In this article we present the list of 15 Best NASDAQ Dividend Stocks To Buy. Click to skip ahead and see the 5 Best NASDAQ Dividend Stocks To Buy.
Starbucks Corporation (NASDAQ:SBUX), Gilead Sciences, Inc. (NASDAQ:GILD), and Intel Corporation (NASDAQ:INTC) are just a handful of the best NASDAQ dividend stocks to buy, which we’ll examine in this article.
The NASDAQ index isn’t typically known for its high-dividend paying stocks. In fact, some of the most prominent companies that make up the index, including Meta Platforms, Inc. (NASDAQ:META) and Amazon.com, Inc. (NASDAQ:AMZN), fail to pay any dividend at all.
The NASDAQ 100 index’s dividend yield stands at just a hair above 1%, which is rather paltry when compared to the companies that make up the Dow Jones index, which yields more than twice that at 2.27%. The average dividend yield of the companies that make up the S&P 500 index also stands at a far more robust 1.8%.
Those figures aren’t totally surprising given the makeup of many of the companies on those indexes. While the Dow and S&P are known for boasting many mature companies that have stable cash flows that make them safe dividend stock picks, the same can’t be said of the NASDAQ, which features many young tech companies that are still in their high-growth stages.
Those dynamics are also apparent in the performance of those indexes this year. While the Dow shot up by 800 points on October 28 and has registered four straight weeks of gains, the NASDAQ has continued to flounder for the most part, down 30% year-to-date, though it has gained 7% in the last two weeks. With investors being bearish and looking to the defensive side of the market to get them through the current economic environment, high-growth tech companies that lose money are rarely on the menu.
Some of the best dividend stocks on the market can be found in the NASDAQ however, with yields that top 2% and steady income streams to support not only their current dividend payouts, but continued dividend growth as well. Notably, many of them are not traditional NASDAQ tech stocks, though several prominent tech heavyweights also feature on the list.
We’ll take a look at all of those top dividend stocks in this article, which feature yields above 2%. We’ll also look into their cash flow situation, dividend history, and more, to get a sense of how suitable an investment they are.
Our Methodology
The following NASDAQ dividend stocks are ranked based on hedge fund sentiment. We follow a select group of hedge funds because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q2 2022 reporting period.
15 Best NASDAQ Dividend Stocks To Buy
15. NetEase, Inc. (NASDAQ:NTES)
Number of Hedge Fund Shareholders: 26
Dividend Yield: 2.8%
Intel Corporation (NASDAQ:INTC), Starbucks Corporation (NASDAQ:SBUX), and Gilead Sciences, Inc. (NASDAQ:GILD) are some of the best NASDAQ dividend stocks to buy, a label which also applies to Chinese video game giant NetEase, Inc. (NASDAQ:NTES). The company, which develops and publishes PC MMORPGs and mobile games, including Diablo Immortal in China, has a variable dividend policy based on the previous quarter’s earnings. NetEase’s most recent quarterly dividend grew by 12% quarter-over-quarter, in line with the company’s five year dividend growth rate of 12.1%.
NetEase, Inc. (NASDAQ:NTES) has been facing some headwinds in China, most notably from the Chinese government, which didn’t approve any of its games for release for over a year as it seeks to crack down on videogame addiction in the country. NetEase was finally issued a license for a new game in September, but more importantly, Diablo Immortal was also released in Q3 after a slight delay, which should help offset any slowdown in its other titles.
Hedge fund ownership of NetEase, Inc. (NASDAQ:NTES) has slumped heavily over the last year, falling by 41% during that time to hit a four-year low. Steve Cohen’s Point72 Asset Management and Ray Dalio’s Bridgewater Associates were some of the biggest money managers to sell off their NTES positions during Q2. William B. Gray’s Orbis Investment Management held the largest stake among the funds tracked by Insider Monkey on June 30, owning 3.67 million shares.
14. Keurig Dr Pepper Inc. (NASDAQ:KDP)
Number of Hedge Fund Shareholders: 29
Dividend Yield: 2.02%
Keurig Dr Pepper Inc. (NASDAQ:KDP) raised its dividend by 6.7% in Q4, which also pushed it 33% higher than Q2 of 2021. That’s been a positive development for the company’s dividend investors, which had been saddled with a flat dividend for ten straight quarters prior to Q3 2021. KDP shares currently yield just over 2% and the dividend is well supported, with the company’s payout ratio being less than 50%.
Keurig Dr Pepper Inc. (NASDAQ:KDP) deliver adjusted EPS of $0.46 in Q3 alongside revenue of $3.62 billion, results that were in line with expectations. The company also reaffirmed its FY22 revenue and EPS guidance, which called for low-double-digit growth in the former and mid-single-digit growth in the latter. With the company seemingly overcoming the supply chain challenges that hampered its coffee business earlier this year, it expects strong sales and earnings growth from the business in Q4.
