In this article, we will be looking at the 10 best blue chip dividend stocks hedge funds are buying. To skip our detailed analysis of blue-chip stocks and dividend investing, you can go directly to the 5 Best Blue Chip Dividend Stocks Hedge Funds Are Buying.
Blue-chip dividend stocks may be among some of the more popular stocks investors tend to consider, because these stocks don’t just offer stability in terms of their financial standing and reputation, but also because they provide stable dividend incomes alongside the benefits of investing in a big name company. Hence, blue-chip dividend stocks like Microsoft Corporation (NASDAQ: MSFT), Visa Inc. (NYSE: V), JPMorgan Chase & Co. (NYSE: JPM), and Johnson & Johnson (NYSE: JNJ) are increasingly popular among hedge funds.
Additionally, while there was a surge in blue-chip stock selloffs this June, Forbes has determined that this would result more in a golden buying opportunity for investors, rather than something that should be considered bad news. It has also been estimated that investors holding a portfolio containing blue-chip stocks like Microsoft Corporation (NASDAQ: MSFT) and JPMorgan Chase & Co. (NYSE: JPM), among other blue-chip stocks, had gained over 30% from the end of 2019 to September 2020. If a strong blue-chip stock also happens to pay dividends, it can be considered an even better investment option especially during times of inflation, as a Guinness Atkinson research report has estimated that between 1958 to 2017, dividend growth has surpassed the rate of inflation 62% of the times, during the time period studied.
Dividend stocks in general have also mostly outperformed other stocks. Take the S&P 500, for instance. High-yielding dividend stocks within the S&P 500 gained by about 24.8% in 2021 so far, with energy companies leading the fray. Additionally, the Vanguard High Dividend Yield ETF also gained by about 9.3% this year, a value that is twice the gain of the S&P 500. And while the above developments should never be taken to mean that dividend stocks, or blue-chip dividend stocks, will always continue to win, they are enough reason to consider smartly investing in such stocks.
Investing is becoming 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 February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. 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.
Without further ado, let’s take a look at the 10 best blue chip dividend stocks hedge funds are buying.
We selected these stocks based on their track record of dividend increases, hedge fund sentiment, future growth potential and analysts’ ratings. For each stock we mentioned the number of years of consistent dividend hikes and also the number of hedge funds having stakes in it.
Best Blue Chip Dividend Stocks Hedge Funds Are Buying
10. Activision Blizzard, Inc. (NASDAQ: ATVI)
Number of Hedge Fund Holders: 76
Dividend Yield: 0.51%
Number of Years of Consistent Dividend Growth: N/A
Activision Blizzard, Inc. (NASDAQ: ATVI) is an interactive home entertainment company that develops entertainment content in the US and internationally. It is also a renowned gaming company, having produced games like Call of Duty and World of Warcraft. It ranks 10th on our list of the best blue chip dividend stocks hedge funds are buying.
This July, Berenberg raised its price target on Activision Blizzard, Inc. (NASDAQ: ATVI) shares from $105 to $110, keeping a Buy rating on the stock. Analyst Jamie Bass has commented that while the ease in global lockdown restrictions may result in lesser engagement for gaming companies, it would merely be a short “bump in the road” before the industry kicks off again.
In the first quarter of 2021, Activision Blizzard, Inc. (NASDAQ: ATVI) had an EPS of $0.84, beating estimates by $0.15. The company’s revenue was $2.07 billion, up 35.74% year over year and beating estimates by $285.55 million. Activision Blizzard, Inc. (NASDAQ: ATVI) has also gained 1.80% in the past 6 months and 2.69% year to date.
By the end of the first quarter of 2021, 76 hedge funds out of the 866 tracked by Insider Monkey held stakes in Activision Blizzard, Inc. (NASDAQ: ATVI) worth roughly $3.58 billion. This is compared to 81 hedge funds in the previous quarter with stakes worth about $3.73 billion.
Like Microsoft Corporation (NASDAQ: MSFT), Visa Inc. (NYSE: V), JPMorgan Chase & Co. (NYSE: JPM), and Johnson & Johnson (NYSE: JNJ), Activision Blizzard, Inc. (NASDAQ: ATVI) is a good blue-chip dividend stock to invest in.
