In this article, we will be looking at the 10 best large cap dividend stocks to buy according to hedge funds. If you want to skip our detailed analysis of large-cap stocks, and dividend investing, you can go directly to the 5 Best Large Cap Dividend Stocks to Buy According to Hedge Funds.
According to CNBC, as of this year, small and mid-cap value stocks were outperforming their large-cap counterparts, especially in the months preceding this June. Dave Nadig, the chief investment officer and director of research at ETF Trends, was reported to comment that small-cap and mid-cap value stocks were beginning to attract investors this year, with CNBC mentioning that the iShares S&P 500 Value ETF (IVE) was able to outperform the iShares S&P 500 Growth ETF as of June 2021, being up 16% versus the latter’s gain of 10%. Additionally, during 2020 the Russell 2000 Index comprising mainly of small-cap stocks was also able to beat the S&P 500 index of large-cap stocks with its 86.7% gain versus the S&P 500’s 48.8%, according to Refinitiv data cited by Reuters this April. Hence, the case was beginning to be made for the triumph of small-cap and mid-cap stocks over large-cap stocks.
Yet, as of this June, this case can be said to have come crumbling down. In the US alone, large-cap funds were reported to have brought in about $13.4 billion in net inflow, the largest value reported since January 2018. In comparison, small-cap and mid-cap stocks underperformed. Reuters this June reported that this development came about as a result of value stocks losing their charm as soon as concerns over the Federal Reserve raising interest rates earlier than expected faded away. Additionally, the fact that the S&P 500’s gains of 5.2% since this April have been higher than those of the Russell 2000 at 2.3% also bears witness to the claim that large-cap stocks have been able to outperform the market in 2021. To drive the nail home, it can be observed that before this April as well, the S&P 500 managed to bring in higher gains of 8.5% versus 5% for the Russell 2000 Index from January to March 2021. As such, large-cap stocks, and primarily large-cap dividend stocks like Apple Inc. (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Visa Inc. (NYSE: V), and JPMorgan Chase & Co. (NYSE: JPM) are seeming more attractive to investors.
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.
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Let’s now look at the 10 best large cap dividend stocks to buy according to hedge funds. The stocks selected for our list below were chosen on the basis of their fundamentals and growth potential based on core business strengths.
These stocks, apart from paying dividends, are also popular among the 866 hedge funds tracked by Insider Monkey. The list is ranked based on the number of hedge funds having stakes in each company as of the end of the first quarter.
Best Large Cap Dividend Stocks to Buy According to Hedge Funds
10. ViacomCBS Inc. (NASDAQ: VIAC)
Number of Hedge Fund Holders: 89
Dividend Yield: 2.2%
ViacomCBS Inc. (NASDAQ: VIAC) is a global media and entertainment company operating through its TV Entertainment, Cable Networks, and Filmed Entertainment segments. Up till 2019, the company operated under the name of CBS Corporation. It ranks 10th on our list of the best large cap dividend stocks to buy according to hedge funds.
This May, BofA analyst Jessica Reif Ehrlich upgraded ViacomCBS Inc. (NASDAQ: VIAC) shares from Underperform to Buy with a $53 price target, raised from the previous price target of $38.
In the first quarter of 2021, ViacomCBS Inc. (NASDAQ: VIAC) had an EPS of $1.52, beating estimates by $0.30. The company’s revenue was $7.41 billion, up 11.14% year over year and beating estimates by $135.27 million. ViacomCBS Inc. (NASDAQ: VIAC) has also gained 64.72% in the past year.
By the end of the first quarter of 2021, 89 hedge funds out of the 866 tracked by Insider Monkey held stakes in ViacomCBS Inc. (NASDAQ: VIAC) worth roughly $2.34 billion. This is compared to 44 hedge funds in the previous quarter with stakes worth approximately $919 million.
Like Apple Inc. (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Visa Inc. (NYSE: V), and JPMorgan Chase & Co. (NYSE: JPM), ViacomCBS Inc. (NASDAQ: VIAC) is a good large-cap stock to invest in.
9. UnitedHealth Group Incorporated (NYSE: UNH)
Number of Hedge Fund Holders: 89
Dividend Yield: 1.2%
UnitedHealth Group Incorporated (NYSE: UNH) is a diversified healthcare company operating in the US. It offers consumer-oriented health benefit plans and services, Medicaid plans, pharmacy care services and programs, and a range of related services. The company ranks 9th on our list of the best large cap dividend stocks to buy according to hedge funds.
This July, Stephens raised its price target on UnitedHealth Group Incorporated (NYSE: UNH) shares from $440 to $460. Analyst Scott Fidel retained the firm’s Overweight rating on the stock as well, citing UnitedHealth Group Incorporated’s (NYSE: UNH) Q2 results for the price target raise, alongside its healthily “conservative” adjusted EPS outlook for the latter half of 2021.
In the second quarter of 2021, UnitedHealth Group Incorporated (NYSE: UNH) had an EPS of $4.70, beating estimates by $0.24. The company’s revenue was $71.32 billion, up 14.78% year over year and also beating estimates by $1.77 billion. UnitedHealth Group Incorporated (NYSE: UNH) has gained about 16.33% in the past 6 months and 18.6% year to date as well.
By the end of the first quarter of 2021, 89 hedge funds out of the 866 tracked by Insider Monkey held stakes in UnitedHealth Group Incorporated (NYSE: UNH) worth roughly $12.09 billion. This is compared to 91 hedge funds in the previous quarter with stakes worth approximately $10.7 billion.
