In this article, we will be looking at the 10 healthcare dividend stocks that hedge funds are buying. To skip our detailed analysis of the healthcare sector, you can go directly to see the 5 Healthcare Dividend Stocks Hedge Funds are Buying.
While the pandemic has raged on and practically destroyed the foundations of every major industry and sector on the globe, the healthcare sector and community have managed to weather the storm. Rather, this is one sector that has gone so far as to ride on the tailwinds of the pandemic and profit off of it at the same time. The healthcare sector has managed to develop and test treatments, therapies, and vaccines, all in the span of one year and leave the global community speechless by its progress. As such, stocks such as Cardinal Health, Inc. (NYSE: CAH), Bristol-Myers Squibb Company (NYSE: BMY), Gilead Sciences, Inc. (NASDAQ: GILD), and CVS Health Corporation (NYSE: CVS) have caught and held the eyes and attention of major investor circles come 2021.
According to a healthcare sector outlook report for 2021 published by Fidelity, rather than slowing down the advancement of the healthcare sector, the COVID-19 pandemic actually opened up new avenues in it. But from an investor’s viewpoint, perhaps what is more alluring about the sector is its relative inexpensiveness as compared to the broader market, and its outperformance of the market at large at the same time. Even in general, BlackRock has estimated that healthcare is generally prone to positive performance even in the midst of a pandemic. In 2020, the Russell 3000 Healthcare Index was up by about 19.3%, for instance, while the broad market Russell 3000 Index was up by only roughly one more percentage point, at 20.9%.
If anything, the fact that the healthcare sector is trading at this rate is reason enough for current valuations to be considered “an attractive entry point,” according to the BlackRock report. Finally, come 2020 and the pandemic, many investors already began laying the foundations for building up healthcare portfolios, with about $4.35 billion being raised that year through about 371 venture financings in the second quarter alone. This number drastically rose from the $3.08 billion figure in the first quarter of 2020, brought in through about 327 deals, according to data from CB Insights. And unsurprisingly, such interest in the sector has continued well into 2021.
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Investing has become 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 July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% 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.
Let’s now look at the 10 healthcare dividend stocks that hedge funds are buying.
Our Methodology
Insider Monkey tracks the data of about 866 hedge funds, which we have used to pick healthcare dividend stocks that are popular among hedge funds. These stocks are positively rated among analysts today and have strong fundamentals demonstrating financial strength. We have mentioned the dividend yields and the number of hedge fund holders for each stock as well, ranking them from the lowest to the highest number of hedge fund holders.
Healthcare Dividend Stocks that Hedge Funds are Buying
10. Becton, Dickinson and Company (NYSE: BDX)
Number of Hedge Fund Holders: 65
Dividend Yield: 1.3%
Becton, Dickinson and Company (NYSE: BDX) is a manufacturer of medical supplies, devices, lab equipment, and other medical products for sale across the globe. It operates through its BD Medical, BD Life Sciences, and BD Interventional segments and ranks 10th on our list of healthcare dividend stocks that hedge funds are buying.
This August, Jason Bednar, an analyst at Piper Sandler, reiterated an Overweight rating on shares of is Becton, Dickinson and Company (NYSE: BDX). The analyst also placed a $285 price target on the shares.
In the fiscal third quarter of 2021, Becton, Dickinson and Company (NYSE: BDX) had an EPS of $2.74, beating estimates by $0.30. The company’s revenue was $4.89 billion, up 26.85% year over year and beatung estimates $382.48 million.
By the end of the first quarter of 2021, 65 hedge funds out of the 866 tracked by Insider Monkey held stakes in Becton, Dickinson and Company (NYSE: BDX) worth roughly $3.7 billion. This is compared to 65 hedge funds in the previous quarter with a total stake value of approximately $4 billion.
Like Cardinal Health, Inc. (NYSE: CAH), Bristol-Myers Squibb Company (NYSE: BMY), Gilead Sciences, Inc. (NASDAQ: GILD), and CVS Health Corporation (NYSE: CVS), Becton, Dickinson and Company (NYSE: BDX) is a good stock to invest in
9. Abbott Laboratories (NYSE: ABT)
Number of Hedge Fund Holders: 65
Dividend Yield: 1.5%
Abbott Laboratories (NYSE: ABT) is a healthcare equipment company developing and selling healthcare products across the globe. The company operates through its Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices segments. It ranks 9th on our list of healthcare dividend stocks that hedge funds are buying.
This July, Raymond James analyst Jayson Bedford raised his price target on shares of Abbott Laboratories (NYSE: ABT) from $116 to $128. The analyst also reiterated an Outperform rating on the shares.
In the second quarter of 2021, Abbott Laboratories (NYSE: ABT) had an EPS of $1.17, beating estimates by $0.15. The company’s revenue was $10.22 billion, up 39.51% year over year and beating estimates by $550.34 million. Abbott Laboratories (NYSE: ABT) has gained 14.25% year to date and 23.78% in the past year.
By the end of the first quarter of 2021, 65 hedge funds out of the 866 tracked by Insider Monkey held stakes in Abbott Laboratories (NYSE: ABT) worth roughly $5.1 billion. This is compared to 64 hedge funds in the previous quarter with a total stake value of approximately $4.3 billion.
