11 Best Dow Jones Dividend Stocks According to Hedge Funds

Published on March 30, 2023 at 6:38 am by Vardah Gill in Dividend Stocks, Hedge Funds, News

In this article, we discuss 11 best Dow Jones dividend stocks according to hedge funds. You can skip our detailed analysis of dividend stocks and their performance over the years, and go directly to read 5 Best Dow Jones Dividend Stocks According to Hedge Funds.

The Dow Jones Industrial Average, or DJIA, is a stock market index that tracks 30 prominent American companies listed on the US stock exchanges. Year-to-date, the index is down 1.67% and returned 11.49% in the past six months, as of March 29. Some important Dow companies include Walgreens Boots Alliance, Inc. (NASDAQ:WBA), The Coca-Cola Company (NYSE:KO), and Intel Corporation (NASDAQ:INTC).

The companies that make up the DJIA are leaders in their respective industries and are considered to be representative of the overall performance of the U.S. stock market. The DJIA is often used as a benchmark for the performance of the U.S. stock market as a whole, and investors and analysts use it to track the performance of individual companies and to make investment decisions. The index has shown strong performance over the past years relative to its counterpart, the S&P 500. According to a report by Forbes, the index delivered an average annual return of 16.65% in three years that ended in 2019, compared with a 14.03% annualized return on the S&P 500. In our previous article, we shed light on the performance of both indexes and reported that the Dow has outperformed the wider market over the last 30 years that ended June 2021. During this period, the S&P 500 delivered a 10.6% return, compared with an 11.16% return of the DJIA.

In the current market situation, dividend stocks are gaining a lot of traction among investors as they try to generate stable and regular income. When it comes to dividend investing, companies that have proven dividend growth track records become popular because of their strong cash flow generation and solid balance sheets. Dividend growers also dominate the market, especially during periods of high turbulence. A report by Capital Group revealed the importance of dividend stocks and mentioned that they accounted for nearly one-third of the market’s total return from 1926 to 2021. The report also mentioned that dividend growers returned 9.3% to shareholders from 1990 to 2022, with a 14.5% volatility. In comparison, non-dividend payers delivered a 4% return during the same period, with a volatility of 19.7%. To know more about dividend growers, readers can have a look at 15 Dividend Growth Stocks with Highest Rates.

Technology share chart

Our Methodology:

Almost all companies in the Dow Jones Industrial Average pay dividends to shareholders. However, for this list, we selected companies from the index that are popular among elite funds. We analyzed Insider Monkey’s database of Q4 2022 for measuring hedge fund sentiment around each stock.

Best Dow Jones Dividend Stocks According to Hedge Funds

11. NIKE, Inc. (NYSE:NKE)

Number of Hedge Fund Holders: 71

NIKE, Inc. (NYSE:NKE) is an Oregon-based multinational footwear manufacturing company that also manufactures apparel, equipment, and other related accessories. In fiscal Q3 2022, the company posted revenue of $12.4 billion, which showed a 14% growth from the same period last year. During the quarter, the company paid $528 million to shareholders in dividends, which makes it one of the best dividend stocks on our list.

Walgreens Boots Alliance, Inc. (NASDAQ:WBA), The Coca-Cola Company (NYSE:KO), and Intel Corporation (NASDAQ:INTC) are some other popular dividend stocks in DJIA.

Following the company’s recent quarterly earnings, Morgan Stanley maintained an Overweight rating on NIKE, Inc. (NYSE:NKE) in March with a $130 price target.

NIKE, Inc. (NYSE:NKE) currently pays a quarterly dividend of $0.34 per share, having raised it by 12% in November 2022. Through this increase, the company took its dividend growth streak to 21 years. The stock has a dividend yield of 1.15%, as of March 29.

At the end of Q4 2022, 71 hedge funds tracked by Insider Monkey owned stakes in NIKE, Inc. (NYSE:NKE), up from 70 in the previous quarter. These stakes have a collective value of over $4 billion.

