In this article, we will be taking a look at 10 most popular dividend stocks among hedge funds. To skip our detailed analysis of dividend investing, you can go directly to see the 5 Most Popular Dividend Stocks Among Hedge Funds.
Whether you’re an ambitious investor looking to set up a reliable income stream separate from the fixed-income world, or a retiree trying to stay afloat in unprecedented times, dividend investing will often be one of your best options. Investing in dividend stocks has proved to be of use to many in the past, as witnessed by an MSCI factor focus report. By looking at the performance of the MSCI World High Dividend Yield Index from 1999 to 2020, the report found that this Index has generated healthy returns over the long run.
Undoubtedly, stocks that don’t pay dividends, like Amazon.com, Inc. (NASDAQ:AMZN), and those that pay minimal dividends, like Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL), can be argued to also be lucrative investments as well. However, others that do pay comparatively significant dividends, like Morgan Stanley (NYSE:MS), are historically shown by research as contributing more to investors’ total return expectations.
For instance, an S&P Dow Jones Indices report mentioned that dividends have contributed a third of total equity return since 1926. The performance of the S&P High Yield Dividend Aristocrats Index year to date as of the writing of this report this November, was 17.42% in total return.
Another report on dividend stock performance, published by Robeco, mentioned how since 2006, their defensive investment strategy delivered a return of 8% annually, of which 4% came from dividends. When discussing equity returns, the report showed that from the 1900s to the 2010s, US equities delivered a 9.5% total return, of which 4.5% also came from dividends. Additionally, while dividend stocks outperform and contribute significantly to returns, they are also a less risky investment factor to base decisions on, when compared to book-to-price (B/P).
The report also found that the risk for dividend investing was 20% lower for high yielding stocks between 1951 and 2017. Over the same period, high dividend stocks also had higher returns by 4% compared to non-dividend payers.
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Without further ado, let’s take a look at the 10 most popular dividend stocks among hedge funds.
Our Methodology
Using Insider Monkey’s hedge fund data tracking 867 hedge funds in the third quarter of 2021, we have picked high yield dividend stocks with a high number of hedge funds holding stakes in them. The dividend yields of these stocks are above 2%, and they are ranked from the lowest to the highest number of hedge funds holding stakes in them. We have also checked analyst ratings to pick stocks with mostly positive ratings, and have mentioned their share price gains in the past six months, year to date, and in the past year as well.
Most Popular Dividend Stocks Among Famous Hedge Funds
10. Morgan Stanley (NYSE:MS)
Number of Hedge Fund Holders: 65
Dividend Yield: 2.7%
Number of Years of Dividend Growth: 8
Morgan Stanley (NYSE:MS) is a financial holding company offering financial products and services to a range of stakeholders, including corporations, governments, financial institutions, and individuals. The stock has 65 hedge funds holding stakes in it, and is thus among the most popular dividend stocks among hedge funds. It is based in New York and operates through its Institutional Securities, Wealth Management, and Investment Management segments.
Citigroup analyst Keith Horowitz just this December upgraded shares of Morgan Stanley (NYSE:MS) from Neutral to Buy, with a $115 price target.
In the fiscal third quarter of 2021, Morgan Stanley (NYSE:MS) had an EPS of $2.04, beating estimates by $0.36. The company’s revenue was $14.75 billion, up 26.56% year over year and beating estimates by $799.47 million. Morgan Stanley (NYSE:MS) has gained 10.46% in the past 6 months and 50.01% year to date.
By the end of the third quarter of 2021, 65 hedge funds out of the 867 tracked by Insider Monkey held stakes in Morgan Stanley (NYSE:MS) worth roughly $4.9 billion. This is compared to 69 hedge funds in the previous quarter with a total stake value of approximately $5.3 billion.
Like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT) and Apple Inc. (NASDAQ:AAPL), Morgan Stanley (NYSE:MS) is a stock many elite hedge funds are piling into.
9. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 66
Dividend Yield: 2.6%
Number of Years of Dividend Growth: 7
Intel Corporation (NASDAQ:INTC) is a renowned information technology company and among the top most popular dividend stocks among hedge funds, as 66 hedge funds held stakes in it in the third quarter. The company manufactures and sells essential technologies for the cloud, smart, and connected devices.
This December, Northland analyst Gus Richard reiterated a Market Perform rating on Intel Corporation (NASDAQ:INTC) shares, alongside a $49 price target.
