In this article, we discuss the 10 best dividend stocks according to John Overdeck and David Siegel’s Two Sigma Advisors. You can skip our detailed analysis of the hedge fund and its performance, and go directly to read 5 Best Dividend Stocks According to John Overdeck And David Siegel’s Two Sigma Advisors.
John Overdeck and David Siegel co-founded Two Sigma Advisors, a New York-based hedge fund, in 2001. The hedge fund utilizes technological advances and data sciences in global financial markets to make investments while managing risks. The use of a scientific approach in investment management comes with the founders’ propensity for data and technology, especially machine learning and distributed computing.
Before founding Two Sigma, both Overdeck and Siegel worked at some of the most prominent hedge funds, like D E Shaw and Tudor Investments. This polished their strategy of deploying scientific rules in financial markets. Currently, the hedge fund has over 1600 employees in research and development roles. In 2019, Overdeck and Siegel received a lifetime achievement award at Institutional Investors’ 17th annual Hedge Fund Industry Awards. The data-driven hedge fund managed to generate positive returns over the years through its technology-based investment methods. The hedge fund’s Compass Fund rebounded in 2021, gaining 8.75% through November, after posting a loss of 12.21% in 2020.
As of Q3 2021, Two Sigma Advisors’ portfolio value stands at over $38.5 billion, up from $37.9 billion in the preceding quarter. The hedge fund invests heavily in technology, healthcare, and services sectors, among others. Some of the hedge fund’s major holdings in Q3 include Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL), and Meta Platforms, Inc. (NASDAQ:FB). However, in this article, we will focus on the dividend stocks in Two Sigma Advisors’ 13F portfolio as of Q3.
David Siegel of Two Sigma Advisors
John Overdeck of Two Sigma Advisors
Our Methodology:
In this article, we will focus on the dividend stocks in Two Sigma Advisors’ portfolio. For this list, we considered the hedge fund’s 13F portfolio as of Q3.
10 Best Dividend Stocks According to John Overdeck And David Siegel’s Two Sigma Advisors
10. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 45
Dividend Yield as of January 18: 7.10%
Altria Group, Inc. (NYSE:MO) is an American manufacturing company that mainly specializes in tobacco, cigarettes, and related products. In Q3 2021, Two Sigma Advisors increased its stake in the company significantly by 481% and now holds roughly 2.6 million shares, worth over $118 million. Altria Group, Inc. (NYSE:MO) represented 0.3% of John Overdeck and David Siegel’s portfolio in Q3.
On December 9, Altria Group, Inc. (NYSE:MO) announced a quarterly dividend of $0.90 per share, with a dividend yield of 7.10%. 2021 marked the company’s 56th dividend increase in the past 52 years. Moreover, Altria Group, Inc. (NYSE:MO)’s long-term payout ratio target of 80% indicates that the company will continue to distribute a significant amount of its cash flow to shareholders. Recently, Morgan Stanley set a $52 price target on Altria Group, Inc. (NYSE:MO), while keeping an Equal Weight rating on the shares.
At the end of Q3 2021, 45 hedge funds tracked by Insider Monkey reported owning stakes in Altria Group, Inc. (NYSE:MO), down from 47 in the previous quarter. These stakes hold a consolidated value of roughly $830 million. With over 5.1 million shares, Harris Associates was the company’s largest shareholder in Q3.
Like Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL), and Meta Platforms, Inc. (NASDAQ:FB), Altria Group, Inc. (NYSE:MO) is one of the most notable stocks in Two Sigma Advisors’ Q3 portfolio.
Broyhill Asset Management mentioned Altria Group, Inc. (NYSE:MO) in its Q2 2021 investor letter. Here is what the firm has to say:
“Altria (MO) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 20%. We shared our thoughts on these regulations during the quarter, which are available here.
MO Valuation. MO is up ~ 18% YTD (even accounting for the recent sell-off). We expect MO to generate close to $5 in annual FCF per share over the next few years, putting the stock at ~ 10x, which is less than half the market’s multiple today. Over the last decade, shares have traded at an average multiple of 15x and within a range of ~ 10x – 20x (+/-1 standard deviation). The stock yields 7.2% at the current price, close to a 6% premium to treasuries. Historically, shares have traded closer to a 3% premium to the 10Y, which would imply a ~ $75 share price.”
9. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 66
Dividend Yield as of January 18: 7.60%
AT&T Inc. (NYSE:T) is an American holding company that offers telecommunications, media, and tech services to its consumers. On December 16, the company announced a quarterly dividend of $0.52 per share, with a dividend yield of 7.60%. Though AT&T Inc. (NYSE:T) has been increasing dividends for the past 36 years, analysts are expecting dividend cuts in 2022 and 2023.
As per Insider Monkey’s Q3 data, 66 hedge funds tracked by Insider Monkey held stakes in AT&T Inc. (NYSE:T), down from 68 in the preceding quarter. The consolidated value of these stakes is over $3.2 billion, up from $2.8 billion in Q2.
