In this article, we will be taking a look at the 15 best S&P 500 stocks that don’t pay dividends. To skip our detailed analysis of these stocks and the performance of the S&P 500 so far this year, you can go directly to see the 5 Best S&P 500 Stocks That Don’t Pay Dividends.
The Standard and Poor’s 500 (S&P 500) is a stock market index that tracks the stock performance of pretty much the 500 largest companies listed on the major stock exchanges in the US. The index was subject to poorer performance over the last 12 months in light of various problems such as the geopolitical issues caused by the Russian invasion of Ukraine, widespread inflationary and recession concerns due to the Fed’s aggressive rate hike stance, and the bursting of the tech bubble. However, stocks listed on the S&P 500 saw broader gains in November and some market strategists are optimistic about December as well. Federal Reserve Chair Jerome Powell was also quoted as saying that the central bank will now slow its rate-hiking campaign, easing pressures on the market.
A few of the most famous names on the S&P 500 include companies such as Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT). These being in the tech sector have consistently been among the best-performing sector on the index over the last decade. Such stocks helped the S&P 500 rise by about 5.4% at the close of November. The broader benchmark index ended up outperforming the smaller Nasdaq Composite index, which gained only 4.4% over the same period.
While many major companies on the index are also strong dividend payers, it is not a requisite condition for a company to be a dividend-payer for it to be an attractive investment choice. Many companies may choose to reinvest their proceeds from ongoing operations into their business models to retain their strong financial performance instead of paying out the same money to their shareholders. This opens larger avenues for a company’s individual growth in the long run.
We have compiled a list of the best S&P 500 stocks that don’t pay dividends, to recommend attractive stock picks for investors looking to invest in solid companies with long-term growth potential. Our rankings reflect the consensus opinion of 900+ hedge funds tracked by Insider Monkey.
Photo by Adam Nowakowski on Unsplash
Let’s now take a look at the 15 best S&P 500 stocks that don’t pay dividends.
Our Methodology
We have selected the best-performing S&P 500 stocks for our list below. They are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest. We have considered analyst ratings, core business strengths, revenue and net income growths, and more in our selection process.
Best S&P 500 Stocks That Don’t Pay Dividends
15. Teradata Corporation (NYSE:TDC)
Number of Hedge Fund Holders: 25
Teradata Corporation (NYSE:TDC) is a provider of a connected multi-cloud data platform for enterprise analytics. The company is based in San Diego, California.
Tyler Radke at Citigroup holds a Buy rating on Teradata Corporation (NYSE:TDC) shares of as November 11.
Teradata Corporation (NYSE:TDC) is expected to generate about $400 million of free cash flow by the end of 2022, giving the company an 11% free cash flow yield. The company’s strong free cash flow generation profile, balance sheet, and share buyback programs have reduced its outstanding share count by 8.2% over the past year
Teradata Corporation (NYSE:TDC) was found among the 13F holdings of 25 funds in the third quarter. Their total stake value was $340 million.
First Eagle Investment Management, an investment management firm, mentioned Teradata Corporation (NYSE:TDC) in its third-quarter 2021 investor letter. Here’s what the firm said:
“A longstanding participant in the data warehousing space, Teradata has been transitioning its focus from on-premises database management and analytics to the rapidly growing cloud-computing market. The company has delivered a series of impressive quarterly results, and markets appear to be taking notice of what we see as a sticky, high-margin, high-cash-generating business.”
14. Verisign, Inc. (NASDAQ:VRSN)
Number of Hedge Fund Holders: 37
Verisign, Inc. (NASDAQ:VRSN) is an information technology company. It provides domain name registry services and internet infrastructure that enables internet infrastructure for domain names globally.
Verisign, Inc. (NASDAQ:VRSN) saw its operating income margins increase significantly this year, standing at 10.8% year-over-year by this August. Revenue growth also stood at 6.8%. Finally, the company also delivered 63-65% of quarterly operating margins.
Berkshire Hathaway was the largest stakeholder in Verisign, Inc. (NASDAQ:VRSN) in the third quarter, holding 12.8 million shares worth $2.2 billion. In total, 37 funds were long the stock, with a total stake value of $4.3 billion.
Verisign, Inc. (NASDAQ:VRSN), like Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT), is an S&P 5oo stock many investors are buying into this year.
13. Monster Beverage Corporation (NASDAQ:MNST)
Number of Hedge Fund Holders: 39
Monster Beverage Corporation (NASDAQ:MNST) is a soft drink company. It operates through its Monster Energy Drinks, Strategic Brands, and Other segments.
John Staszak at Argus holds a Buy rating on Monster Beverage Corporation (NASDAQ:MNST) shares as of November 29.
For the fiscal year ended 2021, Monster Beverage Corporation (NASDAQ:MNST) showed net sales growth of 20.5% year-over-year to $5.54 billion. The same rose by 15.2% year-over-year to $1.62 billion in the third quarter of 2022. The company’s gross margins stood at 51.3%, an improvement compared to the 47.1% margins in the previous quarter.
