5 Best Large Cap Dividend Growth Stocks To Buy

3. JPMorgan Chase & Co. (NYSE:JPM)

Number of Hedge Fund Shareholders: 104

5-Year Dividend Growth Rate: 14.4%

JPMorgan Chase & Co. (NYSE:JPM) is slightly ahead of Bank of America in the dividend game, with a yield that’s already approaching 3.2% and a slightly higher payout ratio of 34%. That’s allowed it to grow its dividend at a slightly slower pace over the past five years while remaining one of the best large cap dividend growth stocks on the market.

JPMorgan’s own net interest income continued to grow at a strong pace during Q3, driven by strong revenue growth in its wealth management business, as well as its consumer and commercial banking divisions. The company expects to grow EPS by $1.26 to $12.73 next year, which could be conservative should interest rates rise as much as projected.

JPMorgan Chase & Co. (NYSE:JPM) is the most popular investment bank among hedge funds and the 13^th most popular stock overall, though ownership of the stock has dipped by 14% over the last two years. Edgar Wachenheim’s Greenhaven Associates raised its JPM stake by 7% to 4.82 million shares during Q3 and has 10.6% 13F exposure to the stock.

Vltava Fund believes JPMorgan Chase & Co. (NYSE:JPM) is the strongest and best-managed bank in the world, as revealed in the fund’s Q3 2022 investor letter:

“We regard JPM to be the strongest and best-managed bank in the world. It is a leader in investment banking, commercial banking, credit cards, and asset management. Its size (the largest bank in the USA, with nearly USD 4,000 billion in assets) and diversification give it a strong competitive advantage that is compounded by its cost advantages and the high costs to clients associated with switching banks. JPM’s management prides itself on running the only large bank to avoid major instability over the long term.

JP Morgan’s quality and strength first became fully evident in 2008 under the leadership of its CEO Jamie Dimon. Not only did JP Morgan help to stabilize the market by taking over the failing Bear Stearns in the spring of that year, but throughout the Great Financial Crisis it was the only big US bank that did not require government assistance and it was highly profitable even in the difficult year of 2008.

A well-functioning and efficient bank can be a very good long-term investment, because the interest compounding effect works well here. JPM’s return on equity (ROE) is well into the double digits and this puts it in a good position to continue producing better long-term returns than does the market. JPM has been very profitable even during years when interest rates were close to zero. The current – and perhaps not temporary – return to somewhat more normal, higher interest rates should have a significantly positive impact on the bank’s interest income and overall profitability.”