We recently published a list of 10 Best Dividend Paying Stocks To Buy According to Quant Hedge Fund AQR. In this article, we are going to take a look at where Comcast Corporation (NASDAQ:CMCSA) stands against the other dividend-paying stocks to buy according to Quant Hedge Fund AQR.
Only a handful of hedge funds have pursued unique investment strategies, and Cliff Asness’ Applied Quantitative Research, or AQR Capital, stands out among them. Known for its quantitative value strategies, Asness co-founded AQR in 1998 after working at Goldman Sachs. He and his partners developed the firm’s investment approach during their time in the University of Chicago’s Ph.D. program, emphasizing value and momentum strategies. These distinct approaches have delivered strong results for the fund over the years. In fact, AQR’s longest-running multistrategy fund returned 18.5% last year after fees, and had its best year in 2022, with a 43.5% gain. In January 2023, Asness forecasted that buying undervalued companies while shorting overvalued ones in particular sectors would be especially advantageous for that year.
Given the growing focus on generative AI and machine learning, Asness mentioned that his natural inclination is to be contrarian. However, he acknowledges that he needs to move past this instinct because he recognizes significant opportunities in machine learning. During a recent Bloomberg Invest conference, Asness highlighted that they increasingly rely on automated decision-making at AQR, expressing a belief that the machine might have a slight edge over human judgment. The firm’s improved performance in recent years is partly attributed to market cycles, but it has also implemented some changes.
Though Asness is now directing his focus toward artificial intelligence, diversification has always been a fundamental aspect of his investment strategy. He believes that concentrating investments into a single asset does not adequately address the inherent risks in financial markets. According to Asness, the rationale for preferring a diversified portfolio lies in its potential to provide a higher return for the risk taken, rather than simply offering a higher expected return.
When discussing diversification, different investment strategies can have varying advantages. Dividend investing is particularly popular among investors. In his paper published in the Financial Analysts Journal, which earned him the Graham and Dodd Award for the best paper of the year twice, Asness emphasized the value of dividends. He explained that companies that distribute higher dividends generally experience stronger earnings growth over the following decade compared to those that pay out less. Asness elaborated that substantial dividend payouts often indicate a company’s confidence in its future prospects, as firms are reluctant to cut dividends and typically wouldn’t pay them if they anticipated poor performance. Furthermore, companies paying large dividends must be more selective with their investment projects, potentially leading to wiser investment choices. On the other hand, companies that pay minimal dividends might be either struggling (as seen with inflated earnings in 1999) or engaging in “empire building,” where managers, having plenty of cash, may invest imprudently in less profitable ventures.
Asness’s preference for dividend stocks is also apparent in his Q2 2024 portfolio, which features a significant number of dividend-paying equities. With that in mind, we will take a look at some of the best dividend-paying stocks according to AQR Capital.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A couple watching their favorite show on TV, enjoying the entertainment network service.
Comcast Corporation (NASDAQ:CMCSA)
AQR Capital’s Stake Value: $339,222,683
Dividend Yield as of August 22: 3.13%
Comcast Corporation (NASDAQ:CMCSA) is a Pennsylvania-based telecommunications and media conglomerate. It is one of the world’s largest and most diverse businesses in the world. The stock is down by over 10% year-to-date and fell by nearly 4% between July 23 and 24 when the company announced its Q2 earnings. In its Studios and Theme Parks division, the company encountered challenges, falling by 27% and 10.6% from the same period last year, respectively. The company’s overall revenue for the quarter came in at $29.6 billion, down 3% on a YoY basis.
Despite the challenges, several other segments of Comcast Corporation (NASDAQ:CMCSA) experienced growth. The media division saw a return to Adjusted EBITDA growth, largely due to Peacock, its streaming service, which achieved its strongest year-over-year improvement for any quarter since its 2020 launch. A highlight of Comcast’s second-quarter results was the performance of Peacock. Streaming subscribers grew by 38% during the quarter, reaching 33 million, while losses decreased to $348 million, compared to $651 million in Q2 2023.
Comcast Corporation (NASDAQ:CMCSA) generated strong cash during the quarter, which is good news for income investors. The company’s operating cash flow was $4.7 billion and it generated $1.3 billion in free cash flow. It remained committed to its shareholder obligation, returning $3.4 billion to investors through dividends and share repurchases.
On July 23, Comcast Corporation (NASDAQ:CMCSA) declared a quarterly dividend of $0.31 per share, which was in line with its previous dividend. Overall, the company has raised its payouts for 16 consecutive years, which makes CMCSA one of the best dividend-paying stocks on our list. The stock’s dividend yield on August 22 came in at 3.13%.
AQR Capital boosted its stake in Comcast Corporation (NASDAQ:CMCSA) significantly by 93% during the second quarter of 2024 and now owns over 8.7 million shares in the company. The hedge fund’s CMCSA stake was valued at roughly $340 million at the end of the quarter. The company made up 0.51% of the firm’s 13F portfolio.
As of the close of Q2 2024, 61 hedge funds in Insider Monkey’s database held stakes in Comcast Corporation (NASDAQ:CMCSA), compared with 63 in the preceding quarter. These stakes have a total value of over $3.6 billion. Among these hedge funds, First Eagle Investment Management was the company’s leading stakeholder in Q2.
Overall CMCSA ranks 8th on our list of the best dividend paying stocks to buy according to Quant Hedge Fund AQR. While we acknowledge the potential of CMCSA as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued dividend stock that is more promising than CMCSA but that trades at less than 7 times its earnings and yields nearly 10%, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.