There were 39 hedge funds long Monster Beverage Corporation (NASDAQ:MNST) in the third quarter. Their total stake value was $1.9 billion.
Carillon Tower Advisers, an investment management company, mentioned Monster Beverage Corporation (NASDAQ:MNST) in its second-quarter 2022 investor letter. Here’s what the firm said:
“Monster Beverage Corporation (NASDAQ:MNST) develops and sells energy drinks and concentrates. The company’s shares outperformed, driven by an impressive earnings report highlighted by better than expected organic growth. Management also gave guidance that indicated a potential bottom in gross margins, as well as upcoming price increases that helped give investors confidence in its growth outlook.”
12. Waters Corporation (NYSE:WAT)
Number of Hedge Fund Holders: 41
Waters Corporation (NYSE:WAT) is a healthcare company. It provides analytical workflow solutions in Asia, the Americas, and Europe.
A Neutral rating was reiterated on Waters Corporation (NYSE:WAT) shares on November 2 by analyst Catherine Ramsey Schulte at Baird.
Management at Waters Corporation (NYSE:WAT) raised their guidance for 2022, now seeing a growth of 11-12% at the top line in constant currency terms. Analyst consensus estimates have valued the stock at 27.9x forward GAAP earnings and 27.3x forward non-GAAP EPS. It is thus expected that the company will outperform the benchmark in the future.
Waters Corporation (NYSE:WAT) had 41 hedge funds long its stock in the third quarter. Their total stake value was $1.8 billion.
Palm Capital, an investment management firm, mentioned Waters Corporation (NYSE:WAT) in its second-quarter 2021 investor letter. Here’s what the firm said:
“We also don’t invest in pharmaceutical companies. While revenue and profits are protected by patents, their future revenue depends on how quickly their drugs are copied once they fall off patent and the success of their R&D. Both are unpredictable.
Instead, we prefer to invest in companies that sell testing equipment and related consumables to the industry. Waters, for example, is a share that we have watched for years and would like to invest in at the right price. The company’s instruments are critical to the production and development of drugs and are the gold standard in the industry. Furthermore, they are often included in the patent applications of customers. This trust and reputation take years to build, resulting in high profit margins. At the same time, it also means that even when a drug of their customer falls off patent, the manufacturers of the generic version are likely to continue using the same instruments as these were already approved in the original application. So, the company’s revenues and profits are less dependent on patent cliffs or the success of R&D than those of pharmaceutical companies.”
11. Synopsys, Inc. (NASDAQ:SNPS)
Number of Hedge Fund Holders: 42
Synopsys, Inc. (NASDAQ:SNPS) is an information technology company based in Mountain View, California. The company provides electronic design automation software products used to design and test integrated circuits.
An Overweight rating was reiterated on Synopsys, Inc. (NASDAQ:SNPS) on December 1 by Peter Sazel at Atlantic Equities.
In the third quarter, Synopsys, Inc. (NASDAQ:SNPS) delivered revenues of $1.24 billion, compared to $1.05 billion in the year-ago period. This shows a year-over-year increase of 18%. The company’s EPS also increased by 16% year-over-year. Its balance sheet shows cash and equivalents of $1.4 billion and total debt of $669.1 million as of this October.
Synopsys, Inc. (NASDAQ:SNPS) had 42 hedge funds long its stock in the third quarter, with a total stake value of $1.9 billion.
Carillon Tower Advisers, an investment management firm, mentioned Synopsys, Inc. (NASDAQ:SNPS) in its fourth-quarter 2021 investor letter. Here’s what the firm said:
“Synopsys is a semiconductor software company that supplies electronic design automation solutions to the global electronics market. The firm’s shares outperformed in the quarter after management outlined a longer-term vision at the company’s analyst day and suggested a higher level of growth going forward than it has achieved in the previous few years. Synopsys is becoming a key supplier of leading-edge semiconductor designs that are getting increasingly more difficult for chip companies to build on their own. On top of accelerating topline growth, the company also posts healthy profits and robust cash flow generation.”
10. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN)
Number of Hedge Fund Holders: 43
Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) is a biotech company. It develops and commercializes medicines to treat a range of diseases across the globe.
Brian Abrahams at RBC Capital holds a Sector Perform rating on Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) shares as of November 9.
In the third quarter, Regeneron Pharmaceuticals, Inc.’s (NASDAQ:REGN) Eylea medicine net sales grew by 11% year-over-year to $1.63 billion in the US. Another product, Dupixent, generated net sales that grew by 40% year-over-year to $2.33 billion. The company’s share of antibody profits also rose by 42% year-over-year to $551 million.
There were 43 hedge funds long Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) in the third quarter. Their total stake value was $1.3 billion.
