors – while 30 cents come from the sale of medical devices, such as surgery equipment and orthopaedics. The rest of that dollar in sales comes from sales of JNJ’s consumer brands such as Listerine mouthwash, Nicorette nicotine tablets and Neutrogena cosmetics.
To make that dollar, however, JNJ typically spends about 25 cents to make the products themselves and another 27 cents on marketing and general administrative functions. This leaves JNJ with about 48 cents on the dollar in profit…” (Click here to see the full text)
1. UnitedHealth Group Incorporated (NYSE:UNH)
Bailard Inc.’s Stake Value: $37,559,000
UnitedHealth Group Incorporated (NYSE:UNH) is an American multinational healthcare company that also provides related insurance services. Mizuho lifted its price target on the stock in August to $600 with a Buy rating on the shares, appreciating the company’s strong Q2 results and its overall business outlook.
In Q2 2022, UnitedHealth Group Incorporated (NYSE:UNH) represented 1.47% of Bailard Inc.’s portfolio. The hedge fund owned 73,124 shares in the company, valued at over $37.5 million. UnitedHealth Group Incorporated (NYSE:UNH) started paying annual dividends in 1990 and shifted to quarterly payments in 2010. The company maintains a 12-year streak of dividend growth, raising its payout by 130% in the last five years. It currently pays a quarterly dividend of $1.65 per share, with a dividend yield of 1.27%, as recorded on August 31.
At the end of Q2 2022, 91 hedge funds in Insider Monkey’s database owned stakes in UnitedHealth Group Incorporated (NYSE:UNH), falling from 103 in the previous quarter. These stakes hold a total value of roughly $11 billion. Rajiv Jain, John Armitage, and Ken Griffin were some of the company’s major stakeholders in Q2.
Wedgewood Partners mentioned UnitedHealth Group Incorporated (NYSE:UNH) in its Q2 2022 investor letter. Here is what the firm has to say:
“UnitedHealth Group also contributed to performance during the quarter. United’s operating income grew +3% on difficult year-ago comparisons as benefits members utilized more services compared to last year. Optum Health grew operating income +40% as more patients are enrolled in the Company’s value-based care services. The Company estimates nearly a third of all medical care is unnecessary and represents an opportunity to capture savings for both patients. Optum’s integrated platform of patient data, IT, and service providers are focused on driving out these unnecessary costs and should serve as the engine for long-term, mid-teens earnings per share growth.”
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Disclosure. None. 10 Best Dividend Stocks to Buy According to Thomas Bailard’s Hedge Fund is originally published on Insider Monkey.
