In this article, we will be looking at the 10 best dividend achievers to buy according to hedge funds. If you want to skip our detailed analysis of dividend investing, you can go directly to the 5 Best Dividend Achievers to Buy.
According to a Reuters report on July 2nd, as investors began grappling with the news that Treasury yields would not be too exciting in the latter half of 2021, the focus was rapidly shifted to dividend-yielding stocks that were offering more attractive payouts as compared to government bonds in the US. As dividend-yielding stocks began to thus gain traction again this July, it has become important to be able to differentiate between relatively safe and risky dividend investments. This is where the dividend achievers can play a role.
What is a Dividend Achiever?
Any company that has regularly increased its dividend yield for at least 10 years, and meets certain liquidity requirements, is referred to as a dividend achiever. These companies must be listed on the NYSE or Nasdaq, but need not be part of the S&P 500. Dividend achievers also must have an average daily cash volume of about $500,000 in November and December before the reconstitution date of the Index.
All dividend stocks, like Morgan Stanley (NYSE: MS), McDonald’s Corporation (NYSE: MCD), Medtronic plc (NYSE: MDT), and The Goldman Sachs Group, Inc. (NYSE: GS) among many others, offer attractive returns and dividend safety for the most part. Dividend stocks have been renowned for being able to outperform the market in the past. For instance, the returns of dividend-paying stocks between 1973 and 2020 were about 12.83%, as compares to non-dividend payers within the same time period with lower returns at 12.18%. According to Reuters this July, the ProShares S&P Dividend Aristocrats ETF was up 14.3% so far in 2021, while the S&P 500 only witnessed a 15.8% rise. Even when you’re not considering a dividend stock’s ability to outperform the market, just knowing that between 1900 and 2000, dividends were the main contributors to the S&P 500 Index’s total return of 10.4% by contributing about 5.5% of that figure, should be proof enough that these stocks have a major role to play in the market. This reality thus allows for more investors to be pulled in by attractive dividend stocks with decent yields and the prospect of being able to establish a reliable passive income stream, especially during times of financial volatility.
With the above in mind, while it becomes tempting to invest in the next best dividend stock right away, it is important to consider a range of other factors before making any investment decisions. For instance, considering a dividend stock’s long-term revenue growth is an important factor to take note of. Data collected by Oppenheimer Funds has indicated that those dividend stocks that grew their payouts at least for several years consistency managed to outperform other dividend stocks that did not grow their payouts, but rather maintained them at the same rate. The former was able to outperform the latter by about 2.4% every year between 1972 and 2013. This one factor alone shows the importance of considering all possible relevant factors when picking dividend stocks for your portfolio.
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 May 29th 2021 our monthly newsletter’s stock picks returned 206.8%, vs. 91% 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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Let’s now look at the 10 best dividend achievers to buy according to hedge funds.
The stocks selected for our list below were among the most popular with hedge funds according to Insider Monkey’s tracked data of about 866 hedge funds. They all also have mostly positive analyst ratings and strong fundamentals and have raised their dividend yields for at least 10 consecutive years.
For each stock, we have mentioned their years of consistent dividend growth, hedge fund holders, and dividend yields as well.
Best Dividend Achievers to Buy According to Hedge Funds
10. Exxon Mobil Corporation (NYSE: XOM)
Number of Hedge Fund Holders: 65
Dividend Yield: 6.02%
Number of Years of Consistent Dividend Growth: 38
Exxon Mobil Corporation (NYSE: XOM), an American multinational energy company, works to produce and provide crude oil and natural gas. The company is based in Texas and ranks 10th on our list of the best dividend achievers to buy according to hedge funds.
Roger Read, an analyst at Wells Fargo, raised his price target on Exxon Mobil Corporation (NYSE: XOM) shares this June from $67 to $72. Read also has an Overweight rating on the company’s shares.
In the first quarter of 2021, Exxon Mobil Corporation (NYSE: XOM) had an EPS of $0.65, beating estimates by $0.05. The company’s revenue was $59.15 billion, up 5.32% year over year and beating estimates by $2.89 billion. Exxon Mobil Corporation (NYSE: XOM) has also gained 25.55% in the past 6 months and 39.35% year to date.
