Below we present the list of Billionaire Bridgewater Founder Ray Dalio’s Top 5 Holdings in 2023. For our methodology and a more comprehensive list please see Billionaire Bridgewater Founder Ray Dalio’s Top 10 Holdings in 2023.
5. McDonald’s Corporation (NYSE:MCD)
Value of Bridgewater Associates’ 13F Position: $430 million
Number of Hedge Fund Shareholders: 65
After hitting a four-year low in hedge fund support during the second quarter of 2022, McDonald’s Corporation (NYSE:MCD) has since seen an increase in hedge fund ownership over each of the past three quarters. Dalio’s Bridgewater trimmed its stake in the fast-food giant by 3% during Q1 to 1.54 million shares.
McDonald’s Corporation (NYSE:MCD) is a great defensive stock, which is certainly one of the reasons Ray Dalio likes it. Despite, or more likely because of, the weakening economic conditions, McDonald’s comparable sales surged by 13% in Q1, while it made market share gains in all of its major markets. While margins were softer during Q1, McDonald’s also has significant margin upset longer-term as it embraces automation and new store formats that emphasize speed and efficiency.
McDonald’s Corporation (NYSE:MCD) plans to open a net total of 1,500 restaurants in 2023, the bulk of which are planned for its International Development Licensed Markets regions, which includes, Asia, the Middle East, Latin America, and parts of Europe.
4. The Coca-Cola Company (NYSE:KO)
Value of Bridgewater Associates’ 13F Position: $505 million
Number of Hedge Fund Shareholders: 62
Dalio trimmed his stake in The Coca-Cola Company (NYSE:KO) by 4% during Q1, ending the quarter with 8.15 million shares. After four straight quarters of declining hedge fund ownership, there was a rebound in Q1, with the number of smart money managers long KO rising slightly. The stock also remains a favorite of another billionaire, defensively-focused investor, Warren Buffett.
As with most of Dalio’s top holdings, The Coca-Cola Company (NYSE:KO) is a world-class dividend stock, having increased the size of its payouts for 61 years running. Coke’s dividend yields 2.9% and the company’s payout ratio is right around its ten-year average of about 60%.
Evercore ISI was bullish on Coke’s Q1 results and sees the company as being favorably set up for the next one to two years as the dollar weakens and commodity inflation eases.
Carillon Tower noted The Coca-Cola Company (NYSE:KO)’s strong pricing power in its Q3 2022 investor letter:
“Shares of The Coca-Cola Company (NYSE:KO) sold off with consumer staples even as the company reported strong pricing for the second quarter. On average, product prices rose with management hinting at further momentum.”
3. PepsiCo, Inc. (NASDAQ:PEP)
Value of Bridgewater Associates’ 13F Position: $512 million
Number of Hedge Fund Shareholders: 72
Bridgewater sold off 8% of its PepsiCo, Inc. (NASDAQ:PEP) holding in Q1, leaving it with 2.81 million shares on March 31. Hedge fund ownership of the beverage and snacks giant is hovering near ten-year highs and is beginning to open up a gap on rival Coke, which it has traditionally been slightly more popular than in terms of smart money sentiment.
PepsiCo, Inc. (NASDAQ:PEP) is another dividend king beverage giant that Dalio loves, and one which is growing sales at a double-digit rate to easily outpace its rival. Pepsi flexed its own pricing power during the latest quarter, as prices were up 16% year-over-year while organic volume dipped by just 2% in response. Pepsi’s dividend yield is lower than Coke’s and its payout ratio is higher, so it’s not quite as attractive from a dividend perspective, but there’s otherwise a lot to like about the company’s momentum right now.
The Madison Sustainable Equity Fund discussed PepsiCo, Inc. (NASDAQ:PEP)’s efforts to reduce water usage in its Q1 2023 investor letter:
“PepsiCo, Inc. (NASDAQ:PEP) announced that it will commit $3.3 million in funds toward water replenishment projects across North America. These projects aim to reduce absolute water use and replenish back into the local watershed more than 100% of the water used at company-owned and third-part sites in high water-risk areas.”
2. Johnson & Johnson (NYSE:JNJ)
Value of Bridgewater Associates’ 13F Position: $556 million
Number of Hedge Fund Shareholders: 86
Johnson & Johnson (NYSE:JNJ) remained Ray Dalio’s second-largest holding for the fourth-straight quarter in Q1. Bridgewater upped its stake in JNJ by 1% during the quarter, ending March 31 with 3.59 million shares. Hedge fund ownership of the stock has remained largely flat over the past two-and-a-half years.
Johnson & Johnson (NYSE:JNJ) is yet another dividend king and stalwart defensive stock that finds itself in a premium position in Ray Dalio’s 13F portfolio. The healthcare products and pharmaceuticals company has only modest growth rates at this point (5.6% in Q1), but they are at least steady and predictable, and the company is resilient in the face of economic downturns due to the necessity of many of its products.
Distillate Capital was somewhat worried about Johnson & Johnson (NYSE:JNJ)’s valuation last year, as related in its Q2 2022 investor letter:
“Johnson & Johnson was among the 2 largest trims at around 1% each. Each stock was up 1% in the quarter compared to the 16% price decline for the S&P 500 and the positions were reduced as the valuations became somewhat less appealing, though still attractive enough to warrant inclusion.”
1. The Procter & Gamble Company (NYSE:PG)
Value of Bridgewater Associates’ 13F Position: $735 million
Number of Hedge Fund Shareholders: 76
The Procter & Gamble Company (NYSE:PG) is Ray Dalio’s top holding so far in 2023, just as it was throughout all of 2022. Bridgewater also remained the company’s biggest shareholder for the fourth-straight quarter. Dalio’s firm trimmed its stake in PG slightly during Q1, selling off 2% of its shares to leave Bridgewater with 4.94 million.
The Procter & Gamble Company (NYSE:PG) has executed an impressive restructuring in recent years, cutting billions of dollars in overhead and trimming its product portfolio. Proctor & Gamble’s sales have proven resilient in the face of price increases, which were driven 10% higher in the company’s fiscal Q3, while volumes dropped by just 3%. That has helped further boost the company’s margins and drive earnings growth, which is expected to persist into the company’s 2024 fiscal year. PG shares have nearly doubled over the last five years however and may be too fairly valued to justify buying into now.
Rowan Street Capital worries how The Procter & Gamble Company (NYSE:PG) investors will fare once the market loses its appetite for safe stocks, as it outlined in its Q4 2022 investor letter:
“Let’s look at The Procter & Gamble Company (NYSE:PG). Dividend yield is 2.4%. Earnings are forecasted to grow at 5.9%, and its current earnings multiple is at 25x. Now, lets say over the next 3-5 years the market loses interest in the “safe”, mature companies that grow at anemic rates and gets an appetite for growth again. It’s very unlikely that Mr. Market will be paying 25x for 5.9% earnings growth. Lets assume that multiple declines to the market average of 18x — that would be ~6.9% drag per year on the total expected return over next 3-5 years. If we get 2.4% (dividend) + 5.9% (earnings growth) – 6.9% (decrease in earnings multiple) = 1.4% (annual return we can expect on average from this stock).”
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