In this article, we discuss 10 dividend stocks in Jim Simons’ portfolio.
Jim Simons is one of the most successful investors of his time due to his revolutionary investing techniques. He founded Renaissance Technologies in 1982. Having a background in Mathematics, Simons introduced a quantitative analysis investment method, which is widely used today.
Simons realized the importance of using computer models to analyze and monitor the fluctuations in the market prices. His hedge fund used statistical and mathematical methods, which Simons called Monometrics, to analyze the scoring trading gains. For this purpose, he employed experts from different fields, such as data analysis, coding, programming, and cryptography.
According to a report published by CNBC, due to these ultra-modern and innovative investing strategies, Renaissance Technologies’ flagship Medallion Fund managed to generate an annual return of 66%, from 1998 to 2018. In 2021, the firm’s three public hedge funds generated positive returns, after facing losses in 2020 due to the pandemic. The firm’s RIEF, RIDA, and RIDGE gained 20%, 15%, and 10% in 2021, respectively. However, the hedge fund has been experiencing consistent outflows over the past year. In 2021, despite generating double-digit gains of its public funds, Renaissance Technologies saw nearly $15 billion in outflows, as reported by Bloomberg. According to the firm, the hedge fund’s beta models did not perform as expected and led to miscalculations. But the firm is optimistic about its overall result as long as the Medallion fund is stable, which generated 76% in 2020.
As of Q1 2022, holds a 13F portfolio value of $85.2 billion, up from $80.5 billion in the previous quarter. The hedge fund invested heavily in technology, healthcare, consumer goods, and finance sectors, among others. Some of the hedge fund’s major holdings include The Coca-Cola Company (NYSE:KO), Exxon Mobil Corporation (NYSE:XOM), and PepsiCo, Inc. (NASDAQ:PEP).
Jim Simons of Renaissance Technologies
Our Methodology:
In this article, we discuss the 10 best dividend stocks in Jim Simons’ portfolio. For this list, we collected data from Renaissance Technologies’ 13F portfolio for Q1 2022.
Jim Simons’ Renaissance Technologies Portfolio: 10 Dividend Stock Picks
10. The Kroger Co. (NYSE:KR)
Dividend Yield as of May 19: 1.75%
Number of Hedge Fund Holders: 41
Renaissance Technologies’ Stake Value: $942,446,000
The Kroger Co. (NYSE:KR) increased its annual dividend by 17% in 2021 to $0.21 per share. This marked the company’s 15th annual dividend raise. The stock’s dividend yield stood at 1.75%, as of the close of May 19.
Jim Simons’ Renaissance Technologies started investing in The Kroger Co. during the fourth quarter of 2010. In Q1 2022, the hedge fund reduced its stake in the company by 7% and held stakes worth over $942.4 million. The company accounted for 1.1% of Jim Simons’ portfolio. Along with KR, the hedge fund also has positions in some notable blue-chip companies, such as The Coca-Cola Company, Exxon Mobil Corporation, and PepsiCo, Inc.. As consumers are moving towards retailers due to broad-based inflation, in April, BofA lifted its price target on The Kroger Co. to $75, while upgrading the stock to Buy from Neutral.
The number of hedge funds tracked by Insider Monkey holding positions in The Kroger Co. increased to 41 in Q4 2021, from 39 in the previous quarter. Warren Buffett’s Berkshire Hathaway was the company’s largest shareholder in Q12022, holding shares worth over $3.3 billion.
9. The Hershey Company (NYSE:HSY)
Dividend Yield as of May 19: 1.76%
Number of Hedge Fund Holders: 37
Renaissance Technologies’ Stake Value: $662,946,000
The Hershey Company (NYSE:HSY) experienced a positive hedge fund sentiment in Q4 2021. 37 hedge funds tracked by Insider Monkey reported owning stakes in the company, up from 33 in the previous quarter.
In 2021, The Hershey Company hiked its annual dividend by 12% to $0.901 per share, with a dividend yield of 1.76%, as of May 19. The company has been increasing its dividend for the past 12 years, coming through as one of the best dividend stocks in Jim Simons’ portfolio. This April, RBC Capital raised its price target on The Hershey Company to $237, with an Outperform rating on the shares, appreciating the company’s Q1 2022 results despite rising inflation.
