10 Best Widow and Orphan Stocks To Buy

In this article, we discuss 10 best window and orphan stocks to buy.

A widow and orphan stock refers to an equity investment that pays a steady dividend and is generally considered to be low-risk, defensive, and non-volatile. These are usually large-cap, stable, and old-economy companies in non-cyclical business sectors. Dividends provide investors with a margin of safety despite the challenging environment for the capital markets, and dividend equities have outperformed non-dividend equities and bonds year-to-date.

Investing in dividends, primarily those firms that increase their payouts on a year-over-year basis, can make massive contributions to long-term portfolio returns in an otherwise volatile market. Looking for the highest-yielding dividend stock is usually associated with higher risk. Investors should focus on picking up stocks which have a consistent track record of growing their dividends year after year. Nick Lentini of the Morgan Stanley Equity Strategy team said on November 9: 

“The investing backdrop of the past year, driven by macroeconomic conditions and combined with the rising risk of recession, have fueled outperformance for many dividend-paying stocks.”

Sectors which are positioned to grow their dividends consistently include Energy, Packaged Food, Beverages and Household Products, Utilities, and Banks. Some of the best widow and orphan stocks to buy include Walmart Inc. (NYSE:WMT), The Procter & Gamble Company (NYSE:PG), and Exxon Mobil Corporation (NYSE:XOM). 

Our Methodology 

We selected the following widow and orphan stocks based on positive analyst coverage, strong business fundamentals, and growing dividends over the last 30 years or more. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. The list is arranged according to the number of hedge fund holders in each firm. 

Photo by Jp Valery on Unsplash

Best Widow and Orphan Stocks To Buy

10. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)

Number of Hedge Fund Holders: 39

Dividend Yield as of December 21: 4.98%

Walgreens Boots Alliance, Inc. (NASDAQ:WBA) was founded in 1901 and is based in Deerfield, Illinois. The company operates as an integrated healthcare, pharmacy, and retailer in the United States, the United Kingdom, Germany, and internationally. Walgreens Boots Alliance, Inc. (NASDAQ:WBA) has three segments – U.S. Retail Pharmacy, International, and U.S. Healthcare. The company paid a $0.48 per share quarterly dividend to shareholders on December 12 and has 46 years of consecutive annual dividend increases under its belt. 

On December 14, Mizuho analyst Ann Hynes raised the price target on Walgreens Boots Alliance, Inc. (NASDAQ:WBA) to $41 from $36 and kept a Neutral rating on the shares. The analyst believes managed care and drug distributors’ earnings visibility remains attractive, but she thinks hospitals have the most improved outlook. 

According to Insider Monkey’s data, 39 hedge funds were bullish on Walgreens Boots Alliance, Inc. (NASDAQ:WBA) at the end of September 2022, compared to 40 funds in the prior quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the biggest stakeholder of the company, with approximately 6 million shares worth $186.5 million. 

In addition to Walmart Inc. (NYSE:WMT), The Procter & Gamble Company (NYSE:PG), and Exxon Mobil Corporation (NYSE:XOM), Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is one of the best widow and orphan stocks to consider for a safe portfolio. 

Here is what Aristotle Capital Management Global Equity has to say about Walgreens Boots Alliance, Inc. (NASDAQ:WBA) in its Q1 2022 investor letter:

“We first invested in Walgreens Boots Alliance in early 2013. Over our holding period, Walgreens merged with U.K.-based Boots Alliance, establishing itself as a global leading retail pharmacy chain. CEO Stefano Pessina set the company on a path of pursuing strategic partnerships (as opposed to vertical integration deals) to increase store traffic and to, over time, transform the business into a neighborhood health destination around a more modern pharmacy. Using its strong FREE cash flow generation, the company ramped up its investments in technology, aiming to accelerate the digitalization of health information. Mr. Pessina was not successful, however, at turning around the firm’s U.S. retail segment and had to deal with increasing prescription drug reimbursement pressures. He stepped down as CEO in 2020, and in 2021, Roz Brewer took the reins of the firm. We admire Ms. Brewer’s impressive track record at companies that include Starbucks (NASDAQ:SBUX) and Walmart (Sam’s Club). However, given management’s decision to divest core cash-generative businesses and redeploy capital to embryonic healthcare startups, we prefer to step aside while we follow the company’s progress.”

