In this article, we will take a look at the 10 Dow Jones Stocks to Buy According to Hedge Funds. To skip our analysis of the Dow Jones Industrial Average Index, its performance, and weighting of the components, you can go directly to see the 5 Dow Jones Stocks to Buy According to Hedge Funds.
The Dow Jones Industrial Average Index (DJIA), commonly referred to as the Dow Jones, is a stock market index of 30 prominent and leading Blue-Chip companies listed on the stock exchanges in the United States. It is one of the oldest and most commonly followed equity index that was launched on May 26, 1896. The index uses a price-weighted method and covers all industries except transportation and utilities.
Since the index uses a price-weighted measure for weighting its component stocks, the stocks with higher prices are given greater weight in the index, as compared to the stocks with lower prices. This results in a higher impact on the index values from changes in higher-priced components. As of September 19, 2022, Health Care, Information Technology, and Financials had the highest weight allocation at 21.4%, 20.09%, and 16.29%.
There are multiple exchange traded funds (ETFs) that track the DJIA Index. SPDR Dow Jones Industrial Average ETF Trust is one of the most prominent ETF tracking the DJIA Index. As of June 30, 2022, the Index had an annualized total return of 11.70% over the course of last 10 years, a dividend yield of 2.21%, and an average market cap of approximately $395 billion.
Some of the notable members of the DJIA include Walmart Inc. (NYSE:WMT), Goldman Sachs Group, Inc. (NYSE:GS), Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), The Boeing Company (NYSE:BA), and Visa Inc. (NYSE:V), among others.
Given the markets have been volatile with the Federal Reserve raising rates, stocks could decline if economic data doesn’t meet expectations. Nevertheless, there’s also opportunity for long term investors who buy quality blue chip stocks.
Francisco Amaral Leitao / shutterstock.com
Methodology
We took 10 Dow Jones stocks, and we sorted them based on the number of hedge funds in our database that owned shares in the stock at the end of Q2 2022.
10 Dow Jones Stocks to Buy According to Hedge Funds
10. Travelers Companies, Inc. (NYSE:TRV)
Number of Hedge Fund Holders: 31
Travelers Companies, Inc. (NYSE:TRV) is a leading provider of property casualty insurance for auto, home, and business. It offers its services primarily through independent agents and brokers and employs nearly 30,000 personnel across the United States and select international markets.
In July, the board of directors of Travelers Companies, Inc. (NYSE:TRV) declared a quarterly cash dividend of $0.93 per share. Travelers Companies, Inc. (NYSE:TRV) has a strong dividend history with 19 years of consecutive dividend raises. Given a forward payout ratio of 25.2% and earnings growth estimates, the company could raise its dividend again next year.
As of Q2 2022, 31 out of the 895 hedge funds tracked by Insider Monkey were bullish on Travelers Companies, Inc. (NYSE:TRV) and held its shares valued at $434 million. First Eagle Investment Management was the largest shareholder holding 3.1 million shares valued at $523 million.
Alongside Salesforce, Inc. (NYSE:CRM), Apple Inc. (NASDAQ:AAPL), and Microsoft Corporation (NASDAQ:MSFT), Travelers Companies, Inc. (NYSE:TRV) is a Dow Jones stock widely owned by hedge funds in our database at the end of Q2 2022.
9. Honeywell International Inc. (NYSE:HON)
Number of Hedge Fund Holders: 42
Charlotte, North Carolina-based Honeywell International Inc. (NYSE:HON) is a multinational conglomerate with a focus on providing solutions across aerospace, building technologies, performance materials & technologies, and safety & productivity solutions.
In July, Honeywell International Inc. (NYSE:HON) released the financial results for Q2 2022. Its total revenue increased by 2% y-o-y to $8.95 billion, while its net income declined by 13% y-o-y to $1.3 billion, for three months ended June 30, 2022. It reported a normalized EPS of $2.10, beating the consensus by $0.07.
Following the earnings release, Citi analyst Andrew Kaplowitz raised the price target for Honeywell shares to $222 from $211 and maintained a ‘Buy’ rating.
As of Q2 2022, 42 hedge funds out of the 895 hedge funds tracked by Insider Monkey held shares of Honeywell International Inc. (NYSE:HON), valued at $1.0 billion. Its largest shareholder was D E Shaw with ownership of 1.3 million shares valued at $220 million.
8. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 54
Saint Paul, Minnesota-based 3M Company (NYSE:MMM) is a diversified technology company with a global presence in the following businesses: Safety and Industrial; Transportation and Electronics; Health Care; and Consumer.
In September, 3M Company (NYSE:MMM) announced that it had finalized the separation of its food safety business through a merger with Neogen Corporation (NASDAQ:NEOG). As part of the transaction, 3M Company (NYSE:MMM) will receive approximately 50.1% of the combined company, with the remaining shares held by existing Neogen shareholders.
On September 9, 2022, UBS analyst Chris Snyder increased the price target on 3M Company (NYSE:MMM) shares to $126 from $118 and upgraded the rating to ‘Neutral’ from ‘Sell’.
As of Q2 2022, 54 of the 895 hedge funds tracked by Insider Monkey owned shares of 3M Company (NYSE:MMM), valued at $1.4 billion. Its largest shareholder was Ken Fisher’s Fisher Asset Management with ownership of 6.2 million shares valued at $802 million.
7. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 67
Bentonville, Arkansas-based Walmart Inc. (NYSE:WMT) is a leading global discount retailer operating more than 10,500 stores and clubs under 46 banners in 24 countries and eCommerce websites.
Walmart Inc. (NYSE:WMT) is one of the largest companies in the world with economies of scale and financial resources. Given its growth, Walmart Inc. (NYSE:WMT) has also increased its dividend for 49 consecutive years. With a forward payout ratio of 38.33% and analyst estimating the company to earn even more money next year, Walmart Inc. (NYSE:WMT) will likely continue to raise its dividend next year.
As of Q2 2022, 67 of the 895 hedge funds tracked by Insider Monkey were long Walmart Inc. (NYSE:WMT), holding shares worth $3.8 billion. Its largest hedge fund shareholder is GQG Partners with ownership of 9.8 million shares valued at $1.2 billion.
6. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 67
American Express Company (NYSE:AXP) is a globally integrated payments company focused on card-issuing, merchant-acquiring, and card network businesses. It provides payment products and services to consumers, small businesses, mid-sized companies, and large corporations around the world. It had 71.4 million proprietary cards-in-force worldwide, as of December 31, 2021.
American Express Company (NYSE:AXP) released the financial results for the quarter ended June 30, 2022, in July. Its total net revenue increased by 20% y-o-y to $13 billion, while its net income shrunk by 14% y-o-y to $2 billion. It reported a normalized EPS of $2.57 for the quarter, beating the consensus by $0.16. It declared a cash dividend of $0.52 per share for the quarter, bringing the dividends for first half of 2022 to $1.04 per share.
As of Q2 2022, 67 of the 895 hedge funds tracked by Insider Monkey owned shares of American Express Company (NYSE:AXP), valued at $25.2 billion. Warren Buffet’s Berkshire Hathaway is its largest shareholder with ownership of 151.6 million shares valued at $21 billion.
Like American Express Company (NYSE:AXP), Salesforce, Inc. (NYSE:CRM), Apple Inc. (NASDAQ:AAPL), and Microsoft Corporation (NASDAQ:MSFT) are Dow Jones stocks widely held by hedge funds in our database at the end of Q2 2022.
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Disclosure: None. 10 Dow Jones Stocks to Buy According to Hedge Funds is originally published on Insider Monkey.
