10 High Sharpe Ratio Dividend Stocks in the S&P 500

Published August 30, 2021 at 10:00 am EDT Updated September 7, 2026 at 1:34 pm EDT

In this article, we will be taking a look at 10 high Sharpe ratio dividend stocks in the S&P 500.

Dividend stocks like McDonald’s Corporation (NYSE: MCD), JPMorgan Chase & Co. (NYSE: JPM), The Home Depot, Inc. (NYSE: HD), and The Boeing Company (NYSE: BA) are among the most reliable and popular investment options available today. However, you can never be too careful where the stock market is concerned, which is why many investors tend to take into account a number of factors before choosing where to invest. From dividend growth rates to payout ratios and more, there are a number of things one can take into account before deciding what company to place their bets on. The Sharpe ratio, then, is just another one of those metrics that one can look at, especially if one is attempting to analyze both risk and return where a particular stock is concerned.

What is the Sharpe Ratio?

The Sharpe ratio is a metric that investors can use to determine whether they are receiving the right reward for the risk they are taking in investing in any company. Typically, a Sharpe ratio of 1 and above signifies that the company is offering a good enough reward, and Sharpe ratios of 2 and 3 and above signify even better rewards for the risks being taken.

Investing in dividends is just as risky as investing in general, but taking the Sharpe ratio, among other metrics, into account before investing can do wonders. In any case, dividend stocks have been, and are expected to continue, gaining popularity as this year progresses. This is perhaps due in part to the growingly attractive opportunities presented by dividends in the market. A Reuters report has mentioned, for instance, that global dividends may rise to about $1.39 trillion in 2021, signifying that the hit taken by dividend stocks after the outbreak of COVID-19 may finally be subsiding, allowing these stocks to bounce back stronger than ever. This rise of about 2.2% is only about 3% lower than the level dividends were at pre-pandemic during their peak, resulting in higher hopes being placed in these stocks as well.

Investing has become difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

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Without further ado, let’s take a look at the 10 high Sharpe ratio dividend stocks in the S&P 500.

Our Methodology

We have selected S&P 500 stocks with Sharpe ratios above 1 and dividend yields of 1.9% and above. Insider Monkey tracks the data of about 873 hedge funds, and we have also used this data to pick dividend stocks that are highly popular among hedge funds today. For each stock we have mentioned its yield, Sharpe ratio, and the number of hedge funds holding a stake in it, ranking the stocks from the lowest to the highest Sharpe ratio. Finally, we have used analysts’ ratings to determine which stocks are favorably placed in analyst and investor circles, picking stocks with mostly positive ratings and strong fundamentals.

High Sharpe Ratio Dividend Stocks in the S&P 500

10. Mid-America Apartment Communities, Inc. (NYSE: MAA)

Number of Hedge Fund Holders: 14
Dividend Yield: 2.2%
Sharpe Ratio: 1.1

Mid-America Apartment Communities, Inc. (NYSE: MAA) is a real estate investment trust that works to deliver full-cycle and superior investment performance for its shareholders by owning, managing, acquiring, developing, and redeveloping quality apartment communities in the Southeast, Southwest, and Mid-Atlantic regions of the United States. The company ranks 10th on our list of high Sharpe ratio dividend stocks in the S&P 500.

Michael Lewis, an analyst at Truist, just this August raised his price target on shares of Mid-America Apartment Communities, Inc. from $178 to $198. The analyst also reiterated a Buy rating on the stock.

In the second quarter of 2021, Mid-America Apartment Communities, Inc. had an FFO of $1.84, beating estimates by $0.20. The company’s revenue was $436.93 million, up 5.79% year over year and beating estimates by $8.18 million. Mid-America Apartment Communities, Inc. has gained 39.43% in the past 6 months and 54.01% year to date.

By the end of the second quarter of 2021, 14 hedge funds out of the 873 tracked by Insider Monkey held stakes in Mid-America Apartment Communities, Inc. worth roughly $80 million. This is compared to 25 hedge funds in the previous quarter with a total stake value of approximately $251 million.

Like McDonald’s Corporation, JPMorgan Chase & Co., The Home Depot, Inc., and The Boeing Company, Mid-America Apartment Communities, Inc. is a good stock to invest in.