9. Sysco Corporation (NYSE:SYY)

Number of Hedge Fund Holders: 40

Dividend Yield as of December 21: 2.52%

Sysco Corporation (NYSE:SYY) is a Texas-based company that engages in the marketing and distribution of various food products to the foodservice or food-away-from-home industries in the United States, Canada, the United Kingdom, France, and internationally. Sysco Corporation (NYSE:SYY) operates through the U.S. Foodservice Operations, International Foodservice Operations, SYGMA, and Other segments. It is one of the best widow and orphan stocks to buy. 

On November 17, Sysco Corporation (NYSE:SYY) declared a quarterly dividend of $0.49 per share, in line with previous. The dividend is payable on January 27, 2023 to shareholders of record on January 6. Sysco Corporation (NYSE:SYY)’s dividend yield on December 21 came in at 2.52%. The company has a history of consecutively increasing annual dividends for the last 53 years, making it a reliable dividend king. 

Argus analyst John Staszak on November 2 raised the price target on Sysco Corporation (NYSE:SYY) to $96 from $92 and kept a Buy rating on the shares. Despite the Q1 earnings miss, the analyst is positive on the company’s efforts to offset lower food sales to restaurants and hotels by controlling costs and focusing on sales to grocery stores. The company also has sufficient liquidity and access to credit to survive the current downturn, noted the analyst. 

According to Insider Monkey’s Q3 data, 40 hedge funds were long Sysco Corporation (NYSE:SYY), compared to 32 funds in the prior quarter. Nelson Peltz’s Trian Partners held the largest stake in the company, with 7.2 million shares worth $507.5 million. 

8. Emerson Electric Co. (NYSE:EMR)

Number of Hedge Fund Holders: 48

Dividend Yield as of December 21: 2.15%

Emerson Electric Co. (NYSE:EMR) is a technology and engineering company that provides industrial, commercial, and consumer solutions in the Americas, Asia, the Middle East, Africa, and Europe. The company operates through Automation Solutions, AspenTech, and Commercial & Residential Solutions segments. Emerson Electric Co. (NYSE:EMR) has achieved dividend king status given the company’s history of increasing its dividends consistently for the last 65 years. 

On November 2, Emerson Electric Co. (NYSE:EMR) declared a $0.52 per share quarterly dividend, a 1% increase from its prior dividend of $0.515. The dividend was distributed on December 9. Emerson Electric Co. (NYSE:EMR)’s dividend yield on December 21 came in at 2.15%. 

Citi analyst Andrew Kaplowitz on December 9 raised the price target on Emerson Electric Co. (NYSE:EMR) to $109 from $99 and kept a Buy rating on the shares. The analyst said that megatrends and “still emerging fiscal tailwinds” should help moderate potential downside for industrials in a weak macroeconomic environment. 

According to Insider Monkey’s data, 48 hedge funds were bullish on Emerson Electric Co. (NYSE:EMR) at the end of Q3 2022, compared to 47 funds in the prior quarter. D E Shaw is the biggest position holder in the company, with approximately 2 million shares worth $145 million. 

7. Colgate-Palmolive Company (NYSE:CL)

Number of Hedge Fund Holders: 57

Dividend Yield as of December 21: 2.39%

Colgate-Palmolive Company (NYSE:CL) is an American multinational manufacturer of consumer products, operating through two segments – Oral, Personal and Home Care, and Pet Nutrition. The company markets and sells its products under the Colgate, Darlie, Palmolive, Protex, Sanex, Softsoap, Speed Stick, EltaMD, Filorga, PCA SKIN, Ajax, Axion, Fabuloso, and Murphy brands, among others. Colgate-Palmolive Company (NYSE:CL) has paid uninterrupted dividends since 1895 and has increased payments to common shareholders annually for 60 years. It is one of the premier widow and orphan stocks to invest in. 

On December 6, Deutsche Bank analyst Steve Powers raised the firm’s price target on Colgate-Palmolive Company (NYSE:CL) to $87 from $85 and maintained a Buy rating on the shares.

According to Insider Monkey’s data, Colgate-Palmolive Company (NYSE:CL) was part of 57 hedge fund portfolios at the end of September 2022, compared to 55 in the prior quarter. The collective stakes in Q3 2022 increased to $4.13 billion from $2.93 billion in Q2. Dan Loeb’s Third Point is the leading position holder in the company, with 11.55 million shares worth $811.3 million. 

