In this article, we discuss the 5 best dividend stocks to buy according to Cliff Asness’ AQR Capital Management. If you want to read our detailed analysis of the hedge fund and its recent development, go directly to read 10 Best Dividend Stocks to Buy According to Cliff Asness’ AQR Capital Management.
5. The Allstate Corporation (NYSE:ALL)
Number of Hedge Fund Holders: 27
Dividend Yield as of January 17: 2.61%
An American insurance company, The Allstate Corporation (NYSE:ALL) has an 11-year track record of consistent dividend growth. Currently, the company pays a quarterly dividend of $0.80 per share, with a dividend yield of 2.61%, compared with the insurance industry’s average yield of 1.51%. Due to the company’s strong business fundamentals, the analysts expect a 7.5% annual dividend growth rate for the stock in the coming years.
AQR Capital Management made its first investment in The Allstate Corporation (NYSE:ALL) during the fourth quarter of 2010, worth $4 million. In Q3 2021, the hedge fund owned roughly 3 million shares in the company, valued at over $377 million. The Allstate Corporation (NYSE:ALL) constituted 0.69% of Cliff Asness’ portfolio in Q3. Recently, JPMorgan set a $140 price target on The Allstate Corporation (NYSE:ALL), with an Outperform rating on the shares.
Of the 867 elite funds tracked by Insider Monkey, 27 hedge funds held positions in The Allstate Corporation (NYSE:ALL) in Q3, down from 33 in the preceding quarter. The total value of these stakes is over $821.1 million.
Appleseed Fund mentioned The Allstate Corporation (NYSE:ALL) in its Q2 2021 investor letter. Here is what the firm has to say:
“Allstate is the second-largest personal insurance company in the United States with a 9.3% share in auto insurance (4th largest) and an 8.0% share in homeowner’s insurance (2nd largest). The company sells products primarily through its captive agents though this business line is shrinking as the company’s direct (Esurance.com and, more recently, Allstate.com) and independent agent businesses grow more quickly. The personal insurance industry is relatively consolidated, and competition has historically been rational, allowing Allstate to earn attractive mid-teen returns on equity in this business over the past decade. Allstate also recently announced plans to divest their low-growth, low-return life and annuity businesses. This will free up capital to reinvest into the more attractive personal insurance segment and result in improvements on consolidated returns on equity of approximately 2.5%.
Despite the attractive industry dynamics of the personal insurance business and the steps that Allstate has taken to dispose of lower return businesses, the company’s stock currently trades as if Allstate will never be able to grow its earnings. At our purchase price, Allstate’s stock was trading for less than 10.0x forward earnings estimates. While Allstate does face tough competition in the auto insurance business from GEICO and Progressive, their market position, strong brand, and increased investment into the direct insurance business should allow them to grow earnings. Overall, we believe this entry price is attractive for an industry leader in a high-return, consolidating industry. Further, downside risk management should be positively impacted by the dividend yield, a strong balance sheet, and a management team that has historically increased share repurchases when they view the stock to be trading below its intrinsic value.”
4. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 63
Dividend Yield as of January 17: 2.41%
Cisco Systems, Inc. (NASDAQ:CSCO), an American multinational technology company, declared a quarterly dividend of $0.37 per share on December 13. The stock’s current dividend yield stands at 2.41%. Cisco Systems, Inc. (NASDAQ:CSCO) has been increasing its dividend for the past 11 years consecutively.
In Q3 2021, AQR Capital Management held over 7.3 million shares in Cisco Systems, Inc. (NASDAQ:CSCO), worth over $398 million. The company represented 0.73% of Cliff Asness’ portfolio. Tigress Financial expects the company to benefit from the spending on the IT sector and its strategic acquisitions. Recently, the firm initiated a 12-month price target on Cisco Systems, Inc. (NASDAQ:CSCO), with a Buy rating on the shares. As of the close of January 17, the stock’s 12-month returns stood at 35.7%.
The number of hedge funds tracked by Insider Monkey having stakes in Cisco Systems, Inc. (NASDAQ:CSCO) grew to 63 in Q3, from 60 in the previous quarter. The consolidated value of these stakes is roughly $4 billion.