Renaissance Technologies started building its position in The Hershey Company during the fourth quarter of 2010. In Q1 2022, the hedge fund held a stake worth roughly $663 million in the company, after slashing its position by 4%. The Hershey Company represented 0.77% of Jim Simons’ portfolio.
8. Target Corporation (NYSE:TGT)
Dividend Yield as of May 19: 2.31%
Number of Hedge Fund Holders: 49
Renaissance Technologies’ Stake Value: $354,900,000
In May, Deutsche Bank called Target Corporation (NYSE:TGT) its top pick as a defensive play. The firm set a $294 price target on the stock while maintaining a Buy rating on the shares.
In Q1 2022, Renaissance Technologies increased its position in Target Corporation by 1%, equaling shares worth roughly $355 million. The company represented 0.41% of Jim Simons’ portfolio. The hedge fund has been investing in the company for over a decade now.
In 2021, Target Corporation increased its annual dividend by 32.4% to $0.90 per share. The company has increased its dividend by 300% over the last 10 years. As of May 19, the stock’s current dividend yield stood at 2.31%.
At the end of Q4 2021, 49 hedge funds tracked by Insider Monkey held stakes in Target Corporation, the same as in the previous quarter. These stakes hold a consolidated value of roughly $4 billion. With shares worth over $530.5 million, Arrowstreet Capital was the company’s largest shareholder in Q1 2022.
Nelson Capital Management mentioned Target Corporation in its Q2 2021 investor letter. Here is what the firm has to say:
“We added Target (tkr: TGT) to our consumer staples sector. Target offers a broad array of products in owned and known brand items at affordable prices. Its omnichannel fulfilment centers allow customers to receive their items via in-store pickup, curbside pickup, same-day shipping and regular shipping while simultaneously reducing operating costs. With a significantly lower valuation than peers and a unique operating strategy, Target is an attractive holding.”
7. Bank of America Corporation (NYSE:BAC)
Dividend Yield as of May 19: 2.42%
Number of Hedge Fund Holders: 84
Renaissance Technologies’ Stake Value: $280,311,000
Bank of America Corporation (NYSE:BAC) is an American multinational financial services holding company and an investment bank. In Q1 2022, the hedge fund held shares worth over $280.3 million in the company, after increasing its position by 30%. The company represented 0.32% of Jim Simons’ portfolio.
In Q1 2022, Adam Capital was the largest shareholder of Bank of America Corporation, holding shares worth over $52.3 billion. Overall, 84 hedge funds tracked by Insider Monkey held stakes in the company in Q4 2021, up from 72 in the previous quarter. The consolidated value of these stakes is over $47.8 billion.
In 2021, Bank of America Corporation increased its annual dividend by 17% to $0.21 per share. The stock’s dividend yield came in at 2.42%, as of May 19. In April, Citigroup called Bank of America Corporation’s Q1 earnings better than expected and raised its price target on the stock to $47, with a Buy rating on the shares.
Miller Value Partners mentioned Bank of America Corporation in its Q1 2022 investor letter. Here is what the firm has to say:
“There are many times when volatility and beta give false signals. Banks outperformed in the post-tech bubble bear market of the early 2000s. At the market peak prior to the financial crisis (when risk was the highest in those names!), Bank of America (NYSE:BAC) had a 0.9x beta (based on the trailing 5 years) suggesting its “risk” was below the market’s. Wrong! It massively underperformed in the financial crisis. Realized beta over the 5 years from the pre-crisis’ 2006 peak measured 2.3x.
A much better indicator of actual risk, both before and after the financial crisis, was the quality of the balance sheet and risk-taking appetite. Beta is backwards looking and non-stationary. Relying on it underestimated risk going into the financial crisis and overestimated coming out of it (its beta has continued to fall over the past decade).
We care greatly about risk. We spend a significant amount of time thinking about the risks to our investments. We measure risk as permanent impairment of capital, which means the prices and values don’t bounce back. Business fundamentals determine risk.”