Here is what Third Point specifically said about Colgate-Palmolive Company (NYSE:CL) in its Q3 2022 investor letter:

“Third Point recently acquired a significant position in Colgate-Palmolive Company (NYSE:CL). The investment fits several important criteria in the current investment environment. First, the business is defensive and has significant pricing power in inflationary conditions. Second, there is meaningful hidden value in the company’s Hill’s Pet Nutrition business, which we believe would command a premium multiple if separated from Colgate’s consumer assets. Third, there is a favorable industry backdrop in consumer health, with new entrants via spin-offs and potential for consolidation. Finally, the current valuation is attractive both because earnings growth is poised to inflect higher, and because shareholders are paying very little for the optionality around Hill’s or Colgate’s ability to participate in further consolidation in the consumer health sector.

Colgate has a strong portfolio of brands and operates across four categories that should perform well across most economic conditions: oral care, home care, personal care, and pet nutrition. Although Colgate has delivered organic sales growth of 5-6% over the past few years, earnings growth has been disappointing, and the stock has become a perennial underperformer. Foreign exchange headwinds have pressured reported results. Business reinvestment, supply chain disruption, and inflationary pressures have weighed heavily on margins; those headwinds are now reversing. Stepped up investments in demand generation, product innovation, and digital capabilities are starting to pay off. Global supply chain bottlenecks are easing and product availability on the shelf is improving. And, most importantly, raw material, transportation, and wage pressures are stabilizing, and even reversing in some areas, at the same time additional pricing takes effect. Taken together, the stage is set for Colgate to deliver several years of outsized earnings growth, as sales continue to increase, foreign exchange movements are annualized, and margins finally recover…” (Click here to view the full text)

6. Abbott Laboratories (NYSE:ABT)

Number of Hedge Fund Holders: 62

Dividend Yield as of December 21: 1.89%

Abbott Laboratories (NYSE:ABT) is an Illinois-based company that discovers, develops, and manufactures healthcare products worldwide. It operates in four segments – Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices. On December 9, Abbott Laboratories (NYSE:ABT) declared a $0.51 per share quarterly dividend, an 8.5% increase from its prior dividend of $0.47. The dividend is payable on February 15, 2023 to shareholders of record on January 13. 2022 marks the company’s 51st consecutive year of dividend growth.

On December 12, Citi analyst Joanne Wuensch raised the price target on Abbott Laboratories (NYSE:ABT) to $125 from $114 and kept a Buy rating on the shares. Looking into 2023, “many headwinds remain” for the North America medical supplies and technology group, but these should ease in the second half of next year, alleviating operating margin pressures, the analyst wrote in a research note

According to Insider Monkey’s third quarter database, 62 hedge funds were long Abbott Laboratories (NYSE:ABT), compared to 61 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 9.12 million shares worth $883.2 million. 

Like Walmart Inc. (NYSE:WMT), The Procter & Gamble Company (NYSE:PG), and Exxon Mobil Corporation (NYSE:XOM), Abbott Laboratories (NYSE:ABT) is a premier widow and orphan stock to buy. 

Here is what Stewart Asset Management has to say about Abbott Laboratories (NYSE:ABT) in its Q3 2022 investor letter:

“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. Abbott (NYSE:ABT), among others, is a good example.”

5. Walmart Inc. (NYSE:WMT)

Number of Hedge Fund Holders: 68

Dividend Yield as of December 21: 1.54%

Walmart Inc. (NYSE:WMT) is an American retailer that operates supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, discount stores, membership-only warehouse clubs, and ecommerce websites. Walmart Inc. (NYSE:WMT) is set to pay a $0.56 per share quarterly dividend on January 3, 2023 to shareholders of record on December 9. Walmart Inc. (NYSE:WMT) is on its way to becoming a dividend king, with 49 consecutive years of dividend increases under its belt. 

On December 19, Credit Suisse analyst Karen Short initiated coverage of Walmart Inc. (NYSE:WMT) with an Outperform rating and a price target of $170, up from $160. Walmart Inc. (NYSE:WMT) has been gaining “meaningful” market share since early 2021 and she views it as “a well-positioned defensive name in an uncertain macro backdrop.” 

According to Insider Monkey’s data, 68 hedge funds were long Walmart Inc. (NYSE:WMT) at the end of September 2022, compared to 67 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 8.12 million shares worth $1.05 billion. 

