In this article we discuss the 5 best dividend stocks to buy according to Stan Druckenmiller. If you want to read our detailed analysis of Druckenmillers’ history and hedge fund performance, go directly to 10 Best Dividend Stocks to Buy According to Billionaire Stan Druckenmiller.
5. Analog Devices Inc. (NASDAQ: ADI)
Number of Hedge Fund Holders: 58
Dividend Yield: 1.72%
Analog Devices Inc. (NASDAQ:ADI) specializes in designing, manufacturing, and distributing Analog, mixed-signal, and digital signal processing integrated circuits (ICs). These circuits are used in all types of electronic equipment. The equipment is used to translate real-world phenomena like sound, temperature, speed, light, and motion into electrical signals.
Analog Device’s products are used in several electronic equipment like medical imaging equipment, including industrial process controls, portable electronic devices, factory automation systems, cellular base stations, instrumentation, wireless communications equipment, energy management systems, digital televisions, automobiles, and digital cameras.
Analog Devices partnered with Woods Hole Oceanographic Institution (WHOI) to launch the Ocean and Climate Innovation Accelerator (OCIA) consortium. Analog is committing $3 million towards the consortium that the money will advance knowledge of the ocean’s critical role in combatting climate change.
50 hedge funds held the Analog Devices’ stock at the end of Q4 2020 compared to 60 in Q3 2020.
The company’s board recently declared a quarterly dividend of $0.69 per share up from the $0.62 declared around the same time last year. This represents a 11% increase, which is 18th increase of the company. The company has paid 69 quarterly dividends consecutively. These 69 quarterly dividend totals to $7 billion.
Analog Devices Inc. (NASDAQ:ADI) has plans to acquire Maxim Integrated, and Chinese authorities are working with third parties to collect inputs on the proposed deal. No issues have been reported against the planned purchase, and China’s State Administration for Market Regulation (SAMR) has since received and accepted the deal’s filings. The purchase was approved by Korean Fair Trade Commission and South Korea’s antitrust authority. The deal is likely to be finalized in the coming weeks.
Here is what Weitz Investment Management has to say about Analog Devices, Inc. in their Q4 2020 investor letter:
“Analog Devices benefited from several global, long-wave trends such as automation, electric vehicles and the 5G network build-out. The company’s quarterly sales into the auto, industrial and communications sectors exceeded expectations, giving the stock a lift.”
Analog is certainly one of the top dividend stock picks of the billionaire considering its strategic position to leverage growth from emerging areas such as autonomous driving, the EV industry and 5G technology.
4. Cummins Inc. (NYSE: CMI)
Number of Hedge Fund Holders: 45
Dividend Yield: 2.08%
Cummins Inc. (NYSE:CMI) specializes in the design, production, and distribution of electric power generation systems, diesel and natural gas engines, and other engine-related products like air handling systems, controls, fuel systems, and emissions solutions. The company received annual certification from the California Air Resources Board for the 2021 Allison Hybrid 40/50 Electric Propulsion system paired with the Cummins B6.7 and L9 diesel-electric hybrid engines
The company recently appointed Sherry Aaholm the Chief Digital Officer after previously serving as the company’s Chief Information Officer. The newly appointed Earl Newsome will now fill this position.
Recently Cummins Inc. (NYSE:CMI) launched the latest B6.7 Performance Series engine that delivers near-zero emission levels of NOx and PM. The engine also has the in-built stop-start capability that helps operators reduce running costs and reduce the impact on the environment. The engine is expected to attract the market especially with the current stringent global warming measures calling for cleaner energies, thus giving it an edge over the market. This alone could be a key growth factor, thus securing the company’s spot in the list of the top dividend stock picks.
Recently, Jefferies upgraded Cummins’ stock to “Buy” from “Hold” raising the price target to $325 from $250. Jefferies EPS estimates for 2021 and 2022 are 6% and 4% ahead of consensus and expects 5 to 10% YoY improvement in China for 2021. Cummins also entered into partnership with Daimler for medium duty engine systems.
3. NextEra Energy, Inc. (NYSE: NEE)
Number of Hedge Fund Holders: 61
Dividend Yield: 1.98%
NextEra Energy, Inc. (NYSE:NEE) is a clean energy company with its headquarters in Juno Beach, Florida. The company owns and operates Florida Power & Light Company, the largest rate-regulated electric utility in the US with over 5.6 million accounts and 11 million residents in Florida. NextEra Energy also owns NextEra Energy Resources, LLC, a competitive clean energy business, the largest producer of wind and solar energy globally. NextEra and privately-held OPAL Fuels plans to extract methane from a Minnesota landfill.