Hedge fund ownership of Keurig Dr Pepper Inc. (NASDAQ:KDP) spiked during the third quarter of 2020 but immediately fell back to baseline during the following quarter, where it’s remained since. Brandon Haley’s Holocene Advisors opened a 1.89 million shares position in KDP during Q2, while Cliff Asness’ AQR Capital Management raised its stake in the company by 150% during the quarter to 1.63 million shares.
13. American Electric Power Company, Inc. (NASDAQ:AEP)
Number of Hedge Fund Shareholders: 30
Dividend Yield: 3.71%
American Electric Power Company, Inc. (NASDAQ:AEP) is growing its dividend by 6.4% in Q4, pushing its yield to 3.71%. The company has grown its dividend for 12 straight years and has a very manageable payout ratio of 62%. AEP is transitioning to cleaner energy systems that the company believes will support long-term earnings growth. Its Q3 operating EPS was $1.62, beating estimates by $0.06, while its $5.5 billion in revenue topped estimates by a hearty $750 million.
Hedge fund ownership of American Electric Power Company, Inc. (NASDAQ:AEP) has dipped for three straight quarters, dropping by 21% during that time. Joel Greenblatt’s Gotham Asset Management and Peter Muller’s PDT Partners were among the funds to sell out of their AEP positions during Q2. Jim Simons’ Renaissance Technologies held the largest position on June 30 at 1.03 million shares.
ClearBridge Investments owns 780,980 shares of AEP as of June 30 and likes American Electric Power Company, Inc. (NASDAQ:AEP)’s aggressive renewables ramp, adding the stock to its portfolio during Q1 and discussing it in the ClearBridge Investments Value Equity Q1 2022 investor letter:
“About 5% of the portfolio is in transitioning power companies, typically migrating from coal to renewables. We have been active in encouraging these transitions and added a new position in American Electric Power (NASDAQ:AEP). AEP has the fastest planned renewable energy ramp in the U.S., with plans to both shrink coal and grow renewables by 50% each by 2030. This would drive an 80% emissions reduction, while supporting high single-digit earnings growth at a double-digit return.”
12. Exelon Corporation (NASDAQ:EXC)
Number of Hedge Fund Shareholders: 32
Dividend Yield: 3.48%
Exelon Corporation (NASDAQ:EXC)’s dividend was cut by 11.1% this year and has largely stagnated for several years, with it currently paying out less than it was in 2018. With a solid yield and payout ratio under 50%, it’s still a dividend worth considering, especially given that it should benefit from the signing of the Inflation Reduction Act. BMO Capital analyst James Thalacker has an ‘Outperform” rating on EXC shares and believes the company is well positioned to achieve multiple expansion.
There was a big sell off of Exelon Corporation (NASDAQ:EXC) by hedge funds during the first quarter of this year, as there was a 31% drop in ownership of the stock. Paul Tudor Jones’ Tudor Investment Corp and Dmitry Balyasny’s Balyasny Asset Management were among the funds to unload their EXC positions during Q1. Ownership of the stock remained flat during Q2.
ClearBridge Investments, which owns 1.62 million EXC shares as of June 30, believes Exelon Corporation (NASDAQ:EXC) is starting to be viewed as a premium utility, as revealed in the ClearBridge Investments Global Infrastructure Value Strategy’s Q1 2022 investor letter:
“U.S. electric utility Exelon (NASDAQ:EXC) was also a top contributor. Exelon is a pure transmission and distribution regulated utility business serving millions of electric and gas customers across Delaware, Illinois, Maryland, New Jersey, Pennsylvania and the District of Columbia. Shares outperformed along with the utilities sector; Exelon is also starting to be viewed as a premium name after its recently completed spin-off of power generation business Constellation Energy (NASDAQ:CEG).”
11. Fastenal Company (NASDAQ:FAST)
Number of Hedge Fund Shareholders: 33
Dividend Yield: 2.55%
Fastenal Company (NASDAQ:FAST) grew its dividend by 10.7% this year, marking its 24th straight year of dividend growth and positioning the company to join the select group of Dividend Aristocrats next year. The company has grown its dividend at a strong CAGR of 14.1% over the past five years, which has pushed the stock’s yield above 2.5%. The company’s payout ratio is just under 65%.
Fastenal Company (NASDAQ:FAST) reported Q3 revenue and EPS of $1.8 billion and $0.50 respectively, which were largely in line with estimates, though topping them slightly. Net sales were up by 16% year-over-year during Q3, including 21.4% year-over-year growth in August. Argus analyst John Eade has a ‘Buy’ rating on FAST shares and believes the company can generate high-single-digit EPS growth over the long-term, which should support continued dividend growth.