In its Q2 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Walmart Inc. (NYSE:WMT) was one of them. Here is what the fund said:

“The pandemic has created challenges for businesses large and small; one major challenge for large essential retailers such as ClearBridge holdings Home Depot, Walmart Inc. (NYSE:WMT) and Costco have been ensuring adequate staffing to meet demand under trying conditions. All three instituted enhanced pay practices during the pandemic, with raises, unplanned bonuses and other benefits helping compensate employees for their efforts in a difficult environment. In September 2020 Walmart raised wages for 165,000 employees, including a number of entry positions to $15 an hour. It followed this in February with a raise for 425,000 workers that moved its average pay above $15 an hour.”

4. The Procter & Gamble Company (NYSE:PG)

Number of Hedge Fund Holders: 69

Dividend Yield as of December 21: 2.40%

The Procter & Gamble Company (NYSE:PG) is an American multinational company that provides branded consumer packaged goods worldwide. It operates through five segments – Beauty, Grooming, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care. The Procter & Gamble Company (NYSE:PG) is a reliable dividend king, as the company has raised its dividend payouts consistently for the last 66 years. The company’s latest quarterly dividend of $0.9133 per share was distributed on November 15. It is one of the premier widow and orphan stocks to invest in. 

On December 6, investment advisory Deutsche Bank raised the firm’s price target on The Procter & Gamble Company (NYSE:PG) to $162 from $156 and reiterated a Buy rating on the shares. Analyst Steve Powers issued the ratings update. 

According to Insider Monkey’s data, 69 hedge funds were bullish on The Procter & Gamble Company (NYSE:PG) at the end of September 2022, compared to 71 funds in the prior quarter. Ray Dalio’s Bridgewater Associates is the biggest position holder in the company, with 6.6 million shares worth $835.20 million. 

3. PepsiCo, Inc. (NASDAQ:PEP)

Number of Hedge Fund Holders: 72

Dividend Yield as of December 21: 2.51%

PepsiCo, Inc. (NASDAQ:PEP) is one of the best widow and orphan stocks to monitor. PepsiCo, Inc. (NASDAQ:PEP) has paid consecutive quarterly cash dividends since 1965, and 2022 marks the company’s 50th consecutive annual dividend increase. On November 17, the company declared a $1.15 per share quarterly dividend, in line with previous. The dividend is payable on January 6, 2023 to shareholders of record on December 2. 

On December 7, Argus analyst John Staszak raised the price target on PepsiCo, Inc. (NASDAQ:PEP) to $206 from $195 and maintained a Buy rating on the shares. The company is well-managed, offers a valuable brand portfolio, and continues to offer strong growth amid soft demand for many consumer staples, the analyst told investors. The analyst added that he expects cost cutting to continue to benefit earnings and expects PepsiCo, Inc. (NASDAQ:PEP) to achieve its goal of $1 billion in annual cost savings.

According to Insider Monkey’s data, 72 hedge funds were bullish on PepsiCo, Inc. (NASDAQ:PEP) at the end of the third quarter of 2022, compared to 65 funds in the earlier quarter. Terry Smith’s Fundsmith LLP is the largest stakeholder of the company, with 7.14 million shares worth $1.16 billion. 

Here is what Lindsell Train has to say about PepsiCo, Inc. (NYSE:PEP) in its Q3 2022 investor letter:

“At this point, it may help to give a further example of these self-reinforcing moats to illustrate the idea, drawing from the consumer franchises side of our portfolio. In our view, strong consumer brands can similarly exhibit Lindy compatible anti-ageing properties. Consider that the longer a company invests in its brands through advertising and R&D, the stronger and more resonant they may get. When successful, a self-sustaining feedback loop is established, whereby it becomes ever harder to recreate a heritage-rich brand from scratch, raising barriers to entry, and proportionately increasing its likely lifespan. There are plenty of long-lived portfolio franchises I could reference here, but I’ve gone with PepsiCo (NYSE:PEP); partly because we have good time-series stats on it (beware data bias!) but also, as I hope will become evident, because Pepsi over its 129 years has succeeded in creating some wonderfully deep moats.

