In this article, we will discuss the top dividend stocks to buy according to billionaire Ray Dalio.
Ray Dalio’s Bridgewater Associates is one of the largest hedge funds in the world. The firm uses a principled-based approach and focuses on distinctive approaches for experienced institutional investors around the globe. Dalio’s investment strategy revolves around the diversification of portfolios, as investments in different industries and asset classes reduce risks in different market situations. His ‘All Weather’ strategy is a testament to the fluctuating market conditions, like the one we are facing today. Recently, Dalio stepped down from running Bridgewater Associates and announced to remain on the fund’s board and public research team. As of November, the billionaire’s real-time net worth stands at $19.1 billion, according to Forbes.
The continuous hike in interest rates this year has seasoned as well as retail investors worried about the future of the market. In one of his interviews with Business Insider this September, Dalio spoke about the trend of interest rate hikes. He said that higher interest rates will result in the slowdown of the economy in 2023, with the S&P 500 falling about another 20%. He further asserted that a well-balanced portfolio is one of the most reliable ways to ride out the stock market downturn.
Over the years, Bridgewater Associates has delivered solid returns to shareholders. According to a report by Bloomberg, the firm’s flagship fund Pure Alpha II delivered an annual average return of 11.4% since its inception in 1991 through June 2022. In the first half of the year, the flagship fund returned 32% due to increased economic volatility. Another report by Business Insider revealed that Bridgewater Associates gained 25% this year through September.
As of the end of Q3 2022, Bridgewater Associates’ 13F portfolio had a value of over $19.7 billion, down from $23.5 billion in the preceding quarter. The hedge fund invested in several sectors, with services, healthcare, and consumer goods making up the major portions of the portfolio. Some of the firm’s major holdings in Q3 include Alphabet Inc. (NASDAQ:GOOG), Visa Inc. (NYSE:V), and Meta Platforms, Inc. (NASDAQ:META). In this article, we will discuss the fund’s top dividend stocks.
Ray Dalio of Bridgewater Associates
Our Methodology:
For this list, we selected stocks from Bridgewater Associates’ 13F portfolio as of the third quarter of 2022. The stocks are ranked according to their stake value in the portfolio.
Billionaire Ray Dalio’s Top 10 Dividend Stocks
10. Starbucks Corporation (NASDAQ:SBUX)
Bridgewater Associates’ Stake Value: $252,598,000
Dividend Yield as of November 16: 2.17%
Starbucks Corporation (NASDAQ:SBUX) is an American multinational coffeehouse company that operates in over 80 countries around the world. The company has been a strong dividend payer for years and has raised its payouts for 12 years in a row. It currently pays a quarterly dividend of $0.53 per share and has a dividend yield of 2.17%, as of November 16.
Bridgewater Associates has been investing in Starbucks Corporation since the fourth quarter of 2010, purchasing shares worth $690,000. At the end of Q3 2022, the hedge fund owned roughly 3 million SBUX shares, worth over $252.5 million. The company represented 1.27% of billionaire Ray Dalio’s portfolio. The company is the fund’s important holding alongside Alphabet Inc., Visa Inc., and Meta Platforms, Inc..
Appreciating the company’s strong fiscal Q4 earnings, Street analysts presented a positive outlook on Starbucks Corporation in November. Both Evercore ISI and Citigroup raised their price targets on the stock to $97 and $93, respectively.
At the end of Q2 2022, Starbucks Corporation was a part of 55 hedge fund portfolios, compared with 58 in the previous quarter. The stakes owned by these hedge funds have a total value of over $1.43 billion.
Polen Capital mentioned Starbucks Corporation in its Q2 2022 investor letter. Here is what the firm has to say:
“Starbucks, which garners a lower weighting in the Portfolio, had slightly better than average three-month performance. Samestore sales were up double-digits in the U.S. and International exChina, with solid revenue growth across those regions. The company is experiencing cost pressures from wages and input costs though, and China same-store sales were down 23% due to zero-COVID policy restrictions and lockdowns.”
9. CVS Health Corporation (NYSE:CVS)
Bridgewater Associates’ Stake Value: $293,711,000
Dividend Yield as of November 16: 2.25%
CVS Health Corporation (NYSE:CVS) is an American healthcare company that owns retail pharmacies and also provides health insurance services to its consumers. The company has been a part of Bridgewater Associates’ portfolio since the third quarter of 2012 when the hedge fund opened its position with shares worth $2.7 million. During Q3 2022, the fund reduced its position in the company by 3% which takes its total CVS stake worth $293.7 million. The company represented 1.48% of billionaire Ray Dalio’s portfolio.
On September 22, CVS Health Corporation declared a quarterly dividend of $0.55 per share, in line with its previous dividend. As of November 16, the stock has a dividend yield of 2.25%.
