Billionaire Ray Dalio’s Top 5 Dividend Stock Picks

In this article, we will take a look at billionaire Ray Dalio’s top 12 stock picks. You can skip our detailed analysis of Ray Dalio’s hedge fund and recent developments, and go directly to read Billionaire Ray Dalio’s Top 5 Dividend Stock Picks. 

5. McDonald’s Corporation (NYSE:MCD)

Bridgewater Associates’ Stake Value: $430,145,593
Dividend Yield as of May 17: 2.07%

An American multinational fast food chain, McDonald’s Corporation (NYSE:MCD) is among the top dividend stock picks of billionaire Ray Dalio. The company offers a quarterly dividend of $1.52 per share for a dividend yield of 2.07%, as recorded on May 17. It has raised its dividends for 46 years in a row.

At the end of Q1 2023, Bridgewater Associates owned over 1.5 million shares in McDonald’s Corporation (NYSE:MCD), worth $430 million. The company represented 2.62% of the firm’s 13F portfolio. During the quarter, the hedge fund reduced its position in the company by 3%.

As of the end of Q4 2022, 57 hedge funds tracked by Insider Monkey reported having stakes in McDonald’s Corporation (NYSE:MCD), up from 53 in the previous quarter. These stakes have a collective value of $2.7 billion.

4. The Coca-Cola Company (NYSE:KO)

Bridgewater Associates’ Stake Value: $505,248,183
Dividend Yield as of May 17: 2.91%

The Coca-Cola Company (NYSE:KO) has been a part of Bridgewater Associates’ portfolio since the fourth quarter of 2010. At the end of the most recent quarter, the hedge fund owned KO stakes worth over $505.2 million. The company accounted for 3.08% of the fund’s 13F portfolio. It is among the top dividend stock picks of billionaire Ray Dalio.

In 2023, The Coca-Cola Company (NYSE:KO) stretched its dividend growth streak to 61 years, which makes it a reliable option for investors. The company pays a quarterly dividend of $0.46 per share for a dividend yield of 2.91%, as of May 17.

At the end of December, 58 hedge funds in Insider Monkey’s database reported having stakes in The Coca-Cola Company (NYSE:KO). These stakes have a consolidated value of $28.8 billion.

Rowan Street Capital mentioned The Coca-Cola Company (NYSE:KO) in its Q4 2022 investor letter. Here is what the firm has to say:

“Let’s take The Coca-Cola Company (NYSE:KO) for example. Its dividend yield is 2.8%, earnings are estimated to grow at only 3.6% rate per year over next 4 years, and its earnings multiple is currently at 24x (based on next years forecasted earnings). KO has an anemic growth, so we can argue that paying 24x earnings is not very attractive. Let’s assume that the multiple will stay constant over the next 3-5 years, thus our expected annual returns will be 2.8%+3.6% = 6.4% (that is below the current reported inflation rate and only slightly above the risk-free rate of 4%).”

3. PepsiCo, Inc. (NASDAQ:PEP)

Bridgewater Associates’ Stake Value: $511,811,443
Dividend Yield as of May 17: 2.62%

PepsiCo, Inc. (NASDAQ:PEP) is a New York-based food, beverage, and snack company. At the end of the first quarter of 2023, Bridgewater Associates had over 2.8 million shares in the company, valued at $511.8 million. The company represented 3.12% of the hedge fund’s portfolio.

PepsiCo, Inc. (NASDAQ:PEP), one of the top dividend stock picks of billionaire Ray Dalio, hiked its quarterly dividend by 10% on May 2 to $1.265 per share. This marked the company’s 51st consecutive year of dividend growth. The stock’s dividend yield on May 17 came in at 2.62%.

As of the close of Q4 2022, 70 hedge funds in Insider Monkey’s database owned stakes in PepsiCo, Inc. (NASDAQ:PEP), worth over $4.4 billion collectively. Among these hedge funds, Fundsmith LLP was the company’s largest stakeholder in Q4.