Cooper Investors, an investment management firm, mentioned Activision Blizzard, Inc. (NASDAQ: ATVI) in its first-quarter 2021 investor letter. Here‘s what they said:
“The portfolio established a position in video game publisher Activision Blizzard. As a watchlist company we have followed Activision for several years. As a reminder the role of the watchlist is to allow us to focus on a select group of companies where we seek to observe important signals around either value latency, industry trends or management behaviour that portend attractive investment propositions.
Technology can often play a disruptive role in content, however video games are a clear beneficiary of technology, both in terms of more immersive and realistic gaming experiences as well as the monetisation opportunities this creates…” (Click here to see the full text).
9. NIKE, Inc. (NYSE: NKE)
Number of Hedge Fund Holders: 78
Dividend Yield: 0.68%
Number of Years of Consistent Dividend Growth: 19
NIKE, Inc. (NYSE: NKE) is a designer and developer of athletic footwear, apparel, equipment, and accessories. The company operates globally and ranks 9th on our list of the best blue chip dividend stocks hedge funds are buying.
This July, Argus analyst John Staszak raised NIKE, Inc.’s (NYSE: NKE) price target from $174 to $182, retaining the firm’s Buy rating on the company’s shares. The analyst added that NIKE, Inc. (NYSE: NKE) is becoming more powerful as a supplier in light of retailers turning to the company to increase their customer traffic and boost their sales.
In the fiscal fourth quarter of 2021, NIKE, Inc. (NYSE: NKE) had an EPS of $0.93, beating estimates by $0.42. The company’s revenue was $12.34 billion, up 95.53% year over year and beating estimates by $1.32 billion. NIKE, Inc. (NYSE: NKE) has also gained 14.8% in the past 6 months and 15.3% year to date.
By the end of the first quarter of 2021, 78 hedge funds out of the 866 tracked by Insider Monkey held stakes in NIKE, Inc. (NYSE: NKE) worth roughly $5.17 billion. This is compared to 82 hedge funds in the previous quarter with stakes worth about $6.28 billion.
Like Microsoft Corporation (NASDAQ: MSFT), Visa Inc. (NYSE: V), JPMorgan Chase & Co. (NYSE: JPM), and Johnson & Johnson (NYSE: JNJ), NIKE, Inc. (NYSE: NKE) is a good blue-chip dividend stock to invest in.
8. Merck & Co., Inc. (NYSE: MRK)
Number of Hedge Fund Holders: 79
Dividend Yield: 3.35%
Number of Years of Consistent Dividend Growth: 10
Merck & Co., Inc. (NYSE: MRK) is a healthcare company providing pharmaceutical products alongside pharmaceuticals for animal health. It ranks 8th on our list of the best blue chip dividend stocks hedge funds are buying.
This July, Mizuho analyst Mara Goldstein kept the firm’s Buy rating on Merck & Co., Inc. (NYSE: MRK) shares, alongside its $100 price target, while commenting that the company’s move to withdraw marketing authorization for pembrolizumab in patients suffering from gastric cancer is not necessarily bad news, and may not impact Merck & Co., Inc. (NYSE: MRK) shares.
In the first quarter of 2021, Merck & Co., Inc. (NYSE: MRK) had an EPS of $1.40, higher than the previous quarter’s EPS of $1.32. The company’s revenue was $12.08 billion, up 0.19% year over year but missing estimates by $567.83 million. Merck & Co., Inc. (NYSE: MRK) has also gained 2.47% in the past year.
By the end of the first quarter of 2021, 79 hedge funds out of the 866 tracked by Insider Monkey held stakes in Merck & Co., Inc. (NYSE: MRK) worth roughly $6.49 billion. This is compared to 82 hedge funds in the previous quarter with stakes worth about $7.17 billion.
Like Microsoft Corporation (NASDAQ: MSFT), Visa Inc. (NYSE: V), JPMorgan Chase & Co. (NYSE: JPM), and Johnson & Johnson (NYSE: JNJ), Merck & Co., Inc. (NYSE: MRK) is a good blue-chip dividend stock to invest in.