In November, Raymond James reiterated its Outperform rating on CVS Health Corporation with a $115 price target, following the company’s strong Q3 earnings. The firm also appreciated the company’s retail business.
Of the 895 elite funds tracked by Insider Monkey, 65 hedge funds owned stakes in CVS Health Corporation in Q2 2022, compared with 72 in the previous quarter. The collective value of these stakes is over $2.03 billion.
Vltava Fund mentioned CVS Health Corporation in its Q3 2022 investor letter. Here is what the firm has to say:
“CVS is a leader in the provision of healthcare services in the USA. It has three main businesses: an enormous network of pharmacies, a health insurance company, and “prescription benefit management”, which is a kind of intermediary between insurance companies and pharmacies. This is the result of large acquisitions over the past 15 years – most notably of Caremark (2007) and Aetna (2018). The markets had deemed its acquisition of health insurer Aetna too expensive (and we agree), so CVS stock then fell into disfavour for a few years.
We took advantage of this in the summer of 2020 and brought the stock into our portfolio at a time when its price was pressed down still further by the coronavirus pandemic. CVS is a giant. It has revenues of USD 300 billion, making it one of the largest companies in the world. It is a relatively stable and highly profitable company with strong free cash flow. Over the past few years, CVS has focused primarily on reducing debt.
This is already much lower than it had been after the Aetna acquisition, and most of the cash is now likely to go to shareholders through share buybacks or be used for smaller acquisitions to grow the company further. CVS trades at about 11 times annual earnings, which is a very appealing valuation given the expected future growth in profitability and overall modest cyclicality in its business.”
8. Abbott Laboratories (NYSE:ABT)
Bridgewater Associates’ Stake Value: $298,016,000
Dividend Yield as of November 16: 1.81%
Abbott Laboratories (NYSE:ABT) is a Chicago-based medical device company that also offers other medical services to its patients across the globe. In October, Mizuho initiated its coverage on Abbott Laboratories with a Neutral rating and a $105 price target, highlighting the company’s solid position in the medical tech market, which is one of the fastest-growing industries today.
During the third quarter of 2022, Bridgewater Associates increased its position in Abbott Laboratories by 11%. The hedge fund now owns over 3 million shares in the company, with a total value of over $298 million. The company made up 1.5% of billionaire Ray Dalio’s portfolio.
Abbott Laboratories is a Dividend King as the company has been raising its dividends consistently for the past 50 years. It currently offers $0.47 per share in quarterly dividends and has a dividend yield of 1.81%, as of November 16.
As of the close of Q2 2022, 61 hedge funds in Insider Monkey’s database owned stakes in Abbott Laboratories, holding a total value of over $3.6 billion.
Diamond Hill Capital mentioned Abbott Laboratories in its Q3 2022 investor letter. Here is what the firm has to say:
“Also among our bottom contributors were health care products manufacturer Abbott Laboratories (NYSE:ABT), global pharmaceutical company Pfizer, media and technology giant Alphabet, and insurance company American International Group (AIG).
Abbott has been working through a recall of its infant formula brand Similac in the US, which has continued to pressure its share price. Although the recall will impact near-term revenues, we are not concerned about any long-term impacts. We remain optimistic about the company given it is one of the highest quality names in health care, in our view, with a talented management team that makes smart capital allocation decisions. Abbott also has leading health care and consumer franchises with a particularly strong competitive position in its medical device business. The company continues to launch innovative products in key strategic areas (such as diabetes, structural heart, and diagnostics), which should help drive not only revenue growth but margin expansion.”
7. McDonald’s Corporation (NYSE:MCD)
Bridgewater Associates’ Stake Value: $487,730,000
Dividend Yield as of November 16: 2.22%
An American multinational fast-food chain, McDonald’s Corporation (NYSE:MCD) has been raising its dividends consistently for the past 46 years. The company currently offers a quarterly payout of $1.52 per share and has a dividend yield of 2.22%, as recorded on November 16.
Bridgewater Associates first opened its position in McDonald’s Corporation during the first quarter of 2011 with shares worth over $4.6 million. During Q3 2022, the hedge fund increased its position in the company by 3% and owned over 2.1 million MCD shares worth $487.7 million. The company accounted for 2.46% of billionaire Ray Dalio’s portfolio.
RBC Capital appreciated the company’s ability to perform in the current situation and also highlighted its Q3 earnings. Given this, the firm raised its price target on the stock to $295 in October with an Outperform rating on the shares.
As of the close of Q2 2022, 50 hedge funds tracked by Insider Monkey owned stakes in McDonald’s Corporation, worth $2.3 billion collectively.