Like Cardinal Health, Inc. (NYSE: CAH), Bristol-Myers Squibb Company (NYSE: BMY), Gilead Sciences, Inc. (NASDAQ: GILD), and CVS Health Corporation (NYSE: CVS), Abbott Laboratories (NYSE: ABT) is a good stock to invest in
Polen Capital, an investment management firm, mentioned Abbott Laboratories (NYSE: ABT) in its first-quarter 2021 investor letter. Here’s what they said:
“Abbott Laboratories developed and commercialized multiple COVID tests during 2020, delivering a double-digit performance in what could have otherwise been a very challenging year. Management expects earnings per share to grow more than 30% in 2021. We believe it is poised to sustainably deliver double-digit earnings per share growth even as COVID testing sales decline from an expected $6.5-7.5 billion in the fiscal year 2021 to potentially as low as $300-$500 million several years from now.
We have always been believers in Abbott management’s capital allocation prowess, and we think they continue to invest prudently.
Management is taking advantage of the COVID test profits to invest roughly $2 billion into R&D and marketing to bolster growth in the core business as it recovers from the pandemic. We think there could even be a durable increase in the longer-term growth rates of both the diagnostics and medical device segments, given investments in product development and direct-to-consumer (DTC) capabilities. Testing sales created a windfall for Abbott in the near term, and management is exploiting it with what we view as sound capital allocation.
We believe the company continues to be fairly valued despite being rewarded for such favorable business momentum during the quarter.”
8. Medtronic plc (NYSE: MDT)
Number of Hedge Fund Holders: 65
Dividend Yield: 1.8%
Medtronic plc (NYSE: MDT) is a developer and distributor of healthcare equipment. The company offers a range of device-based medical therapies like implantable cardiac pacemakers and other medical devices like vessel sealing instruments. It ranks 8th on our list of healthcare dividend stocks that hedge funds are buying.
Matt O’Brien, an analyst at Piper Sandler, this August retained his Overweight rating on shares of Medtronic plc (NYSE: MDT). The analyst also holds a $140 price target on the stock.
In the fiscal fourth quarter of 2021, Medtronic plc (NYSE: MDT) had an EPS of $1.50, beating estimates by $0.08. The company’s revenue was $8.19 billion, up 36.51% year over year and beating estimates by $59.18 million. Medtronic plc (NYSE: MDT) has gained 9.67% in the past 6 months and 11.70% 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 Medtronic plc (NYSE: MDT) worth roughly $3.6 billion. This is compared to 59 hedge funds in the previous quarter with a total stake value of approximately $2.8 billion.
Like Cardinal Health, Inc. (NYSE: CAH), Bristol-Myers Squibb Company (NYSE: BMY), Gilead Sciences, Inc. (NASDAQ: GILD), and CVS Health Corporation (NYSE: CVS), Medtronic plc (NYSE: MDT) is a good stock to invest in
7. Pfizer Inc. (NYSE: PFE)
Number of Hedge Fund Holders: 65
Dividend Yield: 3.2%
Pfizer Inc. (NYSE: PFE), a biopharmaceuticals and healthcare company leading the fight against the coronavirus pandemic through its vaccination production and distribution, ranks 7th on our list of the healthcare dividend stocks that hedge funds are buying. The company is based in New York.
Truist analysts, just this July, assumed coverage of Pfizer Inc. (NYSE: PFE) shares with a Buy rating.
In the second quarter of 2021, Pfizer Inc. (NYSE: PFE) had an EPS of $1.07, beating estimates by $0.09. The company’s revenue was $18.98 billion, up 60.81% year over year, and beating estimates by $249.96 million. Pfizer Inc. (NYSE: PFE) has gained 40.18% in the past 6 months and 32.87% 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 $1.8 billion.
Like Cardinal Health, Inc. (NYSE: CAH), Bristol-Myers Squibb Company (NYSE: BMY), Gilead Sciences, Inc. (NASDAQ: GILD), and CVS Health Corporation (NYSE: CVS), Pfizer Inc. (NYSE: PFE) is a good stock to invest in
6. Gilead Sciences, Inc. (NASDAQ: GILD)
Number of Hedge Fund Holders: 65
Dividend Yield: 4%
Gilead Sciences, Inc. (NASDAQ: GILD), a research-focused healthcare company, offers a range of medical and biopharmaceutical products to consumers in the US and the UK, among other countries. It ranks 6th on our list of the healthcare dividend stocks that hedge funds are buying.
An analyst at RBC Capital, Brian Abrahams, raised his price target on shares of Gilead Sciences, Inc. (NASDAQ: GILD) just this July. The new price target is $84, while Abrahams also reiterated an Outperform rating on the company’s shares.
In the second quarter of 2021, Gilead Sciences, Inc. (NASDAQ: GILD) had an EPS of $1.87, beating estimates by $0.12. The company’s revenue was $6.22 billion, up 20.88% year over year and beating estimates by $133.06 million. Gilead Sciences, Inc. (NASDAQ: GILD) has gained 10.15% in the past 6 months and 19.3% 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 Gilead Sciences, Inc. (NASDAQ: GILD) worth roughly $2.7 billion. This is compared to 72 hedge funds in the previous quarter with a total stake value of approximately $2.02 billion.
Click to continue reading and see the 5 Healthcare Dividend Stocks Hedge Funds are Buying.
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Disclosure: None. 10 Healthcare Dividend Stocks Hedge Funds are Buying is originally published on Insider Monkey.