9. WEC Energy Group, Inc. (NYSE: WEC)

Number of Hedge Fund Holders: 27
Dividend Yield: 2.9%
Sharpe Ratio: 1.2

WEC Energy Group, Inc. (NYSE: WEC) is a provider of regulated natural gas and electricity, and renewable and nonregulated renewable energy services in the United States. The company ranks 9th on our list of high Sharpe ratio dividend stocks in the S&P 500 and operates through its Wisconsin, Illinois, Other States, Electric Transmission, Non-Utility Energy Infrastructure, and Corporate and Other segments.

This August, Anthony Crowdell, an analyst at Mizuho, raised his price target on shares of WEC Energy Group, Inc. from $94 to $95, reiterating a Neutral rating on the stock.

In the second quarter of 2021, WEC Energy Group, Inc. had an EPS of $0.87, beating estimates by $0.08. The company’s revenue was $1.68 billion, up 8.23% year over year and beating estimates by $73.04 million. WEC Energy Group, Inc. has gained 14% in the past 6 months and 4.43% year to date.

By the end of the second quarter of 2021, 27 hedge funds out of the 873 tracked by Insider Monkey held stakes in WEC Energy Group, Inc. worth roughly $499 million. This is compared to 17 hedge funds in the previous quarter with a total stake value of approximately $184 million.

Like McDonald’s Corporation, JPMorgan Chase & Co., The Home Depot, Inc., and The Boeing Company, WEC Energy Group, Inc. is a good stock to invest in.

8. Sysco Corporation (NYSE: SYY)

Number of Hedge Fund Holders: 40
Dividend Yield: 2.4%
Sharpe Ratio: 1.2

Sysco Corporation (NYSE: SYY), a US-based multinational wholesale company, is next on our list of high Sharpe ratio dividend stocks in the S&P 500. The company markets and distributed food products, small wares, kitchen equipment, and related products. It ranks 8th on our list.

Jeffrey Bernstein, an analyst at Barclays, holds an Equal Weight rating on shares of Sysco Corporation as of this May. The analyst also raised his price target on Sysco Corporation at the same time, from $80 to $83.

In the fiscal fourth quarter of 2021, Sysco Corporation had an EPS of $0.71, beating estimates by $0.11. The company’s revenue was $16.14 billion, up 82% year over year and beating estimates by $1.49 billion. Sysco Corporation has gained 9.28% year to date and 31.63% in the past year.

By the end of the second quarter of 2021, 40 hedge funds out of the 873 tracked by Insider Monkey held stakes in Sysco Corporation worth roughly $2.6 billion. This is compared to 42 hedge funds in the previous quarter with a total stake value of approximately $2.7 billion.

Like McDonald’s Corporation, JPMorgan Chase & Co., The Home Depot, Inc., and The Boeing Company, Sysco Corporation is a good stock to invest in.

7. Broadcom Inc. (NASDAQ: AVGO)

Number of Hedge Fund Holders: 47
Dividend Yield: 3%
Sharpe Ratio: 1.2

Broadcom Inc. (NASDAQ: AVGO) is an information technology company ranking 7th on our list of high Sharpe ratio dividend stocks in the S&P 500. The company develops and supplies semiconductor infrastructure software solutions, and also provides semiconductor devices worldwide.

This July, Citigroup’s Christopher Danely reiterated a Buy rating on shares of Broadcom Inc. alongside a price target of $28.

In the fiscal second quarter of 2021, Broadcom Inc. had an EPS of $6.62, beating estimates by $0.16. The company’s revenue was $6.16 billion, up 15.12% year over year and beating estimates by $103.58 million. Broadcom Inc. has gained 14.23% year to date and 43.23% in the past year.

By the end of the second quarter of 2021, 47 hedge funds out of the 873 tracked by Insider Monkey held stakes in Broadcom Inc. worth roughly $3.03 billion. This is compared to 53 hedge funds in the previous quarter with a total stake value of approximately $3.3 billion.

Like McDonald’s Corporation, JPMorgan Chase & Co., The Home Depot, Inc., and The Boeing Company, Broadcom Inc. is a good stock to invest in.