ClearBridge Investments mentioned Cisco Systems, Inc. (NASDAQ:CSCO) in its Q3 2021 investor letter. Here is what the firm has to say:
“We reinvested a portion of the proceeds into existing holding Cisco Systems, which also has highly valuable technology and an improving secular growth story with its leading position in core networking hardware, as well as in its growing software and services business. Cisco has refocused on winning share in the large and growing hyperscale market and has been investing aggressively in R&D to support growth. We believe Cisco has found new legs after previously ceding some growth opportunities in cloud while maintaining its strong presence in the carrier and enterprise markets. Cisco boasts a strong balance sheet and accelerating multiyear growth while trading at a modest multiple of earnings.”
3. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 66
Dividend Yield as of January 17: 2.50%
Intel Corporation (NASDAQ:INTC) is an American semiconductor and technology company. AQR Capital Management has been investing in the company since the fourth quarter of 2010. In Q3 2021, the hedge fund held a $401.1 million worth of stake in the company, which represented 0.74% of its 13F portfolio.
Fisher Asset Management was the largest shareholder of Intel Corporation (NASDAQ:INTC) in Q3, owning shares worth over $1.73 billion. Overall, 66 hedge funds tracked by Insider Monkey held stakes in the company in Q3, down from 78 in the previous quarter. These stakes hold a value of over $6.4 billion.
Recently, Northland appreciated Intel Corporation (NASDAQ:INTC)’s strategies and execution and upgraded the shares to Outperform while maintaining a $62 price target on the stock. Currently, Intel Corporation (NASDAQ:INTC) pays a quarterly dividend of $0.3475 per share, with a dividend yield of 2.50%. 2021 marked the company’s 7th consecutive annual dividend increase. Moreover, its 5-year dividend growth rate (DGR) stands at 6%.
Andaz Private Investments mentioned Intel Corporation (NASDAQ:INTC) in its Q3 2021 investor letter. Here is what the firm has to say:
“Intel (INTC) is trading on a high single digit earnings multiple and is essentially: 1) an oligopolistic foundry set to benefit from large government incentives; and 2) a semiconductor business that is returning to competitiveness after years of being a laggard.”
2. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 88
Dividend Yield as of January 17: 2.53%
An American healthcare company, Johnson & Johnson (NYSE:JNJ) is among the 35 members of Dividend Kings list, increasing its dividend consistently for the past 59 years, making it one of the best dividend stocks in Cliff Asness’ portfolio. Currently, the company pays an annual dividend of $1.06 per share, with a dividend yield of 2.53%. Johnson & Johnson’s (NYSE:JNJ) five-year average annual dividend growth rate stands at 6%.
In Q3 2021, AQR Capital Management held shares worth $491.8 million in Johnson & Johnson (NYSE:JNJ), which accounted for 0.91% of its 13F portfolio. Acknowledging the efficacy of the company’s vaccine against Omicron, recently, Credit Suisse lifted its price target on Johnson & Johnson (NYSE:JNJ) to $200, while maintaining an Outperform rating on the shares.
As per Insider Monkey’s data for Q3, 88 hedge funds held stakes in Johnson & Johnson (NYSE:JNJ), the same as in the previous quarter. These stakes hold a consolidated value of over $6.8 billion.
Distillate Capital mentioned Johnson & Johnson (NYSE:JNJ) in its Q2 2021 investor letter. Here is what the firm has to say:
“The largest additions in the rebalance, Johnson & Johnson was around 50 and 40 basis points incrementally. J&J underperformed in the quarter while its normalized free cash flows held steady and so its position size was topped off to match the stable cash flows.”
1. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 69
Dividend Yield as of January 17: 2.18%
An American consumer goods company, The Procter & Gamble Company (NYSE:PG) was the ninth-largest holding of AQR Capital Management in Q3, representing 0.97% of its 13F portfolio.
The Procter & Gamble Company (NYSE:PG) has been paying dividends to shareholders for the past 131 years and 2021 marked its 65th consecutive year of dividend growth. Currently, the company pays a quarterly dividend of $0.8698 per share, with a dividend yield of 2.18%. This December, The Royal Bank of Canada set a $150 price target on The Procter & Gamble Company (NYSE:PG), appreciating the company’s solid fiscal Q1 2022 results.
At the end of Q3 2021, 69 hedge funds tracked by Insider Monkey held stakes in The Procter & Gamble Company (NYSE:PG) up from 68 in the preceding quarter. These stakes are valued at over $6.41 billion.
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