6. Walmart Inc. (NYSE:WMT)
Bridgewater Associates’ Stake Value: $522,693,000
Dividend Yield as of November 16: 1.51%
Walmart Inc. (NYSE:WMT) is an American multinational retail corporation. At the end of Q2 2022, the company was a part of 67 hedge fund portfolios, growing from 60 a quarter earlier, according to Insider Monkey’s database. The stakes owned by these hedge funds have a total value of over $3.78 billion.
As of the end of Q3 2022, Bridgewater Associates owned over 4 million shares in Walmart Inc., with a total value of roughly $522.7 million. The company represented 2.64% of billionaire Ray Dalio’s portfolio and is one of his most prominent holdings including Alphabet Inc., Visa Inc., and Meta Platforms, Inc..
In November, Street analysts appreciated the recent quarterly earnings of Walmart Inc. and its growing e-commerce business. In view of this, Truist and DA Davidson raised their price target on the stock to $150 and $173, respectively.
Walmart Inc. currently pays a quarterly dividend of $0.56 per share and has a dividend yield of 1.51%, as of November 16. The company is just one year away from becoming a dividend king as it has been raising its payouts consistently for the past 49 years.
Leaven Partners mentioned Walmart Inc. in its Q3 2022 investor letter. Here is what the firm has to say:
“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Walmart (NYSE:WMT), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6%[2] from 7.2% in early August and slashing full-year profit growth to 4.5%.”
5. Costco Wholesale Corporation (NASDAQ:COST)
Bridgewater Associates’ Stake Value: $566,509,000
Dividend Yield as of November 16: 0.68%
Costco Wholesale Corporation (NASDAQ:COST) is a Washington-based retail company. The company has been raising its dividends consistently for the past 18 years, which makes it one of the top dividend stocks on our list. It currently pays a quarterly dividend of $0.90 per share and has a dividend yield of 0.68%, as recorded on November 16.
At the end of Q3 2022, Bridgewater Associates owned nearly 2 million shares in Costco Wholesale Corporation, worth over $566.5 million. The company constituted 2.86% of billionaire Ray Dalio’s portfolio.
In October, Morgan Stanley raised its price target on Costco Wholesale Corporation to $525 with an Overweight rating on the shares, appreciating the company’s market share gains and unit growth.
As of the close of Q2 2022, 64 hedge funds tracked by Insider Monkey owned stakes in Costco Wholesale Corporation, up from 61 in the preceding quarter. These stakes are collectively valued at over $4.76 billion. With stakes over $2 billion, Fisher Asset Management owned the largest position in the company in Q2.
Cooper Investors mentioned Costco Wholesale Corporation in its Q3 2022 investor letter. Here is what the firm has to say:
“The US economy continues to run hot – the labour market is extremely tight and a number of executives we spoke to described their challenges in retaining staff and preventing competitors from poaching talent. Industrial companies in particular continue to see record backlogs, with the easing of logistics and supply chain constraints only just starting to have an impact on deliveries and lead times.
In terms of inflationary pressures, the vast majority of our holdings have been able to leverage strong market positions and stakeholder relationships to push pricing through in 2022 such that minimal impact to earnings has occurred. Clearly this is not a lever than can be pulled indefinitely but the more experienced management teams have kept some of their powder dry. Our meeting with management at Costco in Seattle was memorable for several reasons but one was their latent ability to increase member pricing which they have not done in over 5 years (and thus likely to do in 2023)…
…To conclude we’ll return to our meeting with Costco mentioned earlier. The business quality is no secret after decades of incredible execution, but the meeting gave us renewed conviction around Value Latencies in terms of the runway for growth, the focus on enhancing customer value, Costco’s vast buying power (it purchases 30% of the world’s jumbo cashews as one example) and management’s feral focus on the business model and cost discipline.”
4. The Coca-Cola Company (NYSE:KO)
Bridgewater Associates’ Stake Value: $642,397,000
Dividend Yield as of November 16: 2.90%
An American multinational beverage company, The Coca-Cola Company (NYSE:KO) has been a part of Bridgewater Associates’ 13F portfolio since the fourth quarter of 2010. In the most recent quarter, the hedge fund increased its KO stake by 6%, which takes its total stake in the company to over $642.3 million. The company accounted for 3.25% of billionaire Ray Dalio’s portfolio.
The Coca-Cola Company pays a quarterly dividend of $0.44 per share for a dividend yield of 2.90%, as of November 16. The company maintains a 60-year track record of consistent dividend growth, falling into the category of Dividend Kings.
In October, UBS acknowledged the organic growth and recent quarterly earnings of The Coca-Cola Company and raised its price target on the stock to $68 while maintaining a Buy rating on the shares.
At the end of the June quarter, 60 hedge funds in Insider Monkey’s database owned stakes in The Coca-Cola Company, down from 64 in the previous quarter. These stakes have a total value of over $28.3 billion.