RiverPark Advisors mentioned NIKE, Inc. (NYSE:NKE) in its Q4 2022 investor letter. Here is what the firm has to say:

“NIKE, Inc. (NYSE:NKE) shares were a top contributor for 4Q as the company reported solid 2Q23 results and raised its annual guidance. Nike reported 17% revenue growth (27% on a currency neutral basis) and $0.85 EPS, both significantly greater than expectations. Management raised its F23 outlook to low teens currency-neutral revenue growth.

Nike is, by far, the leading athletic footwear, apparel, and equipment company in the world with over $46 billion in revenue, $6 billion in 2021 annual free cash flow, and over $4 billion of excess cash. We believe that the continued global secular growth trend towards active wear will continue to aid Nike’s top-line growth, while we expect gross and operating margin improvements as it shifts its product mix to more premium products and adopts a more direct to consumer approach, driving long-term mid-teens or higher annual EPS growth for the foreseeable future.”

10. American Express Company (NYSE:AXP)

Number of Hedge Fund Holders: 71

American Express Company (NYSE:AXP) is an American financial services company that specializes in payment cards. The company raised its quarterly dividend by 15% on March 9 to $0.60 per share. It has been making regular dividend payments to shareholders for the past 30 years. The stock has a dividend yield of 1.51%, as of March 29.

In the fourth quarter of 2022, American Express Company (NYSE:AXP) posted revenue of $14.2 billion, up 16.7% from the same period last year. During the quarter, the company paid dividends worth over $14 million to shareholders.

Morgan Stanley called American Express Company (NYSE:AXP) its new top pick in the consumer finance sector in February and upgraded the stock to Overweight with a $186 price target.

At the end of December 2022, 71 hedge funds tracked by Insider Monkey reported having stakes in American Express Company (NYSE:AXP), up from 68 in the preceding quarter. These stakes are collectively valued at over $26.8 billion.

9. The Procter & Gamble Company (NYSE:PG)

Number of Hedge Fund Holders: 74

An American multinational consumer goods corporation, The Procter & Gamble Company (NYSE:PG) is next on our list of the best dividend stocks. JPMorgan upgraded the stock to Overweight in March and also raised its price target on the stock to $155. The firm presented a positive outlook on the company’s earnings this year.

The Procter & Gamble Company (NYSE:PG) currently pays a quarterly dividend of $0.9133 per share and has a dividend yield of 2.50%, as of March 29. The company has been rewarding shareholders with dividends for the past 132 years and raised its payouts for 66 years in a row.

As of the close of Q4 2022, 74 elite funds tracked by Insider Monkey reported owning stakes in the company in Q4 2022, up from 69 in the previous quarter. These stakes are collectively valued at over $4.7 billion. Among these hedge funds, Bridgewater Associates was the company’s leading stakeholder in Q4.

Rowan Street Capital mentioned The Procter & Gamble Company (NYSE:PG) in its Q4 2022 investor letter. Here is what the firm has to say:

“Let’s look at The Procter & Gamble Company (NYSE:PG). Dividend yield is 2.4%. Earnings are forecasted to grow at 5.9%, and its current earnings multiple is at 25x. Now, lets say over the next 3-5 years the market loses interest in the “safe”, mature companies that grow at anemic rates and gets an appetite for growth again. It’s very unlikely that Mr. Market will be paying 25x for 5.9% earnings growth. Lets assume that multiple declines to the market average of 18x — that would be ~6.9% drag per year on the total expected return over next 3-5 years. If we get 2.4% (dividend) + 5.9% (earnings growth) – 6.9% (decrease in earnings multiple) = 1.4% (annual return we can expect on average from this stock).”

8. The Goldman Sachs Group, Inc. (NYSE:GS)

Number of Hedge Fund Holders: 74

The Goldman Sachs Group, Inc. (NYSE:GS) is a New York-based multinational investment banking company that also provides other financial services to its consumers. The company is one of the best dividend stocks on our list as it returned over $3.2 billion to shareholders in dividends.

The Goldman Sachs Group, Inc. (NYSE:GS) currently pays a quarterly dividend of $2.50 per share and has a dividend yield of 3.14%, as of March 29.