6. Colgate-Palmolive Company (NYSE:CL)
Dividend Yield as of May 19: 2.51%
Number of Hedge Fund Holders: 48
Renaissance Technologies’ Stake Value: $431,381,000
Colgate-Palmolive Company (NYSE:CL), announced a 4.4% increase in its annual dividend to $0.47 per share in March 2022. The company maintains a 59-year streak of consecutive dividend growth. The stock’s dividend yield stood at 2.51%, as of the close of May 19.
Renaissance Technologies started investing in Colgate-Palmolive Company during the fourth quarter of 2010. In Q1 2022, the hedge fund increased its position in the company by 152%, with shares worth over $431.3 million. Colgate-Palmolive Company accounted for 0.5% of Jim Simons’ portfolio. This April, Deutsche Bank appreciated the company’s strong sales trend and set a $91 price target on the stock, with a Buy rating on the shares. In the first quarter of 2022, analysts also presented a positive outlook on The Coca-Cola Company, Exxon Mobil Corporation, and PepsiCo, Inc..
At the end of Q4 2021, 48 hedge funds tracked by Insider Monkey reported owning stakes in Colgate-Palmolive Company, down from 54 in the previous quarter. These stakes hold a consecutive value of over $2.06 billion.
5. The Home Depot, Inc. (NYSE:HD)
Dividend Yield as of May 19: 2.64%
Number of Hedge Fund Holders: 68
Renaissance Technologies’ Stake Value: $563,524,000
The Home Depot, Inc. (NYSE:HD) is one of the latest acquisitions of Renaissance Technologies in the first quarter of 2022. The firm initiated its position in the company with shares worth over $563.5 million, which represented 0.66% of Jim Simons’ portfolio.
On February 22, The Home Depot, Inc. announced a 15% increase in its annual dividend to $1.90 per share. The stock’s dividend yield stood at 2.64%, as of May 19. The company has increased its dividend consecutively for the past 14 years. This May, Citigroup set a $327 price target on The Home Depot, Inc., with a Buy rating on the shares.
At the end of Q4 2021, 68 hedge funds tracked by Insider Monkey held positions in The Home Depot, Inc., up from 58 in the previous quarter. The total value of these stakes is over $6.08 billion. Ken Fisher’s Fisher Asset Management was the company’s largest shareholder in Q1 2022, with shares worth over $2.4 billion.
Ensemble Capital mentioned The Home Depot, Inc. in its Q1 2022 investor letter. Here is what the firm has to say:
“Home Depot (7.7% weight in the Fund): The demand surge for remodeling and home improvement goods sparked by shelter in place orders, remote work going mainstream, and a shortage of homes on the market to buy, ran headlong into the supply chain crisis, triggering surging prices in the products Home Depot sells. But the company has been able to pass nearly all of these increased costs on to customers, with revenue growing 37% over the past two years while gross profits, or the profits the company makes on each item they sell, increased by 35%. Even this small difference appears to be due not to inflation eating away at Home Depot’s profits, but rather be a function of the huge increase in revenue the company has been generating in low margin lumber sales.”
4. PepsiCo, Inc. (NASDAQ:PEP)
Dividend Yield as of May 19: 2.84%
Number of Hedge Fund Holders: 60
Renaissance Technologies’ Stake Value: $327,838,000
This May, JPMorgan appreciated the performance of PepsiCo, Inc., calling its earnings and guidance ‘impressive’. The firm lifted its price target on the stock to $186, while maintaining an Overweight rating on the shares.
Terry Smith’s Fundsmith LLP was the largest shareholder of PepsiCo, Inc. in Q1 2022, owning shares worth over $1.3 billion. Overall, 60 hedge funds tracked by Insider Monkey held stakes in the company in Q4 2021, down from 61 in the previous quarter. These stakes hold a consolidated value of over $4.64 billion.
On May 3, PepsiCo, Inc. announced a 7% hike in its annual dividend to $1.15 per share, marking the company’s 50th year of consecutive dividend growth. The company has been paying dividends to shareholders consistently since 1965. The stock’s current dividend yield stood at 2.84%, as of the close of May 19. In Q1 2022, Renaissance Technologies increased its stake in PepsiCo, Inc. by 72%.