Bronte Capital, an investment management company, mentioned Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) in its third-quarter 2022 investor letter. Here’s what the firm said:
“There have been some bright spots in our long book. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN), a major position and a stock we wrote up in our June 2021 letter, has been one of the best performing stocks in the S&P 500 this year. Alas it has not been enough to offset some of our weaker stocks, let alone our overweight exposure to the UK (and Europe) which have suffered from both stock and currency weakness. We do not think we are bad at picking stocks on the long side and hope – reasonably we think – for better relative results in the future. Prior to COVID, our longs were markedly better than the index. Unfortunately, if you look at our long book this quarter and since the onset of the COVID pandemic, there is scant evidence that we have added any value by picking stocks to go long.”
9. Biogen Inc. (NASDAQ:BIIB)
Number of Hedge Fund Holders: 70
Biogen Inc. (NASDAQ:BIIB) is a healthcare company. It develops and delivers therapies to treat neurological and neurodegenerative diseases.
Salim Syed at Mizuho holds a Buy rating on Biogen Inc. (NASDAQ:BIIB) shares as of November 30.
Analysts forecast that Biogen Inc.’s (NASDAQ:BIIB) Lecanemab drug will see total peak sales of $14 billion with the company sharing 50% of the profits. They also forecast a $17 EPS for the company in 2022.
Out of 920 hedge funds tracked in the third quarter, 70 funds were long Biogen Inc. (NASDAQ:BIIB), with a total stake value of $3.7 billion.
ClearBridge Investments, an investment management company, mentioned Biogen Inc. (NASDAQ:BIIB) in its third-quarter 2022 investor letter. Here’s what the firm said:
“Biogen Inc. (NASDAQ:BIIB) was the leading contributor among several biopharma names, boosted by positive, pivotal clinical data for its next-generation Alzheimer’s treatment Lecanemab. In a pivotal trial, the drug proved safe and efficacious in slowing progression of Alzheimer’s disease.”
8. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 88
Tesla, Inc. (NASDAQ:TSLA) is an electric vehicle manufacturing company, based in Austin, Texas. The company operates through its Automotive and Energy Generation and Storage segments.
Alexander Potter at Piper Sandler holds an Overweight rating on Tesla, Inc. (NASDAQ:TSLA) as of December 8. The analyst also placed a $340 price target on the stock.
Tesla, Inc. (NASDAQ:TSLA) is a stock expected to deliver strong growth across all its key financial metrics over the next five years. Consensus data from S&P Capital IQ estimates that the company’s top line will grow by a 30% CAGR from $53.8 billion in 2021 to $201.7 billion in 2026. The company’s normalized net income and free cash flow are also expected to rise by CAGRs of 29% and 45% to $26.8 billion and $32.5 billion, respectively.
There were 88 funds long Tesla, Inc. (NASDAQ:TSLA) in the third quarter, with a total stake value of $7.4 billion.
7. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 89
Advanced Micro Devices, Inc. (NASDAQ:AMD) is another information technology company on our list. The company operates through its Computing and Graphics and Enterprise, Embedded and Semi-Custom segments.
Chris Caso at Credit Suisse initiated coverage of Advanced Micro Devices, Inc. (NASDAQ:AMD) on November 15 with an Outperform rating.
In the third quarter, Advanced Micro Devices, Inc. (NASDAQ:AMD) reported revenues of $5.6 billion, representing an increase of 29% year-over-year. The company’s Data Center segment generated solid growth. Its revenue also increase by 45% year-over-year to $1.6 billion.
Advanced Micro Devices, Inc. (NASDAQ:AMD) had 89 hedge funds long its stock in the third quarter, with a total stake value of $4.9 billion.
6. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 115
Netflix, Inc. (NASDAQ:NFLX) is a communication services stock. It offers TV series, documentaries, feature films, and mobile games.
BofA’s Jessica Reif Ehrlich reinstated coverage of Netflix, Inc. (NASDAQ:NFLX) with a Buy rating on November 15.
Netflix, Inc. (NASDAQ:NFLX) is currently a global leader in the streaming service space. The company boasts over 223 million paid memberships in over 190 countries. As of this November, the company saw its streaming membership rise by over 5%.
We saw 115 hedge funds long Netflix, Inc. (NASDAQ:NFLX) in the third quarter with a total stake value of $6.7 billion.
Harding Loevner, an asset management company, mentioned Netflix, Inc. (NASDAQ:NFLX) in its third-quarter 2022 investor letter. Here’s what the firm said:
“Netflix, Inc. (NASDAQ:NFLX) mustered a modest recovery as the market Allocation Effect: 0.3 mulled the potential of its new lower-priced ad-supported subscription model to drive revenue growth and reduce its dependency on continued heavy investment in content to attract and retain viewers.”
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Disclosure: None. 15 Best S&P 500 Stocks That Don’t Pay Dividends is originally published on Insider Monkey.