Artisan Partners, a high value-added investment management firm, mentioned Merck & Co., Inc. (NYSE: MRK) in its first-quarter 2021 investor letter. Here’s what they said:
“In Q1, we initiated a position in Merck, a provider of health care solutions including prescription medicines, vaccines, biologic therapies, animal health and consumer care products. We purchased Merck when the stock came under pressure in part on concerns that the newly minted Biden administration could implement regulatory changes and lower drug costs in the pharmaceutical industry. Recent, but anticipated changes to Merck’s management team have also weighed on shares, as have concerns over the company’s heavy reliance on immunotherapy treatment Keytruda. Notably, Merck is not getting much credit from investors for the 60+ programs it has in clinical development, despite having several solid and large new product opportunities. Additionally, the company’s strong balance sheet and robust free cash flow provide it multiple options for future
partnerships and acquisitions. While Merck is undergoing a period of transition, we think the company’s fundamentals are strong and believe changes to management should be a catalyst for improvement.”
7. Bristol-Myers Squibb Company (NYSE: BMY)
Number of Hedge Fund Holders: 81
Dividend Yield: 2.89%
Number of Years of Consistent Dividend Growth: 11
Bristol-Myers Squibb Company (NYSE: BMY) is also a healthcare company, working to discover, develop, and license biopharmaceutical products across the world. It offers products in the hematology, oncology, cardiovascular, and immunology therapeutic areas, and ranks 7th on our list of the best blue chip dividend stocks hedge funds are buying.
This April, Citigroup reiterated a Buy rating on Bristol-Myers Squibb Company (NYSE: BMY) shares with a $77 price target, and in June, Mizuho analyst Salim Syed commented that the company would most likely be able to settle its ongoing litigation in 2-3 years.
In the first quarter of 2021, Bristol-Myers Squibb Company (NYSE: BMY) had an EPS of $1.74, higher than the previous quarter’s EPS of $1.46. The company’s revenue was $11.07 billion, up 2.71% year over year but missing estimates by $81.41 million. Bristol-Myers Squibb Company (NYSE: BMY) has gained 2.01% in the past 6 months and 10.59% year to date as well.
By the end of the first quarter of 2021, 81 hedge funds out of the 866 tracked by Insider Monkey held stakes in Bristol-Myers Squibb Company (NYSE: BMY) worth roughly $5.03 billion. This is compared to 131 hedge funds in the previous quarter with stakes worth about $6.08 billion.
Like Microsoft Corporation (NASDAQ: MSFT), Visa Inc. (NYSE: V), JPMorgan Chase & Co. (NYSE: JPM), and Johnson & Johnson (NYSE: JNJ), Bristol-Myers Squibb Company (NYSE: BMY) is a good blue-chip dividend stock to invest in.
6. Johnson & Johnson (NYSE: JNJ)
Number of Hedge Fund Holders: 81
Dividend Yield: 2.49%
Number of Years of Consistent Dividend Growth: 58
Johnson & Johnson (NYSE: JNJ) is a healthcare provider, manufacturing and selling products under the Johnson’s, Clean & Clear, Neutrogena, and other brands. It ranks 6th on our list of the best blue chip dividend stocks hedge funds are buying.
In June, Cantor Fitzgerald’s Louise Chen commented on Johnson & Johnson (NYSE: JNJ), stating that the company’s peak sales potential and pharma asset are still going underappreciated. Chen has retained the firm’s Overweight rating on Johnson & Johnson (NYSE: JNJ) shares and its $200 price target as well.
In the first quarter of 2021, Johnson & Johnson (NYSE: JNJ) had an EPS of $2.59, beating estimates by $0.24. The company’s revenue was $22.32 billion, up 7.88% year over year and beating estimates by $308.14 million. Johnson & Johnson (NYSE: JNJ) has also gained 6.31% in the past 6 months and 8.89% year to date.
By the end of the first quarter of 2021, 81 hedge funds out of the 866 tracked by Insider Monkey held stakes in Johnson & Johnson (NYSE: JNJ) worth roughly $6.91 billion. This is compared to 81 hedge funds in the previous quarter with stakes worth about $5.82 billion.
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Disclosure: None. 10 Best Blue Chip Dividend Stocks Hedge Funds Are Buying is originally published on Insider Monkey.
