In this article, we will look at the 5 best defensive stocks to buy according to Ray Dalio. If you want to explore similar stocks, you can also read 10 Best Defensive Stocks to Buy According to Ray Dalio.
5. Costco Wholesale Corporation (NASDAQ:COST)
Bridgewater Associates’ Stake Value: $580,455,000
Percentage of Bridgewater Associates’ 13F Portfolio: 2.45%
Number of Hedge Fund Holders: 64
On August 31, Costco Wholesale Corporation (NASDAQ:COST) reported that its sales for August grew 11.4% year over year and amounted to $17.55 billion. As of September 21, the stock has soared 11.75% over the past twelve months and the company has trailing twelve-month free cash flows of $4.1 billion.
Wall Street analysts are bullish on Costco Wholesale Corporation (NASDAQ:COST) ahead of the company’s earnings release as they expect it to post a strong quarter. On September 12, UBS analyst Michael Lasser maintained his $595 price target and Buy rating on Costco Wholesale Corporation (NASDAQ:COST), noting that the company is expected to deliver strong earnings. On September 21, Deutsche Bank analyst Krisztina Katai raised her price target on Costco Wholesale Corporation (NASDAQ:COST) to $581 from $579 and reiterated a Buy rating on the shares.
At the end of Q2 2022, 64 hedge funds disclosed ownership of stakes in Costco Wholesale Corporation (NASDAQ:COST). The total value of these stakes amounted to $4.76 billion. Of those, $580 million were of Bridgewater Associates. The investment covers 2.45% of Ray Dalio’s 13F portfolio.
4. PepsiCo, Inc. (NYSE:PEP)
Bridgewater Associates’ Stake Value: $634,801,000
Percentage of Bridgewater Associates’ 13F Portfolio: 2.69%
Number of Hedge Fund Holders: 65
PepsiCo, Inc. (NYSE:PEP) has a 49-year track record of growing its dividends. On July 21, the company announced that its board of directors has increased its annualized cash dividend to $4.60 per share, up from $4.30 per share. The dividend is payable on September 30 to investors of record on September 2. As of September 21, PepsiCo, Inc. (NYSE:PEP) has gained 11.2% over the past twelve months and is offering a forward dividend yield of 2.72%, which the company backs with free cash flows of $6.3 billion.
On July 6, JPMorgan analyst Andrea Teixeira revised her price target on PepsiCo, Inc. (NYSE:PEP) to $185 from $186 and reiterated a buy-side Overweight rating on the shares. On July 7, Deutsche Bank analyst Steve Powers raised his price target on PepsiCo, Inc. (NYSE:PEP) to $178 from $175 and maintained a Hold rating on the shares.
Insider Monkey found 65 hedge funds long PepsiCo, Inc. (NYSE:PEP) at the end of Q2 2022. These funds held collective stakes of $5.28 billion in the company, up from $4.86 billion a quarter ago with 62 positions. The hedge fund sentiment for the stock is positive.
As of June 30, Bridgewater Associates owns more than 3.8 million shares of PepsiCo, Inc. (NYSE:PEP) which amounts to a stake of $634.8 million. The investment covers 2.69% of Ray Dalio’s 13F portfolio.
Here is what ClearBridge Investments had to say about PepsiCo, Inc. (NYSE:PEP) in its second-quarter 2022 investor letter:
“Also in the stable and predictable cash flow camp, though with a very different business model, global food and beverage company PepsiCo (NYSE:PEP) reported very strong organic growth in the first quarter, driven by healthy price/mix, and raised revenue guidance, while holding EPS guidance. Notably, its beverage business showed expanding margins.”
3. The Coca-Cola Company (NYSE:KO)
Bridgewater Associates’ Stake Value: $680,734,000
Percentage of Bridgewater Associates’ 13F Portfolio: 2.88%
Number of Hedge Fund Holders: 60
On July 26, The Coca-Cola Company (NYSE:KO) announced earnings for the second quarter of fiscal 2022. The company reported sales of $11.3 billion, up 11.6% year over year, and outperformed Wall Street estimates by $737 million. The company reported earnings per share of $0.70 and beat expectations by $0.03. Shares of The Coca-Cola Company (NYSE:KO) have appreciated by 12% over the past 12 months, as of September 21.
