In this article, we discuss top 13 high-dividend stocks to buy according to hedge funds.
Dividend stocks are gaining popularity among investors as these stocks can potentially increase their portfolios’ returns. Due to the pandemic in 2020, many companies in the US cut their dividends due to weak earnings. Even so, dividend payments significantly accounted for overall returns. According to a report by S&P Global, citing Bloomberg, the S&P 500 companies that raised their dividends delivered a 12.7% return in 2020, compared with a 6.5% decline in the dividend cutters.
The additional income earned through these dividends investments is beneficial for investors, especially in times of financial instability. This year, elite hedge funds are also growing bullish on high-dividend stocks as the market longs for yields due to growing inflation. Companies like The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG) are mainly popular among investors as these companies have maintained decades-long dividend growth streaks, providing regular income to shareholders.
Over the years, companies with strong dividend growth track records have performed well, outplaying their peers. Charles Schwab compiled Ned Davis Research’s data in its report on dividend investments. The report mentioned that companies that grew and initiated their dividends returned 13.74% from 1981 to 2020 versus a 10.3% return for the stocks that cut their dividends. The report also mentioned that reinvested dividends significantly increased overall S&P 500 returns from 1990 to 2020.
In the third quarter of 2022, dividend payments increased by $17.7 billion, compared with $17.6 billion in the previous quarter. Moreover, for the 12 months ending September 2022, US common dividend increases were $86.7 billion, up 20.7% from the same period last year, as reported by S&P Dow Jones Indices. In view of this, we will discuss high-dividend stocks to buy according to hedge funds.
Photo by Karolina Grabowska from Pexels
Our Methodology:
For this list, we used the data of 895 elite funds in Insider Monkey’s database as of the end of the second quarter of 2022 to select the most popular high-dividend stocks among these hedge funds. The stocks mentioned below have yields above 3%, as of October 6. They are ranked according to hedge fund positions.
Top 13 High Dividend Stocks to Buy According to Hedge Funds
13. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 63
Dividend Yield as of October 6: 3.62%
Cisco Systems, Inc. (NASDAQ:CSCO) is a California-based technology company that provides hardware, software, and tech services and products. In FY22, the company generated over $12.7 billion in free cash flow and paid nearly $4 billion to shareholders through dividends and share repurchases. For fiscal Q4 2022, the company’s operating cash flow came in at $3.6 billion, in line with the previous quarter.
Cisco Systems, Inc. currently pays a quarterly dividend of $0.38 per share for a dividend yield of 3.62%, as of October 6. The company has been raising its dividends consistently for the past 11 years, which makes it one of the best dividend stocks according to hedge funds.
In August, KGI Securities upgraded Cisco Systems, Inc. to Outperform with a $53 price target, appreciating the company’s overall performance this year.
As of the close of Q2 2022, 63 hedge funds tracked by Insider Monkey owned stakes in Cisco Systems, Inc., compared with 66 in the previous quarter. The combined value of these stakes is roughly $2 billion. Among these hedge funds, Citadel Investment Group was the company’s leading stakeholder in Q2.
In addition to dividend stocks like The Coca-Cola Company, Johnson & Johnson, and The Procter & Gamble Company, Cisco Systems, Inc. is one of the best dividend stocks to consider.
Carillon Tower Advisers mentioned Cisco Systems, Inc. in its Q1 2022 investor letter. Here is what the firm has to say:
“Cisco Systems (NASDAQ:CSCO) traded lower as investors weighed how supply chain concerns would impact sales growth. The company has been upgrading its switching and routing offerings, which should lead to strong demand as on-site locations upgrade infrastructure.”
12. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 65
Dividend Yield as of October 6: 5.28%
Intel Corporation (NASDAQ:INTC) is an American multinational semiconductor company that also specializes in cloud computing and data centers. The company is one of the best dividend stocks to buy as it has been making uninterrupted dividend payments for the past 28 years. Moreover, it also holds a seven-year track record of consistent dividend growth. It currently pays a quarterly dividend of $0.365 per share and has a yield of 5.28%, as of October 6.
In September, Deutsche Bank maintained its Hold rating on Intel Corporation with a $35 price target, highlighting the company’s quarterly earnings.
At the end of June 2022, 65 hedge funds in Insider Monkey’s database reported owning stakes in Intel Corporation, down from 76 a quarter earlier. These stakes hold a collective value of over $2.53 billion.
