In this article, we discuss 12 diversified dividend stocks to buy now.
Diversified companies can provide investors with diversification across different industries and sectors, which can help reduce the risk of investing in a single industry or sector. In addition to this, by having multiple businesses, companies can generate revenue from different sources, which stabilizes their revenue streams. This can be particularly beneficial in times of economic uncertainty or when one industry or sector is facing challenges. Through multiple businesses, these companies often have strong balance sheets and solid cash flow generation even during volatile times.
After recording one of its worst performances in history last year, the stock market was on the road to recovery in 2023. However, the recent Silicon Valley Bank (SVB) collapse has shaken investors’ confidence in the stock market. A monthly survey conducted by BofA through its self-compiled ‘Financial Market Risk Indicator’ after the fallout of SVB showed that investor worry levels have risen to 7.7, just a little below extreme highs of last year amid the Ukraine War. This financial instability has made investors explore different investment options, with dividend strategies gaining traction over other asset classes.
According to analysts, companies with strong cash flow should be investors’ focus as they pay stable dividends to shareholders. Chris Senyek, chief investment strategist at Wolfe Research, spoke with Barron’s about dividend stocks and the importance of cash flow. He said:
“Many dividend payers have strong balance sheets and lower leverage, and the sustainability of the dividend isn’t in question unless we get a really deep downturn.”
He further added that investors should avoid companies with a lot of debt and turn their attention toward those who are able to smoothly cover their payouts by free cash flow.
PepsiCo, Inc. (NASDAQ:PEP), Merck & Co., Inc. (NYSE:MRK), and Exxon Mobil Corporation (NYSE:XOM) are some companies that have raised their payouts for a long period of time and have strong cash flow generation. Companies like these can provide a reliable source of income and can also help to mitigate the effects of market volatility. To know more about dividend stocks, readers can have a look at 13 Best Long Term Dividend Stocks to Buy Now.
With this in mind, we will discuss the diversified dividend stocks to buy now.
Image by Sergei Tokmakov Terms.Law from Pixabay
Our Methodology:
For this list, we selected conglomerate firms that specialize in several different businesses and pay regular dividends to shareholders. We gauged hedge fund sentiment for these stocks using Insider Monkey’s database of 943 hedge funds as of Q4 2022. The list is ranked in ascending order of the number of hedge funds having stakes in the companies.
Best Diversified Dividend Stocks to Buy Now
11. Unilever PLC (NYSE:UL)
Number of Hedge Fund Holders: 22
Unilever PLC (NYSE:UL) is a British multinational consumer goods company that specializes in a wide of products. On February 13, the company declared an 8.6% hike in its quarterly dividend to $0.457 per share. The stock has a dividend yield of 3.50%, as of March 28. The company can be added to dividend portfolios alongside some of the best dividend stocks like PepsiCo, Inc., Merck & Co., Inc., and Exxon Mobil Corporation.
In FY22, Unilever PLC reported revenue of €60 billion, which showed a 14.5% growth from the same period last year. The company’s free cash flow for the year amounted to over €5.2 billion, which was sufficient to pay its dividends worth over €4.3 billion.
At the end of Q4 2022, 22 hedge funds tracked by Insider Monkey reported having stakes in Unilever PLC, up from 21 in the previous quarter. The collective value of these stakes is roughly $776.5 million.
Fundsmith mentioned Unilever PLC in its 2022 yearly investor letter. Here is what the firm has to say:
“Last year I wrote about Unilever PLC (NYSE:UL) and attracted a virtual tsunami of comment for my remarks about Unilever, purpose and Hellmann’s mayonnaise. Events soon overtook this commentary insofar as Nelson Peltz’s Trian Partners announced that it had bought a stake in Unilever and he was invited to join the board. We are asked to suspend disbelief that this was in no way linked to the subsequent announcement that Alan Jope will be leaving the CEO role. This explanation sounds like it was lifted from the script of Miracle on 34th Street.
As I have previously pointed out, our Fund has held Unilever shares since inception and was about the 12th largest shareholder when these events happened. Yet for the first eight years of our existence as a shareholder we did not hear from Unilever. The first contact was when we were asked to vote in favour of moving the headquarters and listing to the Netherlands. As I remarked at the time, it is not a good way to manage relationships to ignore people until you need their support…” (Click here to read the full text)
10. Emerson Electric Co. (NYSE:EMR)
Number of Hedge Fund Holders: 32
Emerson Electric Co. (NYSE:EMR) is a Missouri-based manufacturing company that specializes in products and services for industrial, commercial, and consumer markets. Morgan Stanley upgraded the stock to Overweight in March and also raised its price target on the stock to $96. The firm mentioned that the company’s fundamentals are accelerating.
Emerson Electric Co. currently pays a quarterly dividend of $0.52 per share and has a dividend yield of 2.48%, as of March 28. It is one of the best dividend stocks on our list as it has raised dividends for 66 years in a row.