Wall Street analysts are bullish on The Coca-Cola Company (NYSE:KO). On July 27, Deutsche Bank analyst Steve Powers maintained a Hold rating on the stock and raised his price target to $65 from $64. On September 6, HSBC analyst Carlos Laboy raised his price target on The Coca-Cola Company (NYSE:KO) to $76 from $72 and maintained a Buy rating on the shares.
At the end of the second quarter of 2022, 60 hedge funds were eager on The Coca-Cola Company (NYSE:KO) and held stakes worth $28.3 billion in the company. As of June 30, Bridgewater Associates’ stake in The Coca-Cola Company (NYSE:KO) is valued at $680.7 million. The investment covers 2.88% of Ray Dalio’s 13F portfolio.
2. Johnson & Johnson (NYSE:JNJ)
Bridgewater Associates’ Stake Value: $769,086,000
Percentage of Bridgewater Associates’ 13F Portfolio: 3.25%
Number of Hedge Fund Holders: 83
Insider Monkey spotted Johnson & Johnson (NYSE:JNJ) on 83 hedge fund portfolios. The total stakes of these hedge funds amounted to $6.76 billion. Of those, $769 million were of Bridgewater Associates. The investment covers 3.25% of Ray Dalio’s 13F portfolio.
Johnson & Johnson (NYSE:JNJ) is a dividend king. The company has been growing its dividends for roughly 60 years. As of September 21, the stock is offering a forward dividend yield of 2.74% which the company supports with free cash flows of $19.95 billion. On September 14, Johnson & Johnson (NYSE:JNJ) announced a share repurchase program of up to $5 billion.
On July 20, SVB Securities analyst David Risinger revised his price target on Johnson & Johnson (NYSE:JNJ) to $194 from $200 and reiterated a buy-side Outperform rating on the shares. On July 21, UBS analyst Kevin Caliendo adjusted his price target on the stock to $180 from $185 and maintained a Neutral rating on the shares.
Here is what Mayar Capital had to say about Johnson & Johnson (NYSE:JNJ) in its second-quarter 2022 investor letter:
“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. The Procter & Gamble Company (NYSE:PG)
Bridgewater Associates’ Stake Value: $970,175,000
Percentage of Bridgewater Associates’ 13F Portfolio: 4.11%
Number of Hedge Fund Holders: 71
On July 29, The Procter & Gamble Company (NYSE:PG) announced earnings for the fourth quarter of fiscal 2022. The reported earnings per share of $1.21 and generated a revenue of $19.5 billion, up 3% year over year, and ahead of Wall Street expectations by $104 million.
Wall Street is bullish on The Procter & Gamble Company (NYSE:PG). This July, Wells Fargo analyst Chris Carey adjusted his price target on The Procter & Gamble Company (NYSE:PG) to $160 from $170 and maintained a buy-side Overweight rating on the shares. On August 2, Barclays analyst Lauren Lieberman revised her price target on The Procter & Gamble Company (NYSE:PG) to $154 from $157 and reiterated an Overweight rating on the shares.
As of September 21, The Procter & Gamble Company (NYSE:PG) is offering a forward dividend yield of 2.65% and has free cash flows of $13.56 billion. The company has been consistent with growing its dividends for the past 65 years and has a 5-year dividend CAGR of 5.58%.
At the close of Q2 2022, 71 hedge funds held stakes in The Procter & Gamble Company (NYSE:PG). The total value of these stakes amounted to $5.53 billion. As of June 30, Bridgewater Associates owns more than 6.7 million shares of The Procter & Gamble Company (NYSE:PG), which amounts to a stake of $970 million.
You can also take a look at 10 Best Dividend Stocks to Buy According to Billionaire Ray Dalio and 10 Best Defensive Stocks to Buy Today According to Billionaire Ken Fisher.