Recently the company appointed Lynn M. Utter to its Board of directors before the Board declared a $0.385 per share for the first quarter of 2021. This is a 10% increase compared to what was declared during the same period last year. The increase is in line with the Board’s strategic plan to increase dividends by 10% every year up to 2022.
For the fourth quarter of 2020, NextEra Energy, Inc. (NYSE:NEE) reported $5 million, compared to 975 million, or $0.50 per share in net income reported in the fourth quarter of 2019. The company reported $2.919 billion, or $1.48 per share in net income for the whole year 2020, a drop from the $3.769 billion, or $1.94 per share reported in 2019.
2. Freeport-McMoRan Inc. (NYSE: FCX)
Number of Hedge Fund Holders: 61
Dividend Yield: 0.77%
Freeport-McMoRan Inc. (NYSE:FCX) is a global mining company headquartered in Phoenix, Arizona. The company has a large, long-lived, geographically diverse asset portfolio, including significant gold, copper, and molybdenum reserves. Among the company’s asset portfolio includes the Grasberg minerals district in Indonesia, one of the world’s largest gold and copper deposits. FCX also has operations in North America and South America, including the Cerro Verde operation in Peru and the large-scale Morenci minerals district in Arizona.
In the first quarter of 2021, Freeport-McMoRan Inc. (NYSE:FCX) reported $718 million, or $0.48 per share in net income. After adjusting for net charges totaling $38 million, $0.03 per share, the adjusted net income totaled $756 million, or $0.51 per share. FCX sold 258 thousand ounces of gold, 825 million pounds of copper, and 21 million pounds of molybdenum during the quarter. Surge in copper prices with boost its earnings too.
The company projects to sell 1.3 million ounces of gold, 3.85 billion pounds of copper, and 85 million pounds of molybdenum by the end of the year. Out of this, FCX projects to sell 330 thousand ounces of gold, 975 million pounds of copper, and 21 million pounds of molybdenum in the second quarter of 2021. The company announced a dividend of $0.075 per share recently. Healthy demand for the metals in McMoRan’s portfolio is a good reason for this company to be in the list of the top dividend stock picks.
1. Microsoft Corporation (NASDAQ: MSFT)
Number of Hedge Fund Holders: 258
Dividend Yield: 0.86%
Microsoft Corporation (NASDAQ: MSFT) has its headquarters in Redmond, Washington, and mainly specializes in the development, manufacture, support, license, and sale of personal computers, computer software, and consumer electronics, among other products. Microsoft, cuts its online store fees for game developers to 12% from 30%.
Microsoft and Talkdesk Inc recently expanded their partnership to allow contact centers to deliver seamless, highly personalized customer experiences and increase productivity through efficiency and streamlined workflows. Talkdesk is a leading provider of cloud contact center services for innovative businesses.
Citi recently said that Microsoft Corporation (NASDAQ: MSFT)’s quarterly earnings were broadly above the Street’s forecasts but fell short of elevated expectations mainly due to weakness in Azure and personal computing segments. However, the firm believes the company would see better comp sales for Azure in the fiscal fourth quarter.
BMO also maintained an Outperform rating for Microsoft Corporation (MSFT) and increased its price target for the stock from $280 to $290.
Our calculations show that Microsoft Corporation (NASDAQ: MSFT) ranks 2nd in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Microsoft Corporation was in 258 hedge fund portfolios, compared to 234 funds in the third quarter.
Alger Spectra Fund, in their Q1 2021 investor letter, mentioned Microsoft Corporation (NASDAQ: MSFT). Here is what Alger Spectra Fund has to say about Microsoft Corporation in their Q1 2021 investor letter:
“Microsoft Corporation was among the top contributors to performance during the quarter. Microsoft is a Positive Dynamic Change beneficiary of corporate America’s transformative digitization. Microsoft’s enterprise cloud product, Azure, is rapidly growing and accruing market share. Recently, Microsoft reported that Azure grew 50% during the fourth quarter. This high unit volume growth is a primary driver of the company’s higher share price, but Microsoft’s operating execution has enabled notable margin expansion that has also helped to increase forward earnings estimates. Microsoft’s subscription-based software offerings and cloud computing services have not been entirely immune to the pandemic-related economic slowdown but are resilient because they enhance customers’ growth initiatives and help them to reduce costs. Additionally, investors appreciate Microsoft’s strong free cash flow generation and its return of cash to shareholders in the form of dividends and share repurchases.”