As of the close of Q4 2022, 32 hedge funds tracked by Insider Monkey owned stakes in Emerson Electric Co., worth roughly $781 million collectively. Among these hedge funds, Two Sigma Advisors was the company’s leading stakeholder in Q4.
9. Church & Dwight Co., Inc. (NYSE:CHD)
Number of Hedge Fund Holders: 36
A New Jersey-based multinational company, Church & Dwight Co., Inc. is next on our list of the best dividend stocks to buy now. The company specializes in personal care, household, and other specialty products. Deutsche Bank presented a positive stance on the consumer staples industry and raised its price target on the stock to $92 in March, while maintaining a Buy rating on the shares.
Church & Dwight Co., Inc. has been making regular dividend payments to shareholders for 122 years. Moreover, the company holds a 27-year streak of consistent dividend growth. It currently offers a quarterly dividend of $0.2725 per share for a dividend yield of 1.26%, as of March 28.
At the end of December 2022, 36 hedge funds tracked by Insider Monkey owned stakes in Church & Dwight Co., Inc., with a total value of over $1.4 billion.
8. Corning Incorporated (NYSE:GLW)
Number of Hedge Fund Holders: 39
Corning Incorporated (NYSE:GLW) is an American multinational tech company that deals in specialty glass, ceramics, and other related materials. The company also specializes in technologies including advanced optics, for industrial and scientific applications. It currently pays a quarterly dividend of $0.38 per share. The company is one of the best dividend stocks on our list as it maintains a 10-year streak of consistent dividend growth. The stock’s dividend yield on March 28 came in at 3.35%.
In March, Deutsche Bank upgraded Corning Incorporated to Buy and also lifted its price target on the stock to $38. The firm appreciated the company’s growing revenue in its most recent quarter.
As of the end of the December quarter of 2022, 39 hedge funds in Insider Monkey’s database reported owning stakes in Corning Incorporated, up from 38 in the previous quarter. These stakes have a consolidated value of $348.5 million. With over 2 million shares, Citadel Investment Group was the company’s leading stakeholder in Q4.
7. Carlisle Companies Incorporated (NYSE:CSL)
Number of Hedge Fund Holders: 41
Carlisle Companies Incorporated (NYSE:CSL) is an American diversified company, based in Arizona. The company manufactures and markets a wide range of products including optical fibers and defense electronics. BMO Capital maintained an Outperform rating on the stock in March with a $335 price target, highlighting the company’s long-term performance.
Carlisle Companies Incorporated, one of the best dividend stocks, currently pays a quarterly dividend of $0.75 per share. The company has raised its dividends consistently for the past 46 years. As of March 28, the stock has a dividend yield of 1.37%.
At the end of December 2022, 41 hedge funds in Insider Monkey’s database owned stakes in Carlisle Companies Incorporated, worth roughly $8 billion collectively.
Madison Funds mentioned Carlisle Companies Incorporated in its Q4 2022 investor letter. Here is what the firm has to say:
“The bottom five detractors for the quarter were Carlisle Companies Incorporated (NYSE:CSL), Brown & Brown, Brookfield, CarMax, and Armstrong World Industries. Following robust outperformance during the first three quarters of the year, Carlisle shares took a step back this quarter as investors worried about commercial roofing demand in a potentially slowing economy.”
6. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 44
Honeywell International Inc. (NASDAQ:HON) is a North Carolina-based company that specializes in a wide range of products, including alarms, building controls, medical instruments, and space systems. In 2022, the company stretched its dividend growth streak to 13 years and currently pays a quarterly dividend of $1.03 per share. The stock has a dividend yield of 2.18%, as of March 28.
In addition to Honeywell International Inc., investors also pay attention to some other best dividend stocks, including PepsiCo, Inc., Merck & Co., Inc., and Exxon Mobil Corporation.
As per Insider Monkey’s Q4 2022 database, 44 hedge funds owned stakes in Honeywell International Inc., with a total value of roughly $698 million. Diamond Hill Capital was the company’s leading stakeholder among these hedge funds.
5. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 52
3M Company (NYSE:MMM) is an American multinational conglomerate company that manufactures a wide range of products belonging to different industries. In January, Mizuho maintained a Neutral rating on the stock with a $120 price target, highlighting the company’s fourth-quarter earnings.
3M Company, one of the best dividend stocks on our list, currently offers a per-share dividend of $1.50 every quarter, having raised it by 0.7% on February 7. This increase took the company’s dividend growth streak to 65 years. The stock has a dividend yield of 5.91%, as of March 28.
Of the 973 hedge funds tracked by Insider Monkey in Q4 2022, 52 funds owned stakes in 3M Company, up from 49 in the previous quarter. The collective value of these stakes is over $1.57 billion. AQR Capital Management was one of the company’s leading stakeholders in Q4.