With Pepsi Cola you get the flagship soft drinks brand, which is both global and generational, but you also get the Frito-Lay salty snacks portfolio assembled alongside it, claiming nearly 40% of the global market. That’s ten-times greater than the nearest competitor and likely higher than the next 65 competitors combined. These are exceptionally strong global bands with market shares to match; the long-term empirical result being Pepsi’s dividend record which over the past 66 years (as far back as we’ve been able to go) has compounded at an annualized rate of 10%. Pepsi is no ‘in at the ground floor’ start-up today, but it wasn’t six decades ago either. Early growth investor Philip Fisher put it well when in 1958 (two years into Pepsi’s current winning streak) he wrote of “companies which in spite of outstanding prospects of major further growth are so financially strong, with roots going so deep into the economic soil, that they qualify under the general classification of ‘institutional stocks’”. PepsiCo fits this description well…” (Click here to see the full text)

2. Exxon Mobil Corporation (NYSE:XOM)

Number of Hedge Fund Holders: 75

Dividend Yield as of December 21: 3.35%

Exxon Mobil Corporation (NYSE:XOM) is an American energy giant that explores for and produces crude oil and natural gas in the United States and internationally. It operates through Upstream, Downstream, and Chemical segments. Exxon Mobil Corporation (NYSE:XOM)’s dividend payments to shareholders have grown at an average annual rate of 5.9% over the last 40 years. It is one of the premier widow and orphan stocks to invest in. 

On December 8, Exxon Mobil Corporation (NYSE:XOM) said it will expand its stock buyback plan to $50 billion through 2024, including $15 billion this year. The company said it expects to “double earnings and cash flow potential” by 2027 compared to 2019, while also remaining on track to deliver nearly $9 billion in structural cost savings by the end of 2023 as compared to 2019 levels. Exxon Mobil Corporation (NYSE:XOM) raised its quarterly dividend by 3.4% to $0.91 per share, which was paid to shareholders on December 9. 

Piper Sandler analyst Ryan Todd on December 19 maintained an Overweight rating on Exxon Mobil Corporation (NYSE:XOM) but lowered the price target on the shares to $127 from $131. “Even after two years of outperformance,” the analyst remains constructive on the energy complex into 2023. He sees refining “as likely to lead the charge” in 2023, with sustained tightness in product markets driving a similar margin environment to 2022.

According to Insider Monkey’s Q3 data, 75 hedge funds were long Exxon Mobil Corporation (NYSE:XOM), compared to 72 funds in the prior quarter. Rajiv Jain’s GQG Partners is the biggest stakeholder of the company, with 33.8 million shares worth approximately $3 billion. 

In its Q2 2022 investor letter, First Eagle Investments, an asset management firm, highlighted a few stocks and Exxon Mobil Corporation (NYSE:XOM) was one of them. Here is what the fund said:

“Integrated oil and gas giant Exxon Mobil performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industry wide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”

1. Johnson & Johnson (NYSE:JNJ)

Number of Hedge Fund Holders: 85

Dividend Yield as of December 21: 2.54%

Johnson & Johnson (NYSE:JNJ), an American multinational healthcare company, is one of the best widow and orphan stocks to consider for a safe portfolio. Johnson & Johnson (NYSE:JNJ) paid a $1.13 per share quarterly dividend to shareholders on December 6. 2022 marked the 60th consecutive year of dividend increases by the company. 

On December 12, Citi analyst Joanne Wuensch raised the price target on Johnson & Johnson (NYSE:JNJ) to $205 from $198 and maintained a Buy rating on the shares. The analyst is looking for stocks “that will swim past the pandemic.” She does not anticipate it will be an “easy year” to invest in medical technology, but says it “will be one of recovery driven by more level-set expectations and product cycles.”

According to Insider Monkey’s third quarter database, 85 hedge funds were bullish on Johnson & Johnson (NYSE:JNJ), compared to 83 funds in the last quarter. Ken Fisher’s Fisher Asset Management is the biggest stakeholder of the company, with nearly 6 million shares worth $967.2 million.

In its Q2 2022 investor letter, Mayar Capital, an asset management firm, highlighted a few stocks and Johnson & Johnson (NYSE:JNJ) was one of them. Here is what the fund said:

“Johnson & Johnson (NYSE:JNJ) 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 makes and spends 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 orthopedics. 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 (…read more)

You can also take a look at 12 Oil Stocks with Biggest Upside and 12 Penny Stocks with Biggest Upside.

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Disclosure: None. 10 Best Widow and Orphan Stocks To Buy is originally published on Insider Monkey.