Baron Funds mentioned Intel Corporation in its Q2 2022 investor letter. Here is what the firm has to say:
“Then, there is the case of Intel Corporation (NASDAQ:INTC). A blue-chip tech champion with a market capitalization of over $500 billion in early 2000, the stock was trading at a P/E multiple of 42. It was a fast-growing company whose stock price and multiple declined more or less in line with its peers. However, unlike Google, Intel’s net income has grown from $7.3 billion in 1999 to $19.9 billion in 2021, a compounded annual growth rate of just 4.7%. Its growth from the dot com era has not proven to be durable, and Intel has yet to trade at the price it attained in 1999.”
11. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 66
Dividend Yield as of October 6: 3.38%
Broadcom Inc. (NASDAQ:AVGO) is a California-based manufacturer and global supplier of a wide range of semiconductor and infrastructure software products. In September, BMO Capital maintained an Outperform rating on the stock with a $650 price target. The firm appreciated the company’s strong quarterly earnings and highlighted its strong semiconductor business.
In fiscal Q3 2022, Broadcom Inc. reported a strong cash position. Its operating cash flow came in at $4.4 billion, up from $3.5 billion during the same period last year. The company’s free cash flow also grew to $4.3 billion, from $3.4 billion in the prior-year quarter. During the quarter, it returned $3.2 billion to shareholders, $1.7 billion of which represented dividend payments.
On September 1, Broadcom Inc. declared a quarterly dividend of $4.10 per share, in line with its previous dividend. The company has been raising its dividends for the past 11 years, which makes it one of the best dividend stocks. As of October 6, the stock’s dividend yield came in at 3.38%.
At the end of Q2 2022, 66 hedge funds in Insider Monkey’s database owned stakes in Broadcom Inc., down from 71 in the previous quarter. These stakes hold a total value of over $4 billion. Ken Fisher and Ken Griffin were the company’s leading stakeholders in Q2.
ClearBridge Investments mentioned Broadcom Inc. in its Q4 2021 investor letter. Here is what the firm had to say:
“However, ClearBridge portfolio companies are responding by supporting their workforces and showing resilience in adapting and thriving. Semiconductor companies ClearBridge owns and engages with have been successful in advancing vaccinations in their global supply chains. In Malaysia, for example, Broadcom has taken part in PIKAS, a public-private partnership vaccination program focusing on the workforce in critical manufacturing sectors. By the summer of 2021 Broadcom was able to get over 90% of workers in its Penang factory at least one dose of vaccine, and roughly 73% fully vaccinated. Companies in the program also pay the administration cost for vaccinations including cases where the employee is no longer employed by the company before full immunization of the employee.”
10. The Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 69
Dividend Yield as of October 6: 3.24%
The Goldman Sachs Group, Inc. (NYSE:GS) is an American investment banking company. In Q2 2022, the company reported strong earnings, beating Street estimates. It posted a GAAP EPS of $7.73 and revenue of $11.86 billion, which surpassed consensus by $1.04 and $1.16 billion, respectively. At the end of the quarter, the company had $288 billion in cash and cash equivalents, up from $274 billion in the previous quarter. It returned $1.22 billion to shareholders during the quarter, $719 million of which accounted for dividend payments.
On July 18, The Goldman Sachs Group, Inc. declared a 25% hike in its dividends, which takes its quarterly payout to $2.50 per share. This was the company’s 10th consecutive year of dividend growth. As of October 6, the stock’s dividend yield came in at 3.24%.
In July, BMO Capital reiterated its Outperform rating on The Goldman Sachs Group, Inc. with a $461 price target, highlighting the company’s impressive revenue-driven beat and improving profitability.
At the end of Q2 2022, 69 hedge funds tracked by Insider Monkey owned stakes in The Goldman Sachs Group, Inc., down from 71 in the previous quarter. These stakes have a collective value of over $4.6 billion. Eagle Capital Management was the company’s leading stakeholder in Q2.
GoodHaven Capital Management mentioned The Goldman Sachs Group, Inc. in its Q2 2022 investor letter. Here is what the firm has to say:
“We also initiated a position in The Goldman Sachs Group, Inc. (NYSE:GS) at an inexpensive valuation and are attracted by the potential durability of the company’s ability to generate high returns on equity driven in part by the growth in their existing and new franchises.”
9. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 69
Dividend Yield as of October 6: 3.02%
Bristol-Myers Squibb Company (NYSE:BMY) is a multinational pharmaceutical company that develops innovative medical solutions for patients with serious illnesses. In July, JPMorgan appreciated the company’s expanding portfolio and its solid performance in the recent quarter. The firm raised its price target on the stock to $85 with an Overweight rating on the shares.