ClearBridge Investments, an investment management firm, mentioned Broadcom Inc. in its second-quarter 2021 investor letter. Here’s what they said:

“A good way to conceptualize how we think about portfolio construction is to picture a pyramid. At the bottom of the pyramid are the durable compounding growth companies that form the strong foundation, resilience and consistency for the Strategy. We think these companies should comprise just under half of portfolio assets and feature annual revenue growth rates ranging from two times GDP up to 20% as well as healthy free cash flow generation.

Broadcom has delivered similar long-term appreciation through a combination of organic growth, capital deployment into new and adjacent opportunities through merger and acquisition activity as well as returning capital to shareholders through buybacks and dividends.”

6. Xcel Energy Inc. (NASDAQ: XEL)

Number of Hedge Fund Holders: 22
Dividend Yield: 2.7%
Sharpe Ratio: 1.2

Xcel Energy Inc. (NASDAQ: XEL) is a utility company that generates, purchases, transmits, distributes, and sells electricity. It ranks 6th on our list of high Sharpe ratio dividend stocks in the S&P 500 and operates through its Regulated Electric Utility, Regulated Natural Gas Utility, and All Other segments.

Paul Fremont, an analyst at Mizuho, just this August raised his price target on shares of Xcel Energy Inc. from $63 to $70. The analyst also reiterated a Neutral rating on the shares.

In the second quarter of 2021, Xcel Energy Inc. had an EPS of $0.58, beating estimates by $0.01. The company’s revenue was $3.07 billion, up 18.64% year over year and beating estimates by $374.04 million. Xcel Energy Inc. has gained 15.47% in the past 6 months and 4.02% year to date.

By the end of the second quarter of 2021, 22 hedge funds out of the 873 tracked by Insider Monkey held stakes in Xcel Energy Inc. worth roughly $235 million. This is compared to 18 hedge funds in the previous quarter with a total stake value of approximately $200 million.

Like McDonald’s Corporation, JPMorgan Chase & Co., The Home Depot, Inc., and The Boeing Company, Xcel Energy Inc. is a good stock to invest in.

5. CMS Energy Corporation (NYSE: CMS)

Number of Hedge Fund Holders: 31
Dividend Yield: 2.7%
Sharpe Ratio: 1.2

CMS Energy Corporation (NYSE: CMS) is an energy company operating primarily in Michigan through its Electric Utility, Gas Utility, Enterprises, and EnerBank segments. It ranks 5th on our list of high Sharpe ratio dividend stocks in the S&P 500. The company is based in Jackson, Michigan.

This July, KeyBanc’s Sophie Karp upgraded shares of CMS Energy Corporation from Sector Weight to Overweight alongside setting a price target of $67 on the shares.

In the second quarter of 2021, CMS Energy Corporation had an EPS of $0.55, beating estimates by $0.10. The company’s revenue was $1.56 billion, up 7.97% year over year and beating estimates by $50.58 million. CMS Energy Corporation has gained 16.45% in the past 6 months and 7.10% year to date.

By the end of the second quarter of 2021, 31 hedge funds out of the 873 tracked by Insider Monkey held stakes in CMS Energy Corporation worth roughly $693 million. This is compared to 28 hedge funds in the previous quarter with a total stake value of approximately $955 million.

Miller/Howard Investments, an investment management firm, mentioned CMS Energy Corporation in its first-quarter 2021 investor letter. Here’s what they said:

” We added CMS Energy Corp. (CMS), a name poised to benefit from above-average earnings growth. We initiated a position in this high-quality utility after a period of relative weakness in which its premium to the group narrowed.”

4. The Home Depot, Inc. (NYSE: HD)

Number of Hedge Fund Holders: 64
Dividend Yield: 2.05%
Sharpe Ratio: 1.3

The Home Depot, Inc., a home improvement retail company, is next on our list of high Sharpe ratio dividend stocks in the S&P 500, ranking 4th. The company provides building materials, home improvement products, building materials, lawn and garden products, and décor products, alongside installation, home maintenance, and professional service programs to do-it-yourself and professional customers.

As of this August, Jefferies analyst Jonathan Matuszewski holds a Buy rating on shares of The Home Depot, Inc., alongside a price target of $369.

In the fiscal second quarter of 2022, The Home Depot, Inc. had an EPS of $4.53, beating estimates by $0.10. The company’s revenue was $41.12 billion, up 8.05% year over year and beating estimates by $380.39 million. The Home Depot, Inc. has gained 22.88% in the past 6 months and 21.81% year to date.

