5 Best S&P 500 Dividend Stocks To Buy

In this article, we discuss 5 best S&P 500 dividend stocks to buy. If you want to read our detailed analysis of dividend stocks and their performance in the past, go directly to read 12 Best S&P 500 Dividend Stocks To Buy. 

5. UnitedHealth Group Incorporated (NYSE:UNH)

Number of Hedge Fund Holders: 110

UnitedHealth Group Incorporated (NYSE:UNH) is a Minnesota-based managed healthcare company that also provides health insurance services to its consumers. On January 13, the company announced its Q4 earnings and posted revenue of $82.8 billion, which shows a 12.3% growth from the same period last year. Its operating cash flow for the full year came in at $26.2 billion and returned $13 billion to shareholders through dividends and share repurchases.

UnitedHealth Group Incorporated (NYSE:UNH), one of the best S&P 500 dividend stocks, currently pays a quarterly dividend of $1.65 per share for a dividend yield of 1.36%, as of January 24. The company has been paying regular dividends to shareholders since 1990.

In January, Loop Capital raised its price target on UnitedHealth Group Incorporated (NYSE:UNH) to $590 with a Buy rating on the shares, appreciating the company’s Q4 earnings and its outlook for 2023.

UnitedHealth Group Incorporated (NYSE:UNH) was one of the most popular stocks among hedge funds in Q3 2022, as 110 funds tracked by Insider Monkey had positions in the company, up from 91 in the previous quarter. These stakes are collectively valued at over $10.3 billion.

Stewart Asset Management mentioned UnitedHealth Group Incorporated (NYSE:UNH) in its Q3 2022 investor letter. Here is what the firm has to say:

“Looking at the Great Recession which began at year-end 2007 and lasted to mid-year 2009 is helpful too. Our four largest current holdings in the portfolio weathered that period well. UnitedHealth’s (NYSE:UNH) earnings were resilient. While it reported modestly down earnings in 2008, its earnings rebounded quickly to record highs in 2010 and the shares responded strongly in anticipation of this.”

4. Apple Inc. (NASDAQ:AAPL)

Number of Hedge Fund Holders: 140

Apple Inc. (NASDAQ:AAPL) is another best S&P 500 dividend stock on our list. The multinational tech firm currently pays a quarterly dividend of $0.23 per share and has a dividend yield of 0.65%, as of January 24. The company has been raising its dividends consistently for the past nine years.

In January, UBS maintained its Buy rating on Apple Inc. (NASDAQ:AAPL) with a $180 price target ahead of the company’s quarterly earnings.

In fiscal Q4 2022, Apple Inc. (NASDAQ:AAPL) reported revenue of $90.1 billion, which saw an 8.1% growth from the same period last year. The company’s cash position remained strong during the quarter with $23.6 billion available in cash and cash equivalents. Moreover, it returned $29 billion to shareholders in dividends and share repurchases.

Apple Inc. (NASDAQ:AAPL) was a part of 140 hedge fund portfolios in Q3 2022, growing from 128 in the previous quarter. The collective value of stakes owned by these hedge funds is over $144 billion. Among these funds, Berkshire Hathaway was the company’s leading stakeholder in Q3.

Wedgewood Partners mentioned Apple Inc. (NASDAQ:AAPL) in its Q4 2022 investor letter. Here is what the firm has to say:

“Apple grew quarterly revenues +14% (foreign exchange adjusted) driven by +16% growth in iPhone revenues (also foreign exchange adjusted). iPhone revenue growth was particularly impressive because The Company is compounding on +47 growth from a year ago. Apple’s installed base is over 1.8 billion devices which helps drive a software and services business, which in turn has generated almost $80 billion of revenue over the past four quarters and is up +60% compared to calendar 2019 (pre-Pandemic). As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially integrated circuits) and software, continues to add significant value for customers of their products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.”

3. Mastercard Incorporated (NYSE:MA)

Number of Hedge Fund Holders: 146

Mastercard Incorporated (NYSE:MA) is one of the world’s largest payment processing companies, based in New York, US. It also provides related financial services to its consumers. In January, Truist raised its price target on the stock to $450 with a Buy rating on the shares, as the firm covered the main FinTech names. The firm mentioned that MA is most likely to maintain its momentum due to its outperformance last year.

On December 6, Mastercard Incorporated (NYSE:MA) declared a 16.3% growth in its quarterly dividend to $0.57 per share. With this increase, the company extended its dividend growth streak to 10 years. The stock has a dividend yield of 0.60%, as of January 23.

One of the best S&P 500 dividend stocks to buy, Mastercard Incorporated (NYSE:MA) reported a strong cash generation in Q3 2022. The company had $7.6 billion in cash and cash equivalents, up from $7.4 billion at the end of December 2021. Moreover, it also paid $474 million to shareholders in dividends during the quarter.