There was a 17% jump in hedge fund ownership of Fastenal Company (NASDAQ:FAST) during Q2. Greg Poole’s Echo Street Capital Management built a large stake in the company of 1.14 million shares during Q2, while Israel Englander’s Millennium Management hiked its position by 1,174% to 973,277 shares.
10. Paychex, Inc. (NASDAQ:PAYX)
Number of Hedge Fund Shareholders: 37
Dividend Yield: 2.64%
Payroll and HR services provider Paychex, Inc. (NASDAQ:PAYX) has been steadily growing its earnings for the last decade and the company is starting to get more aggressive with its dividend as a result, raising it by 19.7% in the second quarter of this year. PAYX shares now yield a solid 2.64%, though the company’s payout ratio is slightly high at just under 75%.
Paychex, Inc. (NASDAQ:PAYX) has grown its earnings at close to an 11% clip on an annualized basis over the past five years and the company expects more of the same in FY23, predicting 11% to 12% earnings growth, so it should have no problem continuing to grow its dividend as it’s done for the past seven years. The company’s Q1 FY23 EPS was $1.03, beating estimates by $0.06.
There’s been a 37% jump in the number of smart money managers long Paychex, Inc. (NASDAQ:PAYX) during the past five quarters, as hedge funds become increasingly intrigued by the company’s growing customer base. Robert Joseph Caruso’s Select Equity Group owns 2.14 million PAYX shares as of June 30, the largest stake in the company among the select group of funds tracked by Insider Monkey.
9. Skyworks Solutions, Inc. (NASDAQ:SWKS)
Number of Hedge Fund Shareholders: 40
Dividend Yield: 2.82%
Skyworks Solutions, Inc. (NASDAQ:SWKS) grew its dividend by 10.7% in the third quarter of this year, which represented slowing growth compared to its dividend’s 15.5% CAGR over the past five years. With a payout ratio of just over 20%, Skyworks should have no trouble maintaining double digit dividend growth in the years to come.
The radiofrequency device manufacturer is expanding its offerings across multiple markets in the wake of the possibility that it will lose its biggest customer Apple Inc. (NASDAQ:AAPL) in the years to come. Its revenue from non-mobile phone products grew by 38% year-over-year in Q2 to account for 38% of the company’s revenue, so it’s on the right track.
Hedge fund ownership of Skyworks Solutions, Inc. (NASDAQ:SWKS) was flat during the second quarter but is down by 24% since the third quarter of 2020 as hedge funds increasingly shy away from semiconductor stocks during the current cycle. Cathie Wood’s ARK Investment Management also unloaded her SWKS stake during Q3.
Heartland Advisors, which owns 119,628 shares of Skyworks Solutions, Inc. (NASDAQ:SWKS) as of June 30, discussed how cheap the stock has become in its Q3 2022 investor letter:
“Before the risk-on rebound early in the quarter, we were searching for opportunities to shift from our defensive stance, looking for beaten-down, high-quality “early cycle” leaders. Existing holding, Skyworks Solutions, Inc. (NASDAQ:SWKS), represents one such opportunity that was added to on weakness.
Skyworks is one of two leading providers of radio frequency system components to smartphone makers and electronics manufacturers. With every step-up in product complexity, over the past two decades, the competitive landscape has shrunk while gross margins have increased significantly. 5G represents another such step-up, which is likely to increase how much Skyworks can make per smartphone.
Apple is a big customer, accounting for more than half of Skyworks’ sales. That customer concentration has depressed Skyworks’ valuation over time. More recently, fears surrounding a global recession and risk to consumer demand have further pressured valuation. However, the handset business is expected to benefit from 5G content, which may help offset some macroeconomic pressures. Away from the handset business, Skyworks’ growth is expected to accelerate thanks to other secular drivers such as WIFI 6 and growth of the industrial internet (i.e., “Internet of Things”).
At a P/E of less than eight and a 2.3% dividend yield, SWKS rarely gets this cheap, making this high-quality stock compelling for longterm investors.”
8. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Number of Hedge Fund Shareholders: 40
Dividend Yield: 5.25%
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is a Dividend Aristocrat, pushing towards 30 consecutive years of dividend growth. Its dividend inched up to $0.48 in Q3 and has grown at less than a 5% CAGR over the past five years, but with a yield that’s already above 5%, its shares should nonetheless be attractive to dividend investors. While Walgreens’ payout ratio is under 40%, its profit margins are also slim, which could cause issues if its expansion into the primary care field doesn’t pan out.
Hedge fund ownership of Walgreens Boots Alliance, Inc. (NASDAQ:WBA) trended down heavily between 2015 and 2019, falling by more than half during that time, and was remained relatively flat since. Stephen Dubois’ Camber Capital Management owns 2.83 million WBA shares as of June 30, having 4.64% 13F exposure to the stock.
