In this article, we discuss 5 favorite dividend stocks of hedge funds. If you want to check out our detailed analysis of dividend paying stocks, go to 10 Favorite Dividend Stocks of Hedge Funds.
5. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 110
Number 5 on the list of 10 favorite dividend stocks of hedge funds is JPMorgan Chase & Co. (NYSE:JPM). It is the largest financial company/bank in the US with $3.31 trillion worth of assets under management. It provides services in asset management, wealth management and commercial banking. Fisher Asset Management is the biggest investor among the 110 hedge funds invested in the company as of the first quarter of 2022.
On May 24, Societe Generale analyst Andrew Lim upgraded JPMorgan to ‘Buy’ from ‘Hold’ rating and set a price target of $150, up from $145.
When it comes to dividends, JPMorgan Chase & Co. (NYSE:JPM) has a dividend yield of 3.12% as of June 8. The cash amount JPM has been paying to its shareholders in dividends has consecutively increased over 11 years. The next dividend per share of $1 is scheduled for payment on July 31.
In their Q4, 2021 investor letter, ClearBridge Investments discussed JPMorgan Chase & Co. (NYSE:JPM). Here is what they said:
“Our energy and financials holdings kept pace in the 2021 rally. In financials, JPMorgan benefited from strong economic growth, a rise in Treasury yields, and a benign credit environment.”
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 131
Apple Inc. (NASDAQ:AAPL) is the largest technology company in the world by market cap, which stands at $2.4 trillion as of the first quarter of 2022.
Apple outperformed analysts’ expectations in the first quarter of 2022 and boasted a revenue of $97 billion, exceeding consensus estimates by $3 billion. It also exceeded expectations in EPS and came up with an Earnings per Share of $1.52 beating consensus estimates by $0.09.
ClearBridge Investments discussed Apple in their Q4, 2021 investor letter. Here is what they said:
“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. The bulk of these contributions came from U.S. mega-cap growth stocks Apple and Microsoft which continued to uniquely act both offensively and defensively as they have through most of the pandemic.”
3. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 136
Mastercard Incorporated (NYSE:MA) is a US-based multinational payment network operating company. Its payment network is widely spread across the globe and the company facilitates electronic transactions between merchants’ banks and the customers’ banks for “Mastercard” brand credit and debit cards.
Here is what Ensemble Capital had to say about Mastercard in their Q1, 2022 investor letter.
“Mastercard (7.6% weight in the Fund): This company literally earns a percent based fee on dollars spent. When inflation increases the prices of goods across the economy, Mastercard’s revenue increases along with inflation. Thus, the company in some respects is perfectly hedged against inflation with their revenue accelerating automatically when inflation surges.”
2. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 159
Visa Inc. (NYSE:V) is another global payment network operator on the list of 10 favorite dividend stocks of hedge funds. It is, in fact, the largest payment network company in the world, followed by Mastercard and like Mastercard.
On May 17, Goldman Sachs analyst Will Nance initiated coverage of Visa Inc. (NYSE:V) with a ‘Buy’ rating on the shares and a price target of $282 which implies an upside of 43%.
As of the first quarter of 2022, 159 hedge funds hold equity in Visa, totaling $28 billion in value. The largest shareholder in the company is TCI Fund Management which owns shares worth $4 billion.
Baron Funds discussed Visa in their investor letter of Q1, 2022 and here is what they had to say:
“Shares of global payment network Visa, Inc. (NYSE:V) were up 2.5% on strong quarterly results with 24% revenue growth and 27% EPS growth. Payment volume grew 20% with notable strength in cross-border volumes as travel activity rebounded from depressed levels. Management raised full-year guidance to reflect high-teens revenue growth. Shares also likely benefited from a “flight to safety” during a volatile quarter for equities. We continue to own the stock due to Visa’s long runway for growth underpinned by the continued migration from cash transactions to card/digital and strong competitive advantages, operating in a duopoly with Mastercard.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 259
Microsoft Corporation (NASDAQ:MSFT) is one of the largest technology companies in the world. Some of its most popular products include Windows operating systems, Office 365 productivity software, Xbox gaming console and the search engine called Bing. It is also one of the most diversified companies within the information technology sector.
With 259 hedge funds owning a total equity of $65 billion in Microsoft, the company is the most favorite dividend stock of hedge funds. Fisher Asset Management is the leading stakeholder in the technology titan with a total equity of $8.6 billion.
Unlike most other technology companies, Microsoft does pay dividends to its shareholders and its dividend yield as of June 8 is 0.92%. It has been paying out a dividend cash amount of $0.62 since the last quarter of 2021 and has been consistent in making payments while consecutively growing the rate for the past 20 years.
Microsoft was talked about by Motiwala Capital in their Q4, 2021 investor letter. Here is what they said:
“Microsoft (NASDAQ:MSFT) re-enters our portfolio after a long gap. MSFT sells enterprise and consumer software products as well as hardware products such as the Xbox video game console and Surface laptops. All business segments experienced double-digit revenue growth and earnings per share have compounded in the mid-double digits over the last 5 years. We believe MSFT continues this momentum in the years ahead.”
You can also take a peek at 10 Dividend Stocks with Over 5% Yield and 5 Stocks to Buy and Hold for Over 10 Years According to Ray Dalio