By the end of the first quarter of 2021, 65 hedge funds out of the 866 tracked by Insider Monkey held stakes in Exxon Mobil Corporation (NYSE: XOM) worth roughly $2.77 billion. This is compared to 63 hedge funds in the previous quarter with a total stake value of approximately $2.21 billion.
Like Morgan Stanley (NYSE: MS), McDonald’s Corporation (NYSE: MCD), Medtronic plc (NYSE: MDT), and The Goldman Sachs Group, Inc. (NYSE: GS), Exxon Mobil Corporation (NYSE: XOM) is a good stock to invest in.
9. Pfizer Inc. (NYSE: PFE)
Number of Hedge Fund Holders: 65
Dividend Yield: 3.71%
Number of Years of Consistent Dividend Growth: 11
Pfizer Inc. (NYSE: PFE), a multinational pharmaceutical and biotech company, is headquarter in the US and ranks 9th on our list of the best dividend achievers to buy according to hedge funds. The company is dedicated to discovering medical solutions and is among the most renowned COVID-19 vaccine developers.
Robyn Karnauskas, an analyst at Truist, has taken over coverage of Pfizer Inc. (NYSE: PFE) shares this July. Karnauskas has a Buy rating on the shares alongside a $43 price target, commenting that Pfizer Inc. (NYSE: PFE) has the potential to trade 15 times higher than her expected 2022 EPS.
In the first quarter of 2021, Pfizer Inc. (NYSE: PFE) had an EPS of $0.93, beating estimates by $0.15. The company’s revenue was $14.58 billion, up 21.23% year over year and beating estimates by $961.32 million. Pfizer Inc. (NYSE: PFE) has also gained 17.4% in the past 6 months and 14.37% year to date.
By the end of the first quarter of 2021, 65 hedge funds out of the 866 tracked by Insider Monkey held stakes in Pfizer Inc. (NYSE: PFE) worth roughly $2.01 billion. This is compared to 63 hedge funds in the previous quarter with a total stake value of approximately $1.84 billion.
Like Morgan Stanley (NYSE: MS), McDonald’s Corporation (NYSE: MCD), Medtronic plc (NYSE: MDT), and The Goldman Sachs Group, Inc. (NYSE: GS), Pfizer Inc. (NYSE: PFE) is a good stock to invest in.
ClearBridge Investments, an investment management firm, mentioned Pfizer Inc. (NYSE: PFE) in its first-quarter 2021 investor letter. Here’s what they said:
“Our underweights in health care and staples contributed to relative performance during the period. As we continue to focus the portfolio on high-conviction ideas, we sold Pfizer in late 2020, in the health care sector.”
8. McDonald’s Corporation (NYSE: MCD)
Number of Hedge Fund Holders: 67
Dividend Yield: 2.09%
Number of Years of Consistent Dividend Growth: 46
McDonald’s Corporation (NYSE: MCD), an American fast food company, ranks 8th on our list of the best dividend achievers to buy according to hedge funds. The company owns one of the most famous restaurant franchises that operate across the globe under the McDonald’s brand.
Gregory Francfort, an analyst at Guggenheim, has initiated coverage of McDonald’s Corporation (NYSE: MCD) shares this July. Francfort has placed a Buy rating and a $270 price target on the stock and has named it as his Best Idea as well.
In the first quarter of 2021, McDonald’s Corporation (NYSE: MCD) had an EPS of $1.92, beating estimates by $0.10. The company’s revenue was $5.12 billion, up 8.7% year over year and beating estimates by $89.33 million. McDonald’s Corporation (NYSE: MCD) has also gained 19.11% in the past 6 months and 17.19% year to date.
By the end of the first quarter of 2021, 67 hedge funds out of the 866 tracked by Insider Monkey held stakes in McDonald’s Corporation (NYSE: MCD) worth roughly $3.78 billion. This is compared to 62 hedge funds in the previous quarter with a total stake value of approximately $2.88 billion.