On September 14, Bristol-Myers Squibb Company declared a quarterly dividend of $0.54 per share for a dividend yield of 3.02%, as of October 6. The company has been raising its dividends consistently for the past 16 years, coming through as one of the best dividend stocks on our list.
With stakes worth over $2.1 billion, 69 hedge funds tracked by Insider Monkey owned positions in Bristol-Myers Squibb Company in Q2 2022. In the previous quarter, 70 hedge funds owned stakes in the pharmaceutical company, worth over $2.4 billion. Two Sigma Advisors was the company’s leading stakeholder in Q2.
Baron Funds mentioned Bristol-Myers Squibb Company in its Q2 2022 investor letter. Here is what the firm has to say:
“We established a position in Bristol-Myers Squibb Company, a global biopharmaceutical company focused on discovering, developing, and selling medicines for patients in the therapeutic areas of oncology, immunology, cardiovascular, and neurology. The stock trades at a low valuation relative to its current earnings because the company faces loss of exclusivity on several key drugs over the next eight years, including Revlimid, Eliquis, and Opdivo.
At the same time, Bristol-Myers has multiple new products in the early stages of launch (e.g., Opdualag, Camzyos, Breyanzi, and Reblozyl), a robust new product pipeline (e.g., Deucravacitinib, Milvexian, and CELMoD agents), and a strong balance sheet combined with strong free cash flow generation that the company can use for acquisitions. Management believes these growth drivers can more than offset the loss of exclusivity and drive revenue growth through the end of the decade. Given the company’s low valuation, if the company can execute, we think there is substantial upside in the stock.”
8. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 70
Dividend Yield as of October 6: 3.63%
An American multinational pharmaceutical industry company, Pfizer Inc. (NYSE:PFE) is one of the best dividend stocks on our list due to its strong dividend history. The company was a part of 70 hedge fund portfolios in Q2 2022, down from 79 in the previous quarter. The stakes owned by these hedge funds hold a collective value of over $2.8 billion.
In September, Pfizer Inc. declared a quarterly dividend of $0.40 per share, in line with its previous dividend. The company has been raising its dividends consistently for the past 12 years and its free cash flow generation signals future growth as well. As of October 6, the stock has a yield of 3.63%.
In Q2 2022, Pfizer Inc. reported an operating cash flow of $8.1 billion, up from $6.5 billion in the previous quarter. Its free cash flow stood at $7.4 billion, compared with $5.9 billion a quarter earlier. The company paid $4.5 billion in dividends to shareholders, which shows that its FCF is stable for shareholder returns.
ClearBridge Investments mentioned Pfizer Inc. in its Q4 2021 investor letter. Here is what the firm had to say:
“While the level of general turnover abated as we progressed through 2021, it remained high in one area: post-COVID-19 recovery plays. The concept behind this investment thesis was, and still is, straightforward: with the advent of effective vaccines, the path from pandemic to endemic is just a matter of time. As this transition occurs, the estimated excess savings of over $2 trillion built up on U.S. consumer balance sheets will unlock dramatic pent-up demand for experiences, especially global travel. This investment case seemed especially compelling when the Pfizer vaccine positively surprised markets in November 2020. As a result, we made post-COVID-19 stocks (which were trading well below our estimate of recovery value) a sizable theme within the portfolio. We understood this to be a more aggressive tilt in positioning because it required a major improvement in demand to catalyze fundamentals and drive price toward higher business values. While we accepted that recovery would not be smooth and that it would take time to deploy vaccines both domestically and globally, we decided that recovery was the logical path of least resistance and we were being well compensated for these risks. (Click here for the full text)
7. ConocoPhillips (NYSE:COP)
Number of Hedge Fund Holders: 71
Dividend Yield as of October 6: 3.83%
ConocoPhillips (NYSE:COP) is a Texas-based natural gas liquids company that specializes in the exploration and production of hydrocarbons. In August, Barclays raised its price target on the stock to $153 with an ‘Overweight’ rating on the shares, highlighting the company’s maintenance of its free cash flow yields.
ConocoPhillips has been paying continuous dividends to shareholders since 1993. It currently pays a quarterly dividend of $0.46 per share with a dividend yield of 3.83%, as of October 6.
At the end of Q2, 71 hedge funds tracked by Insider Monkey owned stakes in ConocoPhillips, up from 67 in the previous quarter. The collective value of those stakes was over $2.42 billion. With over 6.7 million shares, Fisher Asset Management owned the largest position in the energy company in Q2.