Recently, Citigroup added AT&T Inc. (NYSE:T) to its ‘positive catalyst watchlist’ as the company is expected to see growth in postpaid phone net sales. The firm lifted its price target on the stock to $29, while keeping a Buy rating on the shares. In Q3 2021, Two Sigma Advisors increased its stake in AT&T Inc. (NYSE:T) by 99%, which now represents 0.87% of its 13F portfolio.
Nelson Capital Management mentioned AT&T Inc. (NYSE:T) in its Q1 2021 investor letter. Here is what the firm has to say:
“Nelson Capital stayed busy in the first quarter, making several adjustments within our core portfolio. In the communication services sector, we sold AT&T (tkr: T). Over the years, AT&T has made several poor acquisitions, especially in the content realm, leaving the company saddled with debt and unable to change directions.”
8. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 61
Dividend Yield as of January 18: 1.64%
An American multinational beverage corporation, The Coca-Cola Company (NYSE:KO) has a 59-year track record of consistent dividend growth.
Two Sigma Advisors started investing in The Coca-Cola Company (NYSE:KO) during the fourth quarter of 2010. In Q3 2021, the hedge fund increased its stake in The Coca-Cola Company (NYSE:KO) by 58%, which represented 0.88% of its 13F portfolio. As The Coca-Cola Company (NYSE:KO) reported growth in its on-premise sales despite low vaccination rates, in January, Guggenheim upgraded the stock’s shares to Buy, while lifting its price target to $66.
With stakes worth $25.1 billion, 61 hedge funds tracked by Insider Monkey held positions in The Coca-Cola Company (NYSE:KO) in Q3, compared with 62 in the previous quarter.
7. Medtronic plc (NYSE:MDT)
Number of Hedge Fund Holders: 62
Dividend Yield as of January 18: 2.34%
Medtronic plc (NYSE:MDT) is an American-Irish medical device company, which is best known for its revolutionary cardiac devices. Two Sigma Advisors started investing in the company during the third quarter of 2016. In Q3 2021, the hedge fund owned a stake worth over $373.4 million in Medtronic plc (NYSE:MDT), which accounted for 0.96% of its 13F portfolio.
On December 10, Medtronic plc (NYSE:MDT) announced a quarterly dividend of $0.63 per share, with a dividend yield of 2.34%. The company has maintained a 44-year streak of consistent dividend growth. However, the dividend growth rate has declined to 8% in the past three years, which was previously recorded at 16%. Recently, Morgan Stanley set a $120 price target on Medtronic plc (NYSE:MDT), with an Equal Weight rating on the shares.
In Q3 2021, 62 hedge funds tracked by Insider Monkey were bullish on Medtronic plc (NYSE:MDT), down from 68 in the previous quarter. The total value of these stakes is over $2.27 billion. Diamond Hill Capital was the company’s largest shareholder in Q3, owning shares worth over $575.6 million.
6. Mondelez International, Inc. (NASDAQ:MDLZ)
Number of Hedge Fund Holders: 46
Dividend Yield as of January 18: 2.08%
Mondelez International, Inc. (NASDAQ:MDLZ) is an American confectionery and food holding company based in Chicago. In January, Morgan Stanley appreciated the company’s strong pricing power and lifted its price target on the stock to $73, with an Overweight rating on the shares.
At the end of Q3 2021, 46 hedge funds tracked by Insider Monkey reported owning stakes in Mondelez International, Inc. (NASDAQ:MDLZ), compared with 53 in the previous quarter. The consolidated value of these stakes is roughly $2 billion.
In Q2 2021, Mondelez International, Inc. (NASDAQ:MDLZ) increased its quarterly dividend by 11% to $0.35 per share, with a dividend yield of 2.08%. The company has been raising its dividend consecutively for the past eight years and has increased its dividend at a CAGR of 13.4% in the past five years. In Q3 2021, Two Sigma Advisors increased its stake in Mondelez International, Inc. (NASDAQ:MDLZ) by 40%, which represented 0.99% of its 13F portfolio.
Mondelez International, Inc. (NASDAQ:MDLZ) is one of the most prominent stocks in Two Sigma Advisors’ portfolio, like Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL), and Meta Platforms, Inc. (NASDAQ:FB), Altria Group, Inc. (NYSE:MO).
Click to continue reading and see 5 Best Dividend Stocks According to John Overdeck And David Siegel’s Two Sigma Advisors.
Suggested articles:
- 10 Dividend Stock Picks of Ira Unschuld’s Brant Point Investment
- 10 Canadian Dividend Stocks to Buy
- 10 Healthcare Dividend Stocks with Over 3% Yield
Disclosure. None. 10 Best Dividend Stocks According to John Overdeck And David Siegel’s Two Sigma Advisors is originally published on Insider Monkey.