BofA gave a positive outlook on The Goldman Sachs Group, Inc. (NYSE:GS)’s performance in 2023 and raised its price target on the stock to $425 with a Buy rating on the shares.

t the end of Q4 2022, 74 hedge funds in Insider Monkey’s database owned stakes in The Goldman Sachs Group, Inc. (NYSE:GS), up from 69 in the previous quarter. The collective value of these stakes is roughly $5 billion.

Here is what Manole Capital Management had to say about The Goldman Sachs Group, Inc. (NYSE:GS) in its Q3 2022 investor letter:

“Back in 2019, The Goldman Sachs Group, Inc. (NYSE:GS) made a splash in the card industry by working with Apple and MasterCard on a credit card. The actual card is fairly sleek (as you can see below), as customers names are etched into an Apple titanium card. The no-fee card generated a lot of hype, as many early users were quick to post their latest card on various social media sites.

The initial goal of Marcus (back in 2016) was to leverage Goldman’s wonderful name brand and build a full-service digital bank. This card was a large piece of GS’s ambitions to grow its retail banking franchise called Marcus. After 5 years, Marcus now has 14 million customers and $16 billion in loan balances. Surprisingly, Marcus now represents nearly 20% of the firm’s total revenue.

We thought it would be interesting to look how the Apple Card is doing in terms of loans and exposures. With over $100 billion in assets, this has been a successful source of cheap deposits for GS. Despite having an institutional / “white shoe” brand in the investment banking and trading world, GS’s Apple Card has been a disappointment.” (Click here to read the full text)

7. Merck & Co., Inc. (NYSE:MRK)

Number of Hedge Fund Holders: 77

Merck & Co., Inc. (NYSE:MRK) is an American multinational pharmaceutical company, based in New Jersey. In March, Berenberg raised its price target on the stock to $130 with a Buy rating on the shares. The firm sees price appreciation for the stock.

On January 24, Merck & Co., Inc. (NYSE:MRK) declared a quarterly dividend of $0.73 per share, which was in line with its previous dividend. The company maintains a 12-year streak of consistent dividend growth, which places it as one of the best dividend stocks on our list. The stock’s dividend yield came in at 2.77% on March 29.

At the end of Q4 2022, 77 hedge funds tracked by Insider Monkey owned stakes in Merck & Co., Inc. (NYSE:MRK), with a total value of over $5 billion. Citadel Investment Group was the company’s largest shareholder in Q4.

Artisan Partners mentioned Merck & Co., Inc. (NYSE:MRK) in its Q4 2022 investor letter. Here is what the firm has to say:

“Merck & Co., Inc. (NYSE:MRK) is a provider of health care solutions including prescription medicines, vaccines, biologic therapies, animal health and consumer care products. Shares have benefited from investors seeking safety in areas with less economic and interest rate sensitivity. With about one third of its sales generated by blockbuster oncology drug Keytruda, the key issue for investors is the success of its large R&D pipeline to replace those sales when Keytruda comes off patent in 2028. However, Merck seems to be getting little credit from investors for the 60+ programs it has in clinical development, despite having several solid and large new product opportunities. Additionally, the company’s strong balance sheet and robust free cash flow provide it multiple options for future partnerships and acquisitions, besides return of capital to shareholders via dividends and share repurchases.”

6. Johnson & Johnson (NYSE:JNJ)

Number of Hedge Fund Holders: 84

Johnson & Johnson (NYSE:JNJ) is one of the best dividend stocks on our list. The pharmaceutical industry company has been growing its dividends consistently for the past 61 years. It currently pays a quarterly dividend of $1.13 per share and has a dividend yield of 2.98%, as of March 29.

In addition to JNJ, Walgreens Boots Alliance, Inc. (NASDAQ:WBA), The Coca-Cola Company (NYSE:KO), and Intel Corporation (NASDAQ:INTC) are some other popular dividend stocks that investors are paying attention to.

According to Insider Monkey’s Q4 2022 database, 84 hedge funds owned investments in Johnson & Johnson (NYSE:JNJ), with a total value of over $5.5 billion.

Click to continue reading and see 5 Best Dow Jones Dividend Stocks According to Hedge Funds.

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Published on October 30, 2024 at by Inan Dogan, PhD

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A New Dawn is Coming to U.S. Stocks

Published on November 16, 2024 at by Insider Monkey Staff

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