In this article, we discuss the 5 growth stocks with decent dividend yields. If you want to read our detailed analysis of these stocks, go directly to the 10 Growth Stocks with Decent Dividend Yields.
5. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 60
Forward Dividend Yield: 2.59%
Cisco Systems, Inc. (NASDAQ:CSCO) makes and sells internet networking products. MKM Partners analyst Fahad Najam recently maintained a Buy rating on the stock and raised the price target to $69 from $60, backing the firm to beat estimates on growth and revenue in the coming months. In September, the firm declared a quarterly dividend of $0.37 per share, in line with previous.
Chuck Robbins , the CEO of Cisco Systems, Inc. (NASDAQ:CSCO), recently said that the company will rebuild around next-gen technology solutions like the cloud, slowly transitioning to a software-as-a-service firm on the lines of Microsoft Corporation.
At the end of the second quarter of 2021, 60 hedge funds in the database of Insider Monkey held stakes worth $4.2 billion in Cisco Systems, Inc. (NASDAQ:CSCO), up from 59 in the previous quarter worth $5.1 billion.
4. Activision Blizzard, Inc. (NASDAQ:ATVI)
Number of Hedge Fund Holders: 78
Forward Dividend Yield: 0.69%
Activision Blizzard, Inc. (NASDAQ:ATVI) markets interactive entertainment content that includes video games for computers and mobiles. The company recently posted earnings for the third quarter, reporting earnings per share of $0.72, beating estimates by $0.02. The revenue over the period was $1.88 billion, up 6.2% year-on-year. The firm recently announced a new version of Call of Duty, a popular video game, in time for the holiday season.
However, Activision Blizzard, Inc. (NASDAQ:ATVI) has also announced delays in the release of new versions of two key games, Overwatch and Diablo. Oppenheimer analyst Andrew Uerkwitz, who has an Outperform rating on the shares with a $85 target, believes “talent retention” is a problem for the company.
At the end of the second quarter of 2021, 78 hedge funds in the database of Insider Monkey held stakes worth $3.5 billion in Activision Blizzard, Inc. (NASDAQ:ATVI), up from 76 in the preceding quarter worth $3.7 billion.
In its Q1 2021 investor letter, Cooper Investors, an asset management firm, highlighted a few stocks and Activision Blizzard, Inc. (NASDAQ:ATVI) was one of them. Here is what the fund said:
“The portfolio established a position in video game publisher Activision Blizzard. As a watchlist company we have followed Activision for several years. As a reminder the role of the watchlist is to allow us to focus on a select group of companies where we seek to observe important signals around either value latency, industry trends or management behaviour that portend attractive investment propositions.
Technology can often play a disruptive role in content, however video games are a clear beneficiary of technology, both in terms of more immersive and realistic gaming experiences as well as the monetisation opportunities this creates.
In order to benefit from these trends, video game publishers must be owners of unique IP. Activision Blizzard fits this bill perfectly boasting a portfolio which includes franchises such as Call of Duty, World of Warcraft and Diablo just to name a few.
The business is run by CEO Bobby Kotick, who together with Chairman Brian Kelly purchased the foundation assets for the company for US$400k in the early 1990s. Today Activision has a market capitalisation of over US$70bn. Over the last few years Bobby and his management team have refocused resources onto their best IP, with the goal of capitalising on the aforementioned industry tailwinds.
We saw the benefits of this in 2020 with the release of Call of Duty Mobile and Free-to-Play versions (with in game micro transactions) complimenting the traditional core console game. Engagement increased materially and due to the very favourable economics of content publishing, Operating Income more than doubled for the Call of Duty Franchise. Even adjusting for the impact of lockdowns, this is a phenomenal outcome.
Activision has 3-4 key pieces of IP with which they plan to repeat this playbook over the next couple of years. If they can replicate the success of Call of Duty, even in part, we see material upside to the free cash flow power of the business. Further, revenue sources are broadening which will move the profile away from a traditional lumpy annual release cycle of the old video game model towards one of a more recurring nature. This will transition Activision from a publishing to a services business, likely attracting a higher multiple than the current mid-low 20x FCF which is broadly in line with the market. To summarise, we see significant value latency and a pathway to double digit returns over the medium term.”
3. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 78
Forward Dividend Yield: 2.76%
Intel Corporation (NASDAQ:INTC) makes and sells essential technologies that are used in smart devices around the world. Amid a global rise in demand for chips, a key product of the firm, and supply chain constraints, semiconductor prices have skyrocketed in recent months, benefiting Intel, which has invested the increased revenues into a major plan to become the leader of the chip industry.
As it ramps up spending in growth initiatives, Intel Corporation (NASDAQ:INTC) insiders have been busy buying the stock. In late October, four directors at the firm bought nearly 40,000 shares of the firm.
At the end of the second quarter of 2021, 78 hedge funds in the database of Insider Monkey held stakes worth $6.7 billion in Intel Corporation (NASDAQ:INTC), down from 83 in the previous quarter worth $7.6 billion.
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 138
Forward Dividend Yield: 0.58%
Apple Inc. (NASDAQ:AAPL) features on our list of growth stocks with decent yields because the firm is one of the largest growth firms in the world with a business model that is likely to churn out a steady stream of revenue for years to come. As such, the dividend payouts of the firm are likely to be regular and might even grow with the passage of time, a trait not normally associated with growth offerings.
Apple Inc. (NASDAQ:AAPL) offers the best of both worlds, solid dividends and reliable growth. Legendary investors like Warren Buffett also value the stock a great deal. The firm has a market capitalization of more than $2.4 trillion.
At the end of the second quarter of 2021, 138 hedge funds in the database of Insider Monkey held stakes worth $145 billion in Apple Inc. (NASDAQ:AAPL), up from 127 in the preceding quarter worth $131 billion.
In its Q1 2021 investor letter, Distillate Capital, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:
“Apple is an even more notable situation and one that highlights our free cash valuation methodology and bears further discussion given its Q3 ‘20 sale from our strategy. For an extended period, Apple was extraordinarily inexpensive on a free cash flow basis and was the largest position in our strategy, exceeding 5% of the portfolio.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 238
Forward Dividend Yield: 0.74%
Microsoft Corporation (NASDAQ:MSFT) is another hedge fund favorite that operates in the growth domain but also pays a healthy dividend. The company has successfully transitioned to a subscription-based business model and made key purchases in the software sector to reinvent itself around the cloud in the past few years. However, it has consistently paid dividends during the time, a remarkable feat for a company in transition.
Deutsche Bank analyst Brad Zelnick recently initiated coverage of Microsoft Corporation (NASDAQ:MSFT) stock with a Buy rating and a price target of $390, describing the firm as “the gold standard” for software stocks in a bullish investor note.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Microsoft Corporation (NASDAQ:MSFT) with 24.8 million shares worth more than $6.7 billion.
In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ:MSFT) was one of them. Here is what the fund said:
“We have written extensively about Microsoft in recent commentaries. It was our leading contributor last year and one of our largest weightings within the Portfolio. It continues to experience business momentum through several dominant, essential, and competitively advantaged businesses, like Office 365 and Azure. The markets it competes for are enormous, which gives the company the ability to compound at scale. In the past quarter alone, the company generated over $40 billion in revenue, representing a 17% growth rate. The inherent operating leverage in Microsoft’s business model continues and led to 34% earnings growth this past quarter. Despite the broad rotation we saw in the first quarter and Microsoft’s robust performance in 2020, we think its business fundamentals continue to exhibit strength, and the stock continues to reflect the fundamentals.”
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