Mastercard Incorporated (NYSE:MA) saw significant growth in hedge fund positions in Q3 2022, as 146 funds tracked by Insider Monkey had stakes in the company, up from 137 in the previous quarter. These stakes have a total value of over $13.8 billion.

Ensemble Capital Management mentioned MA in its 2022 annual investor letter. Here is what the firm has to say:

“Mastercard Incorporated (NYSE:MA) (8.43%* weight in fund): Mastercard declined just 1.61% during the Fund’s fiscal year, adding 1.30% to relative performance. After worries last year about Buy Now, Pay Later lenders being disruptive to Mastercard’s payment network provided to be misguided, Mastercard avoided much of the decline in the broader stock market this year. In addition, with inflation worries being the main driver of the market selloff, the company’s inflation resistant business model calmed worried investors.”

2. Visa Inc. (NYSE:V)

Number of Hedge Fund Holders: 165

Visa Inc. (NYSE:V) is an American multinational financial services and credit card company, based in California. In fiscal Q4 2022, the company reported revenue of $7.8 billion, which showed a 19% growth from the same period last year. During the quarter, it returned nearly $3 billion to shareholders in dividends. The company is among the best S&P 500 dividend stocks on our list.

Visa Inc. (NYSE:V) has been raising its dividends consistently for the past 16 years. It currently offers a per-share dividend of $0.45 every quarter and has a dividend yield of 0.80%, as recorded on January 24.

Due to its strong performance last year and positive outlook for FY23, Visa Inc. (NYSE:V) gained positive analyst ratings this month. Both Truist and Baird raised their price targets on the stock in January to $260 and $270, respectively.

At the end of Q3 2022, 165 hedge funds in Insider Monkey’s database owned stakes in Visa Inc. (NYSE:V), compared with 166 in the previous quarter. These stakes are worth over $22.4 billion collectively. TCI Fund Management was the company’s leading stakeholder in Q3.

Wedgewood Partners mentioned Visa Inc. (NYSE:V) in its Q4 2022 investor letter. Here is what the firm has to say:

“Visa rebounded as the Company continued to report strong growth, while concerns about potential adverse legislation related to its credit card routing practices receded as U.S. legislators failed to take action. Although Visa is not totally free from legislative risk, the Company’s value proposition to merchants as well as bank issuing customers and acquirers is robust enough to help blunt the potential effects any future legislation might portend. Over a multi-year time horizon, it would be difficult for any currently nonexistent or even subscale credit routing network to add the value that Visa (or MasterCard) can already add today, legislative fiat notwithstanding. “

1. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 269

Microsoft Corporation (NASDAQ:MSFT) was the most popular stock among hedge funds in Q3 2022, as 269 funds in Insider Monkey’s database owned stakes in the company, compared with 258 in the previous quarter. The consolidated value of these stakes is over $61 billion. This strong hedge fund inclination makes it one of the best S&P 500 dividend stocks to buy.

Microsoft Corporation (NASDAQ:MSFT) offers a quarterly dividend of $0.68 per share for a dividend yield of 1.12%, as of January 24. It is one of the few tech companies that maintain a long dividend growth streak of 16 years.

BMO Capital maintained an Outperform rating on Microsoft Corporation (NASDAQ:MSFT) in January with a $267 price target. The firm noted that the company’s upside opportunities are ‘modestly’ higher than downside risk.

Fundsmith mentioned Microsoft Corporation (NASDAQ:MSFT) in its yearly 2022 investor letter. Here is what the firm has to say:

“Take the example of Microsoft Corporation (NASDAQ:MSFT) and Intuit. Microsoft shares are currently being valued at a P/E ratio of 25.0 times the consensus EPS estimate for the fiscal year ending June 2023. Meanwhile, Intuit is being valued at 28.4 times the non-GAAP consensus estimate for the fiscal year ending July 2023. Many investors and analysts may accept that Intuit is trading at a higher multiple given expectations of greater growth potential. However, Intuit removes share-based compensation from their non-GAAP EPS whereas Microsoft does not. Given that Intuit’s GAAP EPS guidance for the year ending 31st July 2023 is $6.92–$7.22, its non-GAAP guidance is $13.59–$13.89, and the consensus estimate for 2023 EPS is at $13.69, it seems clear that most sell-side analysts are accepting the company’s non-GAAP adjustments, which includes the removal of some $1.8bn of share-based compensation, in their estimates. If we include the impact of share-based compensation in Intuit’s 2023 EPS to make a more apples-to-apples comparison with Microsoft based upon GAAP EPS, Intuit’s 2023 EPS would be closer to $9, meaning that the shares would be trading at a multiple of about 43 times. I think investors and analysts may find a premium of 14% for Intuit over Microsoft (28.4 times versus 25.0 times) to be reasonable. I’m not so sure they are fully aware that Intuit shares are actually trading at a premium of 73% if share-based compensation is treated in the same manner between the two companies.”

You can also take a look at 11 Best Dividend Stocks For Rising Interest Rates and Dividend Aristocrats Ranked: Top 15 According To Hedge Funds

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