Diamond Hill Capital mentioned ConocoPhillips in its Q1 2022 investor letter. Here is what the firm had to say:
“We redeployed capital into ConocoPhillips (NYSE:COP), which was trading at a discount to our estimate of intrinsic value and is well positioned over the long run due to its low-risk asset base.”
6. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 72
Dividend Yield as of October 6: 3.55%
Exxon Mobil Corporation (NYSE:XOM) is next on our list of the best dividend stocks according to hedge funds. The company is one of the most popular energy corporations in the US and was founded in 1999 with the merger of Exxon and Mobil. Morgan Stanley lifted its price target on the stock to $113 in September and maintained an Overweight rating on the shares, holding a positive stance for companies that support low-carbon growth.
Exxon Mobil Corporation pays a quarterly dividend of $0.88 per share for a yield of 3.61%, as recorded on September 12. The company has sustained its annual dividend growth for 39 years in a row.
Of the 895 hedge funds tracked by Insider Monkey, 72 funds had investments in Exxon Mobil Corporation in Q2 2022, compared with 83 in the previous quarter. The total value of these investments came in at over $7.4 billion.
Exxon Mobil Corporation is a valuable addition to dividend portfolios alongside The Coca-Cola Company, Johnson & Johnson, and The Procter & Gamble Company.
First Eagle Investments mentioned Exxon Mobil Corporation in its Q2 2022 investor letter. Here is what the firm has to say:
“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 industrywide 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.”
5. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 71
Dividend Yield as of October 6: 3.93%
AbbVie Inc. (NYSE:ABBV) is an American biotech company that specializes in pharmaceuticals and other treatments for patients with serious illnesses. The company reported strong results in Q2 2022, posting revenue of $14.5 billion, which showed a 4.4% growth from the same period last year. Its operating cash flow for the quarter came in at over $5 billion, up from $4.9 billion in the previous quarter. The free cash flow of $4.8 billion was enough to support its dividends during the quarter.
AbbVie Inc. has been raising its dividends consistently since its spin-off in 2013. Since then, the company has raised its dividend by 250%, which makes it one of the best dividend stocks on our list. It currently pays a quarterly dividend of $1.41 per share, with a dividend yield of 3.93%, as of October 6.
In September, JPMorgan raised its price target on AbbVie Inc. to $180 with an Overweight rating on the shares, as the firm sees a strong case for multiple expansions. The firm also called ABBV one of its favorite large-cap ideas.
At the end of Q2 2022, 71 hedge funds in Insider Monkey’s database owned stakes in AbbVie Inc., compared with 76 in the previous quarter. The collective value of these stakes is over $2.8 billion. With over 4.2 million shares, Arrowstreet Capital was the company’s leading stakeholder in Q2.
ClearBridge Investments mentioned AbbVie Inc. in its Q2 2022 investor letter. Here is what the firm has to say:
“We added to our health care exposure in the quarter with the purchases of Straumann Holding (OTCPK:SAUHF), a Swiss manufacturer of medical instruments, implants and related supplies for dental procedures, in the secular bucket and U.S. pharmaceutical maker AbbVie Inc. (NYSE:ABBV) in the structural bucket. Straumann is the global market leader in dental implants with 29% overall share, a meaningful position within premium implants and smaller share in value implants. The company is also involved in clear aligners through a series of acquisitions as well as peripheral capital equipment around those businesses.
Growth will come from increasing share in both value implants and clear aligners through expansion in emerging markets on top of market growth in its premium implant business. AbbVie is undergoing a transition in anticipation of loss of exclusivity for its blockbuster Humira in the next several years with several commercial therapeutics, led by Skyrizi for psoriasis and Rinvoq for rheumatoid arthritis.”
4. Comcast Corporation (NASDAQ:CMCSA)
Number of Hedge Fund Holders: 75
Dividend Yield as of October 6: 3.51%
An American telecommunications company, Comcast Corporation (NASDAQ:CMCSA) recently succeeded in its tech test for 10G network and modem technologies, including a complete network-to-home 10G loop. The company is also planning to launch a nationwide rollout of multi-gigabit speeds for its internet service.
Comcast Corporation has been raising its dividends consistently for the past 14 years. It currently pays a quarterly dividend of $0.27 per share and has a dividend yield of 3.51%, as of October 6. The company generated $3.2 billion in free cash flow during Q2 2022 and paid $1.2 billion in dividends. This indicates that the company’s dividends are secure within its FCF.
