5 Best GARP Stocks That Pay Dividends

In this article, we discuss 5 best GARP stocks that pay dividends. If you want to read our detailed analysis of GARP investment and the performance of these stocks over the years, go directly to read 10 Best GARP Stocks That Pay Dividends. 

5. D.R. Horton, Inc. (NYSE:DHI)

Number of Hedge Fund Holders: 46
P/E Ratio as of June 14: 7.67
Estimated EPS Growth for FY23: 11.16%

D.R. Horton, Inc. (NYSE:DHI) is a Texas-based home construction company that is one of the largest homebuilders in the country by volume. It is one of the best GARP stocks on our list with a P/E ratio of 46 and estimated EPS growth of 11.16%. Moreover, the company’s EPS has shown a 43.2% growth in the past five years.

D.R. Horton, Inc. (NYSE:DHI) is also a strong dividend payer as the company holds a 10-year streak of dividend growth. It currently pays a quarterly dividend of $0.25 per share for a dividend yield of 0.87%, as recorded on June 14.

In May, Deutsche Bank initiated its coverage on the stock with a Buy rating and a $150 price target, appreciating the company’s strong sales momentum.

D.R. Horton, Inc. (NYSE:DHI) was a part of 46 hedge fund portfolios in Q1 2023, the same as in the previous quarter, according to Insider Monkey’s database. The stakes owned by these hedge funds have a total value of over $1.3 billion.

Third Avenue Management mentioned D.R. Horton, Inc. (NYSE:DHI) in its Q1 2023 investor letter. Here is what the firm has to say:

“The primary contributors to performance during the quarter included the Fund’s investments in leading US-based homebuilders (Lennar Corp. and D.R. Horton, Inc. (NYSE:DHI)), UK-centric real estate holdings (Berkeley Group and Savills plc), and Industrial and Logistics REITs (Prologis, First Industrial and Segro plc).

The Fund’s other activity during the period was modest in nature and included slight reductions to certain holdings for portfolio management purposes (Lennar Corp., D.R. Horton, FNF Group, Wharf Holdings, and AMH).

After factoring in this activity, the Fund had 41% of its capital invested in Residential Real Estate companies with strong ties to the U.S. and U.K. residential markets—where there remain supply deficits after years of under-building. In conjunction with near record-low inventory levels, there also remains significant demand for new products at affordable price points (both for-sale and for-rent). Therefore, these Fund holdings seem positioned to benefit from a multi-year recovery in residential construction and ancillary activities, particularly as mortgage rates stabilize for conforming loans. At the end of the quarter, these holdings included a diversified set of businesses including homebuilding (Lennar Group and DR Horton), timberland ownership and management (Weyerhaeuser and Rayonier), planned development (Berkeley Group and Five Point Holdings), the ownership and development of rental properties (AMH, Grainger plc, and Ingenia Communities), as well as other ancillary businesses (Lowe’s and Trinity Place Holdings).”

4. QUALCOMM Incorporated (NASDAQ:QCOM)

Number of Hedge Fund Holders: 69
P/E Ratio as of June 14: 13.16
Estimated EPS Growth for FY23: 8.31%

QUALCOMM Incorporated (NASDAQ:QCOM) is an American tech company that manufactures semiconductors and software and also provides wireless-related services. On April 12, the company declared a quarterly dividend of $0.80 per share, which was in line with its previous dividend. It has raised its dividends for 20 years in a row. The stock’s dividend yield on June 14 came in at 2.58%.

QUALCOMM Incorporated (NASDAQ:QCOM) reported an annual EPS growth of 47.4% over the past five years. In view of this and its current performance, analysts expect the company to show an 8.31% EPS growth in fiscal year 2023. With a P/E ratio of 13.16, QCOM is one of the best GARP stocks on our list.

As per Insider Monkey’s database for Q1 2023, 69 hedge funds tracked by Insider Monkey held stakes in QUALCOMM Incorporated (NASDAQ:QCOM), worth collectively over $1.74 billion.

3. The Cigna Group (NYSE:CI)

Number of Hedge Fund Holders: 79
P/E Ratio as of June 14: 12.09
Estimated EPS Growth for FY23: 24.83%

The Cigna Group (NYSE:CI) is an American multinational managed healthcare and insurance company, based in Connecticut. The company posted strong revenues in Q1 2023 which has resulted in positive analyst sentiment for FY23. Its revenue for the quarter came in at $46.5 billion, up 5.7% from the same period last year. The company’s EPS is projected to grow by 24.8% in fiscal year 2023.