ClearBridge Investments mentioned PepsiCo, Inc. in its Q4 2021 investor letter. Here is what the firm has to say:
“The pandemic created opportunities for us to be more aggressive in a variety of areas of the market. We were opportunistic throughout the year. After a strong year for equities, we sought to bolster more defensive areas of the portfolio and added to PepsiCo, increasing our exposure to a high-quality and stable name.”
3. The Coca-Cola Company (NYSE:KO)
Dividend Yield as of May 19: 2.92%
Number of Hedge Fund Holders: 70
Renaissance Technologies’ Stake Value: $313,234,000
Jim Simons’ Renaissance Technologies started building its position in The Coca-Cola Company during the fourth quarter of 2010. In Q1 2022, the hedge fund held shares worth over $313.2 million in the company, after reducing its position by 49%. The company represented 0.36% of Jim Simons’ portfolio.
The Coca-Cola Company is one of the most famous dividend stocks, increasing dividends for the shareholders for the past 60 years consecutively.
As of the end of Q4 2021, 70 hedge funds tracked by Insider Monkey reported owning stakes in The Coca-Cola Company, up from 61 in the previous quarter. The consolidated value of these stakes is over $28.6 billion. Berkshire Hathaway was the major shareholder of this Georgia-based company in Q1 2022, holding stakes worth roughly $24.8 billion.
ClearBridge Investments mentioned The Coca-Cola Company in its Q4 2021 investor letter. Here is what the firm has to say:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like consumer staples (Coca-Cola). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”
2. Merck & Co., Inc. (NYSE:MRK)
Dividend Yield as of May 19: 3.01%
Number of Hedge Fund Holders: 80
Renaissance Technologies’ Stake Value: $418,400,000
Merck & Co., Inc. currently pays a quarterly dividend of $0.69 per share, after raising its annual dividend by 6% in 2021. The company maintains an 11-year track record of consistent dividend growth. As of May 19, the stock’s dividend yield stood at 3.01%.
In Q1 2022, Renaissance Technologies increased its position in the company by 2,672% and held stakes worth $418.4 million. The company represented 0.49% of Jim Simons’ portfolio. Merck & Co., Inc. is one of the oldest holdings of the hedge fund, as it first invested in the company in 2010. In April, Barclays analyst Carter Gould lifted his price target on the stock to $97, while maintaining an Overweight rating on the shares.
ClearBridge Investments mentioned Merck & Co., Inc. in its Q4 2021 investor letter. Here is what the firm has to say:
“Other pharma companies are providing solutions as well. Merck’s antiviral pill molnupiravir is less effective than Pfizer’s, but it will be a helpful alternative for patients who cannot take Pfizer’s due to drug-drug interactions. Merck is also helping to manufacture Johnson & Johnson’s COVID-19 vaccine, which has less stringent storage requirements than the mRNA vaccines do.”
1. Exxon Mobil Corporation (NYSE:XOM)
Dividend Yield as of May 19: 3.88%
Number of Hedge Fund Holders: 71
Renaissance Technologies’ Stake Value: $532,273,000
Exxon Mobil Corporation is a Texas-based natural gas and oil company, also involved in the production and exploration of crude oil and gas. Following its strong Q1 2022 results, Wall Street analysts presented a positive outlook on the company. In May, both Cowen and Credit Suisse lifted their price targets on Exxon Mobil Corporation to $90 and $102, respectively.
Exxon Mobil Corporation has been increasing its dividends for the past 39 years at an annual average rate of 6%. In 2021, the company raised its annual dividend by 1% to $0.88 per share. The stock’s dividend yield stood at 3.88%, as of the close of May 19. In Q1 2022, Exxon Mobil Corporation represented 0.62% of Jim Simons’ portfolio, as its hedge fund increased its position in the company by 3% during the quarter.
Saturna Capital mentioned Exxon Mobil Corporation in its Q4 2021 investor letter. Here is what the firm has to say:
“Few companies maintain their position at the top for more than a decade or two. One that did was Exxon, which appeared decennially from 1980 through 2010. In 2019 it was ranked 10th, but as of writing has dropped to 39th place.”
You can also take a look at Billionaire Steve Cohen’s Top 10 Stock Picks and David Einhorn’s Top 10 Stock Picks
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This article is originally published at Insider Monkey.