4. General Electric Company (NYSE:GE)
Number of Hedge Fund Holders: 59
General Electric Company (NYSE:GE) is a Boston-based multinational company that operates in aviation, power, manufacturing, energy, and digital industries. The company’s cash position remained strong in Q4 2022 as it reported $4.6 billion in operating cash flow and its free cash flow came in at $4.3 billion. It is among the best dividend stocks on our list.
On February 10, General Electric Company declared a quarterly dividend of $0.08 per share, which was in line with its previous dividend. The stock has a dividend yield of 0.34%, as of March 28.
General Electric Company gained positive ratings from Street analysts due to its positive growth outlook. In March, both RBC Capital and BofA raised their price targets on the stock to $100 and $105, respectively.
The number of hedge funds tracked by Insider Monkey owning stakes in General Electric Company grew to 59 in Q4 2022, from 53 a quarter earlier. These stakes have a total value of over $4.38 billion.
Vulcan Value Partners mentioned General Electric Company in its recently-published Q4 2022 investor letter. Here is what the firm has to say:
“General Electric Company (NYSE:GE) recently spun off its health care businesses, General Electric HealthCare Technologies, which has leading market share positions in medical imaging products including MRI devices and CT scanners. General Electric’s remaining businesses include Aerospace and its Power and Renewables business. Aerospace is performing well and comprises the bulk of General Electric’s value in our opinion. We believe that the spin-off of General Electric HealthCare Technologies has highlighted the value of General Electric’s remaining business units. General Electric intends to spin out its Power and Renewables business unit early in 2024.”
3. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 61
An American manufacturing company, Colgate-Palmolive Company (NYSE:CL) is next on our list of the best dividend stocks. The company specializes in the household, healthcare, and personal care sectors. It pays a quarterly dividend of $0.48 per share and has a dividend yield of 2.59%, as of March 28. The company has been raising its dividends consistently for the past 61 years.
In March, Deutsche Bank maintained a Buy rating on Colgate-Palmolive Company with an $80 price target, presenting a conservative outlook for the consumer staples sector.
At the end of December 2022, 61 hedge funds in Insider Monkey’s database had stakes in Colgate-Palmolive Company, compared with 57 in the previous quarter. The consolidated value of these stakes is over $4.46 billion.
Third Point mentioned Colgate-Palmolive Company in its Q4 2022 investor letter. Here is what the firm has to say:
“Colgate-Palmolive Company (NYSE:CL) remains one of the firm’s largest equity positions. The company offers defensive growth at a reasonable valuation, and we continue to see the potential for shares to deliver attractive risk adjusted returns over the next several years.
Fourth Quarter results were disappointing. The company missed on gross margins, guided 2023 well below the Street, and took another large impairment charge on its portfolio of skin care brands. The price action on the day of the print (down 5%) was extreme and perhaps reflective of growing investor frustration that the company has failed to sustainably grow earnings over the past decade.”
2. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 84
Johnson & Johnson operates in a wide range of industries, including healthcare, consumer packaged goods, and medical devices. The company has been raising its dividends consistently for the past 61 years and pays a quarterly dividend of $1.13 per share. As of March 28, the stock has a dividend yield of 2.95%.
Guggenheim initiated its coverage of Johnson & Johnson with a Neutral rating in March with a $161 price target, appreciating the company’s business model and growth in its MedTech segment.
As per Insider Monkey’s database for Q4 2022, 84 hedge funds owned stakes in Johnson & Johnson with a total value of over $5.5 billion. Among these hedge funds, Citadel Investment Group was the company’s leading stakeholder in Q4.
1. Danaher Corporation (NYSE:DHR)
Number of Hedge Fund Holders: 88
Danaher Corporation (NYSE:DHR) tops our list of the best dividend stocks to buy now. The company manufactures products related to the medical, commercial, and industrial sectors. The company offers a quarterly dividend of $0.27 per share, having raised it by 8% on February 22. This was the company’s ninth consecutive year of dividend growth. The company’s shares have a yield of 0.44%, as of March 28.
Danaher Corporation was a part of 88 hedge fund portfolios in Q4 2022, as per Insider Monkey’s database. The stakes owned by these funds have a total value of over $5.4 billion.
Stewart Asset Management mentioned Danaher Corporation in its Q3 2022 investor letter. Here is what the firm has to say:
“We also need to point out one global consequence of the rapid rise in interest rates: an irrepressibly strong dollar. This hurts the reported earnings of U.S. companies who sell their goods and services overseas. Foreign currency earnings translate into fewer dollars and thus lower earnings. Most of the companies in your portfolios gain a notable amount of earnings from their international operations. While the strength or weakness of a currency doesn’t change the quality of a business or its longer-term earnings power, it can change the reported earnings of a company over short periods of time. It is difficult to forecast this effect accurately because many of our companies manufacture where they sell, which to some extent dulls the sharp negative effect of a surging dollar. Danaher (NYSE:DHR), among others, is a good example.”
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This article is originally published at Insider Monkey.