The Cigna Group (NYSE:CI), one of the best GARP stocks on our list, pays a quarterly dividend of $1.23 per share. The stock has a dividend yield of 1.81%, as of June 14. The stock currently trades at a price-to-earnings ratio of 12.09.

At the end of Q1 2023, 79 hedge funds tracked by Insider Monkey owned stakes in The Cigna Group (NYSE:CI), worth over $3 billion collectively.

Artisan Partners mentioned the performance of The Cigna Group (NYSE:CI) in its Q1 2023 investor letter. Here is what the firm has to say:

“The Cigna Group (NYSE:CI) delivered strong operating results that came in well ahead of the company’s initial guidance, yet the stock has continued to sell off since the beginning of 2023. It seems there are a few reasons for it: 1) concerns over the government targeting pharmacy benefit managers and trying to directly negotiate drug prices under the president’s new budget, 2) a potential normalization of elective procedures that increases medical costs, 3) a rotation by dedicated health care investors toward medical technology and technology areas and away from the safety of big pharma and HMOs, 4) disenrollment trends as it relates to the commercial book of business heading into a potential downturn, and 5) selling in the space as we approach another presidential election in 2024. Pick your poison, but the selling has taken the stock price back to its levels of mid-2022. Our investment case hasn’t changed. Cigna is one of the few managed care organizations in the US with the scale and size to compete effectively. In 2022, free cash flow was $7.4 billion, up $1.3 billion from 2021. Cigna paid down $3.5 billion of debt, repurchased $7.6 billion in stock and sold its life, accident and supplemental benefits business in Asia to Chubb that helped fund the share repurchases. In short, the business in performing well, and management is smartly allocating capital. Additionally, the stock is selling for less than 11X next year’s earnings, which is inexpensive.”

2. Applied Materials, Inc. (NASDAQ:AMAT)

Number of Hedge Fund Holders: 84
P/E Ratio as of June 14: 18.40
Estimated EPS Growth for FY23: 7.39%

Applied Materials, Inc. (NASDAQ:AMAT) is a California-based company that specializes in semiconductor chips. It is among the best GARP stocks on our list with a P/E ratio of 18.40, as of June 14.

Applied Materials, Inc. (NASDAQ:AMAT) has been raising its dividends consistently for the past six years. The company offers a quarterly dividend of $0.32 per share and has a dividend yield of 0.92%, as recorded on June 14.

Applied Materials, Inc. (NASDAQ:AMAT) was a popular buy among hedge funds in Q1 2023, as 84 funds in Insider Monkey’s database owned stakes in the company, up from 70 a quarter earlier. Their collective stake value is $4.4 billion.

1. Apple Inc. (NASDAQ:AAPL)

Number of Hedge Fund Holders: 131
P/E Ratio as of June 14: 31.18
Estimated EPS Growth for FY23: 6%

Apple Inc. (NASDAQ:AAPL) tops our list of the best GARP stocks that pay dividends. The stock currently has a P/E ratio of 31.18 and its estimated EPS growth is 6% for FY23. Over the past five years, the company’s EPS has grown by 21.6%.

Apple Inc. (NASDAQ:AAPL) pays a quarterly dividend of $0.24 per share and has raised its payouts for 11 years in a row. The stock’s dividend yield on June 14 came in at 0.52%.

Apple Inc. (NASDAQ:AAPL) was a part of 131 hedge fund portfolios at the end of Q1 2023, as per Insider Monkey’s database. These stakes are collectively worth over $165.2 billion. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q1.

Here’s what Fred Alger Management said about Apple Inc. (NASDAQ:AAPL) in its Q1 2023 investor letter:

“Apple Inc. (NASDAQ:AAPL) is a leading technology provider in telecommunications, computing, and services. Apple’s iOS operating system is the company’s unique intellectual property and competitive strength. This software drives particularly tight engagement with consumers and enterprises, which is fostering the growing purchase of high margin services like music, apps, and Apple Pay. While iPhone sales were down year-over-year (YoY). services revenues grew 7% YoY which was slightly above analyst estimates. Company earnings were also better-than-anticipated due to lower input costs, such as memory chips and cost control initiatives. Aside from production disruptions, negative sentiment had also weighed on shares as investors questioned how an economic slowdown would affect consumer demand for Apple products in 2023. However, management projected an acceleration in earnings for the fiscal first quarter, where they noted that iPhone and services growth should remain strong, along with encouraging impacts around product mix, lower input costs, and continued cost controls.”

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