By the end of the second quarter of 2021, 64 hedge funds out of the 873 tracked by Insider Monkey held stakes in The Home Depot, Inc. worth roughly $4.2 billion. This is compared to 68 hedge funds in the previous quarter with a total stake value of approximately $4.4 billion.

Nelson Capital Management, an investment management firm, mentioned The Home Depot, Inc. in its second-quarter 2021 investor letter. Here’s what they said:

“In the consumer discretionary sector, we trimmed pandemic winners in favor of companies we believe will outperform in a recovery period. We also trimmed our position in Home Depot (tkr: HD), as it will be challenged by tough comparable statistics, supply chain issues, and rising commodity costs.”

3. Cincinnati Financial Corporation (NASDAQ: CINF)

Number of Hedge Fund Holders: 22
Dividend Yield: 2.06%
Sharpe Ratio: 1.3

Cincinnati Financial Corporation (NASDAQ: CINF), a financial services company, offers property-casualty insurance products in the United States. The company ranks 3rd on our list of high Sharpe ratio dividend stocks in the S&P 500 and operates through its Commercial Lines Insurance, Personal Lines Insurance, Excess and Surplus Lines Insurance, Life Insurance, and Investments segments.

As of this August, Wolfe Research’s Michael Zaremski holds an Outperform rating on shares of Cincinnati Financial Corporation, alongside a price target of $148.

In the second quarter of 2021, Cincinnati Financial Corporation had an EPS of $1.79, beating estimates by $0.81. The company’s revenue was $2.29 billion, also beating estimates by $578.93 million. Cincinnati Financial Corporation has gained 21.17% in the past 6 months and 45.07% year to date.

By the end of the second quarter of 2021, 22 hedge funds out of the 873 tracked by Insider Monkey held stakes in Cincinnati Financial Corporation worth roughly $780 million. This is compared to 22 hedge funds in the previous quarter with a total stake value of approximately $886 million.

2. McDonald’s Corporation (NYSE: MCD)

Number of Hedge Fund Holders: 66
Dividend Yield: 2.18%
Sharpe Ratio: 1.4

McDonald’s Corporation, an American fast-food chain, is next on our list of high Sharpe ratio dividend stocks in the S&P 500. The company offers food products and beverages at its restaurants across the globe. It ranks 2nd on our list.

This July, Christopher Carril, an analyst at RBC Capital, raised his price target on shares of McDonald’s Corporation from $263 to $268. The analyst also reiterated an Outperform rating on McDonald’s Corporation shares.

In the second quarter of 2021, McDonald’s Corporation had an EPS of $2.37, beating estimates by $0.25. The company’s revenue was $5.89 billion, up 56.53% year over year and beating estimates by $319.30 million. McDonald’s Corporation has gained 13.78% in the past 6 months and 12.72% year to date.

By the end of the second quarter of 2021, 66 hedge funds out of the 873 tracked by Insider Monkey held stakes in McDonald’s Corporation worth roughly $2.7 billion. This is compared to 67 hedge funds in the previous quarter with a total stake value of approximately $3.8 billion.

1. NextEra Energy, Inc. (NYSE: NEE)

Number of Hedge Fund Holders: 59
Dividend Yield: 1.9%
Sharpe Ratio: 1.7

NextEra Energy, Inc. (NYSE: NEE), an electric utility company, is next and last on our list of high Sharpe ratio dividend stocks in the S&P 500, ranking 1st. The company generates, transmits, distributes, and sells electric power to retail and wholesale customers in North America.

Maheep Mandloi, an analyst at Credit Suisse, holds an Outperform rating on shares of NextEra Energy, Inc. as of this July. The analyst also placed an $85 price target on the stock at the same time.

In the second quarter of 2021, NextEra Energy, Inc. had an EPS of $, beating estimates by $. The company’s revenue was $, up % year over year and beating estimates by $. NextEra Energy, Inc. has gained 10.41% in the past 6 months and 12.92% year to date.

By the end of the second quarter of 2021, 59 hedge funds out of the 873 tracked by Insider Monkey held stakes in NextEra Energy, Inc. worth roughly $2.7 billion. This is compared to 63 hedge funds in the previous quarter with a total stake value of approximately $2.7 billion.

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