Aristotle Capital Management, LLC mentioned The Coca-Cola Company in its Q2 2022 investor letter. Here is what the firm has to say:
“The Coca-Cola Company (NYSE:KO), the global beverage business, was a leading contributor for the period. Coca-Cola continues to benefit from the refranchising of its bottling operations and realignment of incentives, catalysts we previously identified. These initiatives are demonstrating their strength in an inflationary and supply-chain-challenged environment. Additionally, the company has focused on evolving its customer engagement practices by leveraging digital and social medias for targeted campaigns, such as the design and launch of Coke Byte in the metaverse. Lastly, Coca-Cola has furthered its transformation into a total beverage company, as it debuted its new Jack Daniel’s Tennessee Whiskey and Coca-Cola ready-to-drink premixed cocktail. Although uncertainties surrounding cost pressures, lockdowns and geopolitical conflicts remain, we believe Coca-Cola is uniquely positioned to successfully continue its transition toward a total beverage business.”
3. PepsiCo, Inc. (NASDAQ:PEP)
Bridgewater Associates’ Stake Value: $656,549,000
Dividend Yield as of November 16: 2.57%
Another top dividend stock to buy in billionaire Ray Dalio’s portfolio is PepsiCo, Inc. (NASDAQ:PEP). The food and beverage company has raised its dividends for 50 years in a row. It currently offers a quarterly dividend of $1.15 per share and has a dividend yield of 2.57%, as of November 16.
Ray Dalio has been investing in PepsiCo, Inc. since the fourth quarter of 2010 when his hedge fund purchased shares worth $16.4 million in the company. At the end of Q3 2022, the fund owned over 4 million PEP shares worth over $656.5 million, after increasing its position in the company by 6%. The company represented 3.32% of the firm’s 13F portfolio.
In October, Barclays raised its price target on PepsiCo, Inc. to $185 with an Overweight rating on the shares, appreciating the flexibility in its operations and its overall fundamentals.
The number of hedge funds tracked by Insider Monkey owning stakes in PepsiCo, Inc. stood at 65 in Q2 2022, growing from 62 in the previous quarter. The collective value of these stakes is over $5.28 billion.
2. Johnson & Johnson (NYSE:JNJ)
Bridgewater Associates’ Stake Value: $769,836,000
Dividend Yield as of November 16: 2.60%
Johnson & Johnson is a New Jersey-based pharmaceutical company. In October, Citigroup maintained a Buy rating on the stock with a $198 price target as the firm remained positive for the medical device sector and believes that the company will benefit from its medicine sales in the upcoming quarters.
Johnson & Johnson has been raising its dividends consistently for the past 60 years. The company currently pays a quarterly dividend of $1.13 per share with a dividend yield of 2.60%, as of November 16.
During Q3 2022, Bridgewater Associates increased its position in Johnson & Johnson by 9%. The firm currently owns over 4.7 million shares in the company, worth nearly $770 million. The company accounted for 3.89% of billionaire Ray Dalio’s portfolio.
At the end of the second quarter of 2022, 83 hedge funds tracked by Insider Monkey owned stakes in Johnson & Johnson, with a total value of over $6.7 billion.
Distillate Capital Partners LLC mentioned Johnson & Johnson in its Q2 2022 investor letter. Here is what the firm has to say:
“Johnson & Johnson was among the 2 largest trims at around 1% each. Each stock was up 1% in the quarter compared to the 16% price decline for the S&P 500 and the positions were reduced as the valuations became somewhat less appealing, though still attractive enough to warrant inclusion.”
1. The Procter & Gamble Company (NYSE:PG)
Bridgewater Associates’ Stake Value: $835,201,000
Dividend Yield as of November 16: 2.57%
The Procter & Gamble Company, an American multinational consumer goods company, was the largest holding of Bridgewater Associates at the end of Q3 2022. The hedge fund owned over 6.6 million PG shares, worth over $835.2 million. The company made up 4.22% of billionaire Ray Dalio’s portfolio.
The Procter & Gamble Company is one of the strongest dividend companies in the US. The company has been making consistent dividend payments for the past 132 years and has also raised its payouts for 66 years in a row. It currently pays a quarterly dividend of $0.9133 per share and has a dividend yield of 2.57%, as of November 16.
In November, Wells Fargo lifted its price target on The Procter & Gamble Company to $155 with an Overweight rating on the shares, highlighting the company’s business model post-pandemic.
As of the close of Q2 2022, 71 hedge funds owned stakes in The Procter & Gamble Company, compared with 72 a quarter earlier, as per Insider Monkey’s database. These stakes hold a consolidated value of over $5.5 billion.
You can also take a look at Billionaire Seth Klarman’s Top 9 Dividend Stock Picks and 15 Best Consistent Dividend Stocks to Buy
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This article is originally published at Insider Monkey.