Davis Funds, an investment management firm, mentioned Intel Corporation (NASDAQ:INTC) in its third-quarter 2021 investor letter. Here’s what they said:
“Semiconductor-related holdings currently include Intel. While each of these businesses is unique, they serve fast-expanding global end markets ranging from e-commerce and AI to cloud computing, mobile technologies and electric vehicles—a set of market opportunities that dwarf this industry’s historical legacy markets in more mature sectors, such as PCs and mobile devices. We are excited by these new, long-tailed areas of future growth for this set of well-resourced, innovative hightechnology companies. In our view, best-inclass operators have successfully made the transition from what were historically cyclical businesses to “growth cyclicals” over the coming decades. Products today are harder to design and manufacture, let alone source given a strained supply chain, making chips more valuable today than before—in some cases by multiples of past pricing. In addition, financially savvy managements have created value by retiring large percentages of their companies’ shares when their stocks were cheap, with some retiring 20–35% over the last seven years alone.”
8. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 69
Dividend Yield: 2.3%
Number of Years of Dividend Growth: 65
The Procter & Gamble Company (NYSE:PG) is a provider of branded consumer goods and operates in the household products industry. It operates in North and Latin America, Europe, the Asia Pacific, Greater China, India, the Middle East, and Africa. Some of its famous products include Head & Shoulders and Pantene, and with 69 hedge funds holding stakes in it, the stock is among the most popular dividend stocks among hedge funds.
Deutsche Bank’s Steve Powers holds a Buy rating on The Procter & Gamble Company (NYSE:PG) shares as of this October.
The company’s earnings history for the fiscal first quarter of 2022 was promising, as it beat both EPS and revenue estimates. Its EPS was $1.61, beating estimates by $0.02, and revenue was $20.34 billion, beating estimates by $445.19 million.
Out of 867 hedge funds, 69 hedge funds held stakes in The Procter & Gamble Company (NYSE:PG) in the third quarter of 2021, while 68 hedge funds held stakes in the company in the second quarter.
Like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Morgan Stanley (NYSE:MS), The Procter & Gamble Company (NYSE:PG) is a stock that was popular among investors in the third quarter.
7. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 74
Dividend Yield: 3%
Number of Years of Dividend Growth: 11
Pfizer Inc. (NYSE:PFE) is a healthcare company selling its biopharmaceutical products worldwide. The company gained critical acclaim in 2020 for being among the best vaccine producers against coronavirus. It has 74 hedge funds holding stakes in it, making it one of the most popular dividend stocks among hedge funds.
In November, Morgan Stanley’s Matthew Harrison raised his price target on Pfizer Inc. (NYSE:PFE) to $60, and also reiterated an Equal Weight rating on the shares.
Our data shows that 74 hedge funds held stakes in Pfizer Inc. (NYSE:PFE) in the third quarter of 2021, worth $2.7 billion. In the second quarter, 67 hedge funds held stakes in the company worth $2.4 billion.
6. Bristol Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 74
Dividend Yield: 3.4%
Number of Years of Dividend Growth: 12
Bristol Myers Squibb Company (NYSE:BMY) is another healthcare company on our list, and is sufficiently popular with hedge funds. It offers biopharmaceutical products in the hematology, oncology, cardiovascular, and immunology therapeutic classes.
BMO Capital analyst Evan Seigerman initiated coverage of Bristol Myers Squibb Company (NYSE:BMY) shares in November, with an Outperform rating and a $72 price target.
Another reason why this stock is among the top dividend stocks to buy is its positive financial performance in the fiscal third quarter of 2021. The company’s EPS then was $2, beating estimates by $0.08, while its revenue also beat estimates by $100.06 million.
In our latest third quarter database, 74 hedge funds were found to hold stakes in Bristol Myers Squibb Company (NYSE:BMY). In the second quarter, the number of hedge funds holding stakes in the company was 73.
Like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Morgan Stanley (NYSE:MS), Bristol Myers Squibb Company (NYSE:BMY) is a stock that was high up on hedge funds’ list of stocks to invest in.
Click to continue reading and see 5 Most Popular Dividend Stocks Among Hedge Funds.
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Disclosure: None. 10 Most Popular Dividend Stocks Among Famous Hedge Funds is originally published on Insider Monkey