Like Apple Inc. (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Visa Inc. (NYSE: V), and JPMorgan Chase & Co. (NYSE: JPM), UnitedHealth Group Incorporated (NYSE: UNH) is a good large-cap stock to invest in.
ClearBridge Investments, an investment management firm, mentioned UnitedHealth Group Incorporated (NYSE: UNH) in its second-quarter 2021 investor letter. Here’s what they said:
“A good way to conceptualize how we think about portfolio construction is to picture a pyramid. At the bottom of the pyramid are the durable compounding growth companies that form the strong foundation, resilience and consistency for the Strategy. We think these companies should comprise just under half of portfolio assets and feature annual revenue growth rates ranging from two times GDP up to 20% as well as healthy free cash flow generation.
UnitedHealth Group, a name we have owned in the Strategy since 1992, is a good example of a long-term compounder, having grown its revenue base from approximately $600 million to north of $260 billion over that time frame. It remains constantly focused on investing in new growth drivers such as telemedicine and health care analytics. Broadcom and Comcast have delivered similar long-term appreciation through a combination of organic growth, capital deployment into new and adjacent opportunities through merger and acquisition activity as well as returning capital to shareholders through buybacks and dividends.”
8. Citigroup Inc. (NYSE: C)
Number of Hedge Fund Holders: 90
Dividend Yield: 2.9%
Citigroup Inc. (NYSE: C) is a diversified financial services holding company offering a range of financial products and services to consumers in the US, Europe, and internationally. The company operates through its Global Consumer Banking and Institutional Clients Group segments and ranks 8th on our list of the best large cap dividend stocks to buy according to hedge funds.
This July, Keefe Bruyette initiated coverage of Citigroup Inc. (NYSE: C) shares with David Konrad leading the initiation. The firm places an Outperform rating on the stock, alongside an $85 price target, with Konrad commenting that he’s still optimistic about large-cap bank stocks in light of the Federal Research foreseeably raising short-term rates.
In the second quarter of 2021, Citigroup Inc. (NYSE: C) had an EPS of $2.84, beating estimates by $0.95. The company’s revenue was $17.47 billion, beating estimates by $273.99 million as well. Citigroup Inc. (NYSE: C) has also gained 7.14% in the past 6 months and 10.23% year to date.
By the end of the first quarter of 2021, 90 hedge funds out of the 866 tracked by Insider Monkey held stakes in Citigroup Inc. (NYSE: C) worth roughly $6.93 billion. This is compared to 95 hedge funds in the previous quarter with stakes worth approximately $7.12 billion.
Like Apple Inc. (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Visa Inc. (NYSE: V), and JPMorgan Chase & Co. (NYSE: JPM), Citigroup Inc. (NYSE: C) is a good large-cap stock to invest in.
7. Wells Fargo & Company (NYSE: WFC)
Number of Hedge Fund Holders: 96
Dividend Yield: 1.8%
Wells Fargo & Company (NYSE: WFC) is one of the leaders in the financial services sector, with roughly $1.9 trillion in assets. The company provides banking, investment, and mortgage products and services, alongside a range of others, and ranks 7th on our list of the best large cap dividend stocks to buy according to hedge funds.
This July, Barclays raised its price target on Wells Fargo & Company (NYSE: WFC) shares from $46 to $50. The firm holds an Equal Weight rating on the stock, with analyst Jason Goldberg citing Wells Fargo & Company’s (NYSE: WFC) Q2 earnings beat for the increased price target and an increase in his 2022 EPS estimate to $3.75.
In the second quarter of 2021, Wells Fargo & Company (NYSE: WFC) had an EPS of $1.37, beating estimates by $0.44. The company’s revenue was $20.27 billion, up 13.65% year over year and beating estimates by $2.54 billion. Wells Fargo & Company (NYSE: WFC) has gained 40.13% in the past 6 months and 50.98% year to date.
By the end of the first quarter of 2021, 96 hedge funds out of the 866 tracked by Insider Monkey held stakes in Wells Fargo & Company (NYSE: WFC) worth roughly $7.45 billion. This is compared to 99 hedge funds in the previous quarter with stakes worth approximately $8.74 billion.
Like Apple Inc. (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Visa Inc. (NYSE: V), and JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC) is a good large-cap stock to invest in.
6. Bank of America Corporation (NYSE: BAC)
Number of Hedge Fund Holders: 97
Dividend Yield: 2%
Bank of America Corporation (NYSE: BAC) is a financial services company providing banking and financial products and services for consumers, small and middle-market businesses, institutional investors, corporations, and governments across the world. The company ranks 6th on our list of the best large cap dividend stocks to buy according to hedge funds.
Keefe Bruyette’s David Konrad took over coverage of Bank of America Corporation (NYSE: BAC) shares this July with a Market Perform rating and a $40 price target.
In the second quarter of 2021, Bank of America Corporation (NYSE: BAC) had an EPS of $1.03, beating estimates by $0.27. The company’s revenue was $21.47 billion, missing estimates by $330.18 million. Bank of America Corporation (NYSE: BAC) has however gained 18.63% in the past 6 months and 25.51% year to date.
By the end of the first quarter of 2021, 97 hedge funds out of the 866 tracked by Insider Monkey held stakes in Bank of America Corporation (NYSE: BAC) worth roughly $45.3 billion. This is compared to 99 hedge funds in the previous quarter with stakes worth approximately $35.3 billion.
Like Apple Inc. (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Visa Inc. (NYSE: V), and JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corporation (NYSE: BAC) is a good large-cap stock to invest in.
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Disclosure: None. 10 Best Large Cap Dividend Stocks to Buy According to Hedge Funds is originally published on Insider Monkey.