Like Morgan Stanley (NYSE: MS), Medtronic plc (NYSE: MDT), and The Goldman Sachs Group, Inc. (NYSE: GS), McDonald’s Corporation (NYSE: MCD) is a good stock to invest in.
7. The Home Depot, Inc. (NYSE: HD)
Number of Hedge Fund Holders: 68
Dividend Yield: 2.02%
Number of Years of Consistent Dividend Growth: 12
The Home Depot, Inc. (NYSE: HD) is the largest home improvement retail company operating in the US. The company offers a range of tools, construction supplies, and related services to consumers in the US and ranks 7th on our list of the best dividend achievers to buy according to hedge funds.
This May, Credit Suisse’s analyst Lavesh Hemnani raised the price target on The Home Depot, Inc. (NYSE: HD). The new price target is $330 versus the previous $319 target, and Hemnani also holds an Outperform rating on the stock.
In the fiscal first quarter of 2022, The Home Depot, Inc. (NYSE: HD) had an EPS of $3.86, beating estimates by $0.81. The company’s revenue was $37.50 billion, up 32.70% year over year and beating estimates by $2.87 billion. The Home Depot, Inc. (NYSE: HD) has also gained 17.7% in the past 6 months and 24% year to date.
By the end of the first quarter of 2021, 68 hedge funds out of the 866 tracked by Insider Monkey held stakes in The Home Depot, Inc. (NYSE: HD) worth roughly $4.35 billion. This is compared to 79 hedge funds in the previous quarter with a total stake value of approximately $4.92 billion.
Like Morgan Stanley (NYSE: MS), McDonald’s Corporation (NYSE: MCD), Medtronic plc (NYSE: MDT), and The Goldman Sachs Group, Inc. (NYSE: GS), The Home Depot, Inc. (NYSE: HD) is a good stock to invest in.
6. Verizon Communications Inc. (NYSE: VZ)
Number of Hedge Fund Holders: 69
Dividend Yield: 4.47%
Number of Years of Consistent Dividend Growth: 17
Verizon Communications Inc. (NYSE: VZ), a multinational telecommunications conglomerate, ranks 6th on our list of the best dividend achievers to buy according to hedge funds. The company is based in the US and is also a corporate component of the Dow Jones Industrial Average.
Colby Synesael from Cowen raised the price target on Verizon Communications Inc. (NYSE: VZ) just this July from $66 to $68. Synesael also has an Outperform rating on the company’s shares.
In the second quarter of 2021, Verizon Communications Inc. (NYSE: VZ) had an EPS of $1.37, beating estimates by $0.07. The company’s revenue was $33.76 billion, up 10.89% year over year and beating estimates by $1.03 billion. Verizon Communications Inc. (NYSE: VZ) has also gained 1.5% in the past 6 months.
By the end of the first quarter of 2021, 69 hedge funds out of the 866 tracked by Insider Monkey held stakes in Verizon Communications Inc. (NYSE: VZ) worth roughly $11.3 billion. This is compared to 67 hedge funds in the previous quarter with a total stake value of approximately $10.5 billion.
Like Morgan Stanley (NYSE: MS), McDonald’s Corporation (NYSE: MCD), Medtronic plc (NYSE: MDT), and The Goldman Sachs Group, Inc. (NYSE: GS), Verizon Communications Inc. (NYSE: VZ) is a good stock to invest in.
Miller/Howard Investments, an investment management firm, mentioned Verizon Communications Inc. (NYSE: VZ) in its first-quarter 2021 investor letter. Here’s what they said:
“We sold Verizon (VZ) based on concerns over how much they might spend in ongoing spectrum auctions. Management may legitimately view spending billions of dollars to expand their spectrum holdings as necessary, but we believe the payoff will be slow and will make it challenging to grow the dividend at a good pace.”
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Disclosure: None. 10 Best Dividend Achievers to Buy According to Hedge Funds is originally published on Insider Monkey.