Lindsell Train mentioned PepsiCo, Inc. (NASDAQ:PEP) in its Q3 2022 investor letter. Here is what the firm has to say:

“At this point, it may help to give a further example of these self-reinforcing moats to illustrate the idea, drawing from the consumer franchises side of our portfolio. In our view, strong consumer brands can similarly exhibit Lindycompatible anti-ageing properties. Consider, that the longer a company invests in its brands through advertising and R&D, the stronger and more resonant they may get. When successful, a self-sustaining feedback loop is established, whereby it becomes ever harder to recreate a heritage-rich brand from scratch, raising barriers to entry, and proportionately increasing its likely lifespan. There are plenty of long-lived portfolio franchises I could reference here, but I’ve gone with PepsiCo (NYSE:PEP); partly because we have good time-series stats on it (beware data bias!) but also, as I hope will become evident, because Pepsi over its 129 years has succeeded in creating some wonderfully deep moats.

With Pepsi Cola you get the flagship soft drinks brand, which is both global and generational, but you also get the Frito-Lay salty snacks portfolio assembled alongside it, claiming nearly 40% of the global market. That’s ten-times greater than the nearest competitor and likely higher than the next 65 competitors combined. These are exceptionally strong global bands with market shares to match; the long-term empirical result being Pepsi’s dividend record which over the past 66 years (as far back as we’ve been able to go) has compounded at an annualised rate of 10%. Pepsi is no ‘in at the ground floor’ start-up today, but it wasn’t six decades ago either. Early growth investor Philip Fisher put it well when in 1958 (two years into Pepsi’s current winning streak) he wrote of “companies which in spite of outstanding prospects of major further growth are so financially strong, with roots going so deep into the economic soil, that they qualify under the general classification of ‘institutional stocks’”. PepsiCo fits this description well…” (Click here to see the full text)

2. Johnson & Johnson (NYSE:JNJ)

Bridgewater Associates’ Stake Value: $556,054,905
Dividend Yield as of May 17: 2.98%

Johnson & Johnson (NYSE:JNJ) is one of the world’s largest pharmaceutical industry companies. It currently pays a quarterly dividend of $1.19 per share, having raised it by 5.3% in April this year. This marked the company’s 62nd consecutive year of dividend growth. The stock has a dividend yield of 2.98%, as of May 17.

During Q1 2023, Bridgewater Associates increased its position in Johnson & Johnson (NYSE:JNJ) by 1%. The hedge fund ended the quarter with JNJ stakes worth over $556 million. The company represented 3.39% of its 13F portfolio.

According to Insider Monkey’s Q4 2022 database, 84 hedge funds had investments in Johnson & Johnson (NYSE:JNJ), with a total value of over $5.5 billion.

1. The Procter & Gamble Company (NYSE:PG)

Bridgewater Associates’ Stake Value: $735,257,924
Dividend Yield as of May 17: 2.40%

The Procter & Gamble Company (NYSE:PG) was the third-largest holding of Bridgewater Associates at the end of Q1 2023. The hedge fund owned PG stakes worth over $735.2 million, which made up 4.48% of its 13F portfolio. It is one of the top dividend stock picks of billionaire Ray Dalio.

On April 11, The Procter & Gamble Company (NYSE:PG) increased its dividend by 3% to $0.9407 per share. This was the company’s 67th consecutive year of dividend growth. The stock’s dividend yield on May 17 came in at 2.40%.

As of the close of Q4 2022, 74 elite funds tracked by Insider Monkey reported owning stakes in the company in Q4 2022, up from 69 in the previous quarter. These stakes are collectively valued at over $4.7 billion.

Rowan Street Capital mentioned The Procter & Gamble Company (NYSE:PG) in its Q4 2022 investor letter. Here is what the firm has to say:

“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).”

You can also take a look at 10 Best Fast Food Stocks to Invest In and 10 Best Diversified Bank Stocks to Buy Now

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