Aristotle Capital Management Global Equity, which sold out of its Walgreens Boots Alliance, Inc. (NASDAQ:WBA) stake during Q2, discussed its reasoning for stepping to the sidelines in the fund’s Q1 2022 investor letter:
“We first invested in Walgreens Boots Alliance in early 2013. Over our holding period, Walgreens merged with U.K.-based Boots Alliance, establishing itself as a global leading retail pharmacy chain. CEO Stefano Pessina set the company on a path of pursuing strategic partnerships (as opposed to vertical integration deals) to increase store traffic and to, over time, transform the business into a neighborhood health destination around a more modern pharmacy. Using its strong FREE cash flow generation, the company ramped up its investments in technology, aiming to accelerate the digitalization of health information. Mr. Pessina was not successful, however, at turning around the firm’s U.S. retail segment and had to deal with increasing prescription drug reimbursement pressures. He stepped down as CEO in 2020, and in 2021, Roz Brewer took the reins of the firm. We admire Ms. Brewer’s impressive track record at companies that include Starbucks (NASDAQ:SBUX) and Walmart (Sam’s Club). However, given management’s decision to divest core cash-generative businesses and redeploy capital to embryonic healthcare startups, we prefer to step aside while we follow the company’s progress.”
7. The Kraft Heinz Company (NASDAQ:KHC)
Number of Hedge Fund Shareholders: 41
Dividend Yield: 4.11%
The Kraft Heinz Company (NASDAQ:KHC) slashed its dividend by 36% in 2019 and it’s been flat ever since, so investors shouldn’t count on it growing any time soon, especially with the company’s margins being heavily pressured in Q2. Still, with a yield above 4% thanks to KHC shares cratering over the past five years, it may be an opportune time to for investors to add a good defensive dividend stock to their portfolios.
The Kraft Heinz Company (NASDAQ:KHC) surged its prices by 12.4% in Q2 but margins still fell by more than four percentage points year-over-year to just over 30% and sales volumes fell by over 2%. The company’s revenue and adjusted net income did beat estimates in Q3, coming in at $6.5 billion and $0.63 per share respectively, but year-over-year sales volumes fell again, this time by nearly 4%.
Hedge fund ownership of The Kraft Heinz Company (NASDAQ:KHC) ticked up by 19% during the second quarter as hedge funds began taking a harder look at quality food producers in an investing environment turning more defensive. Warren Buffett’s Berkshire Hathaway maintains the largest stake in KHC as of June 30, owning nearly 326 million shares worth $12.4 billion.
6. eBay Inc. (NASDAQ:EBAY)
Number of Hedge Fund Shareholders: 43
Dividend Yield: 2.18%
Closing out the first part of the list is eBay Inc. (NASDAQ:EBAY), which has already grown its dividend payments by 57% since first instituting them in the second quarter of 2019. The e-commerce platform made its most aggressive dividend hike yet in the first quarter of this year, raising its dividend by 22%. With a yield now topping 2% and a payout ratio of just 20%, eBay is becoming a compelling dividend stock for investors to consider.
While the number of active buyers on eBay’s platform fell by 12% year-over-year in Q2, the company’s strong profit margins should ensure continued earnings power for years to come, especially with eBay’s take rate growing by 130 basis points to 12.4%. There’s plenty of room for further growth in that regard, as rival Etsy, Inc. (NASDAQ:ETSY)’s take rate is nearly 20%.
Hedge fund ownership of eBay Inc. (NASDAQ:EBAY) dropped by 20% during the first half of 2022 and is less than half what it was eight years ago. David Harding’s Winton Capital Management and Noam Gottesman’s GLG Partners both sold out of their EBAY stakes during the second quarter.
Smead Capital Management, which owns 2.97 million eBay Inc. (NASDAQ:EBAY) shares as of June 30, discussed the stock’s poor run in Smead Value Fund’s Q3 2022 investor letter:
“Two things are very noticeable right off the top. First, sometimes you have to be happy losing less in a bear market environment so that you have more of your capital to grow in the next bull market. We are never really happy losing money. Second, 2022 is likely to be our third year of existence as a fund to lose money for the year. This year would join 2008 and 2018 in this undistinguished category. Our biggest detractors was dominated by eBay (NASDAQ:EBAY). Consumer/investor fears about media and e-commerce hit WBD and EBAY and profit taking in Amgen came from early 2022 strength.”
Gilead Sciences, Inc. (NASDAQ:GILD), Intel Corporation (NASDAQ:INTC), and Starbucks Corporation (NASDAQ:SBUX) lead the list of NASDAQ dividend stocks to buy, see why by clicking the link below.
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Disclosure: None. 15 Best NASDAQ Dividend Stocks To Buy is originally published at Insider Monkey.