In September, Benchmark maintained its Buy rating on Comcast Corporation with a $46 price target. The firm highlighted the significant growth in the company’s wireless broadband business.
As of the close of June 2022, 75 hedge funds tracked by Insider Monkey owned stakes in Comcast Corporation, down from 78 in the previous quarter. The collective value of these stakes is nearly $5.4 billion.
3. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 79
Dividend Yield as of October 6: 3.12%
Merck & Co., Inc. is a New Jersey-based multinational pharmaceutical company that provides innovative health solutions to its patients. Recently, the company announced the expansion of its footprint in Singapore, as it opened a new packaging facility to support the production of vaccines and biologics in the country. The company started its operations in Singapore in 1997.
In Q2 2022, Merck & Co., Inc. reported an operating cash flow of $4.3 billion, compared with $4.7 billion in the previous quarter. Its free cash flow for the quarter came in at $3.1 billion and has a healthy dividend payout ratio of 41.3%. The company has been raising its dividends consistently for the past 11 years, coming through as one of the best dividend stocks. Merck & Co., Inc. currently pays a quarterly dividend of $0.69 per share, with a dividend yield of 3.12%, as of October 6.
In September, Berenbergy upgraded Merck & Co., Inc. to Buy and also lifted its price target on the stock to $100. The firm appreciated the company’s medium-term growth which is above the sector average.
At the end of Q2 2022, 79 hedge funds in Insider Monkey’s database owned stakes in Merck & Co., Inc., valued at over $6.1 billion. Fisher Asset Management was the company’s leading stakeholder in Q2.
Chartwell Investment Partners mentioned Merck & Co., Inc. in its Q2 2022 investor letter. Here is what the firm has to say:
“In the Dividend Equity accounts, the three best performers in Q2 includes Merck (NYSE:MRK, 3.6%), up 12.0%. Merck, like other pharma companies, is in a defensive business, but the stock also did well as peak-sales estimates for their flagship drug, Keytruda, have gone up (JPMorgan estimates $32 billion in sales by 2026).”
2. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 82
Dividend Yield as of October 6: 4.65%
Citigroup Inc. (NYSE:C) is an American multinational investment banking company that also provides financial and other banking services to its consumers. The company is one of the major banks to reserve a spot in the global investment banking table. The bank generated over $2.3 billion in revenue as of September 2022, accounting for 4.2% of the global investment banking revenue.
Citigroup Inc. generated over $9 billion in free cash flow in the second quarter of 2022, which smoothly covered its dividend payments worth over $1 billion. The company has a safe payout ratio of 29%, which further indicated dividend growth. Though Citigroup Inc. does not have a dividend growth track record, it has raised its payouts at a CAGR of 20.59% in the last five years. It currently pays a quarterly dividend of $0.51 per share for a yield of 4.65%, as of October 6.
In July, Oppenheimer raised its price target on Citigroup Inc. to $86 with an Outperform rating on the shares, highlighting the company’s clean balance sheet with minimal loans.
As of the close of Q2 2022, 82 hedge funds in Insider Monkey’s database reported owning stakes in Citigroup Inc., compared with 88 in the previous quarter. These stakes have a total value of over $7.4 billion.
Diamond Hill Capital mentioned Citigroup Inc. in its Q1 2022 investor letter. Here is what the firm has to say:
“Shares of Citigroup declined in the quarter as investors became increasingly negative on capital markets activity. The company is also continuing to divest certain consumer banking geographies which may be dilutive to earnings in the near term.”
1. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 104
Dividend Yield as of October 6: 3.62%
JPMorgan Chase & Co. is a New York-based investment banking company that also operates as a financial holding company. In September, Deutsche Bank maintained its Buy rating on the stock with a $155 price target, mentioning that banking stocks could deliver a long-term performance in the current environment.
On September 20, JPMorgan Chase & Co. declared a quarterly dividend of $1.00 per share, consistent with its previous dividend. The company maintains a seven-year streak of consistent dividend growth. As of October 6, the stock’s dividend yield came in at 3.62%.
As of the close of Q2 2022, 104 hedge funds tracked by Insider Monkey owned stakes in JPMorgan Chase & Co., falling from 110 in the previous quarter. These stakes hold a combined value of over $5.8 billion, compared with $5 billion worth of stakes owned by hedge funds in the previous quarter.
You can also take a look at 10 Dividend Stocks to Buy According to Billionaire Carl Icahn’s Icahn Capital LP and 10 Dividend Stocks to Buy According to Billionaire Cliff Asness
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