5 Dividend Paying Stocks You Should Avoid According to Morgan Stanley’s Quant Screen

2. FactSet Research Systems Inc. (NYSE:FDS)

Dividend Yield as of September 27: 0.91%

Total Expected Return: -23%

Number of Hedge Fund Holders: 30

On September 22, FactSet Research Systems Inc. (NYSE:FDS) announced earnings for the fourth quarter of fiscal 2022. The company reported earnings per share of $3.13 and missed expectations by $0.08. The company generated a revenue of $499.3 million and outperformed consensus by $11.35 million. As of September 27, FactSet Research Systems Inc. (NYSE:FDS) has lost 18% year to date, and Morgan Stanley’s quant screen shows the stock can decline a further 23% in the coming months.

This September, Stifel analyst Shlomo Rosenbaum reiterated a Hold rating and his $415 price target on FactSet Research Systems Inc. (NYSE:FDS). On September 23, Deutsche Bank analyst Faiza Alwy slashed her price target on FactSet Research Systems Inc. (NYSE:FDS) to $483 from $507 and maintained a Buy rating on the shares.

As of September 27, FactSet Research Systems Inc. (NYSE:FDS) is offering a forward dividend yield of 0.91% and has free cash flows of $487 million.

At the close of Q2 2022, 30 hedge funds disclosed ownership of stakes in FactSet Research Systems Inc. (NYSE:FDS). These funds held collective stakes of $399 million in the company. This is compared to 34 positions in the previous quarter with stakes worth $544 million.

As of June 30, Echo Street Capital Management is the largest shareholder in FactSet Research Systems Inc. (NYSE:FDS) with stakes worth $144 million.

Here is what Baron Funds had to say about FactSet Research Systems Inc. (NYSE:FDS) in its second-quarter 2022 investor letter:

“The businesses in which we have invested have generally continued to report robust financial results despite elevated public attention on the risks of a slowdown. In June, market data vendor FactSet Research Systems Inc. (NYSE:FDS) reported an acceleration in its organic growth rate to 10.1%, its fastest rate of organic growth in a decade. FactSet is reaping the benefits of a multi-year investment cycle and unwavering focus on customer service to bring new products to market, consolidate spending from competitors, and realize price increases.”