In this article, we will discuss the best dividend aristocrat stocks sorted by hedge fund popularity. You can skip our detailed analysis of dividend aristocrats and their past performance, and go directly to read S&P 500 Dividend Aristocrats List: Top 10 Among Hedge Funds.
Dividend aristocrats are companies in the S&P 500 that have a track record of consistently raising their dividends for 25 years or more. Dividend growers become top choices for investors, especially during bearish markets, because of their ability to generate stable cash flows and return profits to shareholders. When the market was down from December 1999 to March 2022, the S&P High Yield Dividend Aristocrats outperformed the S&P Composite 1500 by an average of 140 basis points per month, according to a report by S&P Dow Jones Indices.
Dividend growth is one of the most important aspects of dividend investing. It is often associated with high-quality companies that have sustainable business models and solid financial health. In addition to this, companies with proven track records of dividend growth help protect during inflationary periods. For these reasons, investors often gravitate towards some of the best dividend aristocrat stocks such as Walmart Inc. (NYSE:WMT), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV). These companies have demonstrated strong profitability through the years, which has contributed to their ability to raise their payouts regularly. In our previous article titled 25 Things Every Dividend Investor Should Know, we cited Washington Crossing Advisors’ data, which showed that dividend growers and initiators delivered an annual average return of 11.6% from 1972 to 2014. In comparison, dividend cutters underperformed and delivered an annual average return of 3.4%.
Also read: Dividend Aristocrats Ranked: Top 15 According to Analysts
Various studies have shown the outperformance of reliable dividend stocks relative to other equities. According to a report by T. Rowe Price, dividend growers delivered a 12.07% annual average return from March 1972 to March 2020, compared with an 11.50% annualized return of the S&P 500. During this period, non-dividend payers returned 10.24% on average, underperforming dividend growth stocks. The report further analyzed market conditions from 1985 to 2019 and highlighted that dividend growers showed strong performance than their peers in down markets during this period.
Photo by Austin Distel on Unsplash
Our Methodology:
For this list, we scanned Insider Monkey’s database of 943 hedge funds updated to reflect Q1 portfolios and picked the top 25 dividend aristocrats in terms of hedge fund popularity. The list is ranked in ascending order of the number of hedge funds having stakes in the companies as of the end of the first quarter.
25. Emerson Electric Co. (NYSE:EMR)
Number of Hedge Fund Holders: 47
Emerson Electric Co. (NYSE:EMR) is a Missouri-based manufacturing company that provides engineering services and products to different markets. On May 3, the company announced a quarterly dividend of $0.52 per share, which was in line with its previous dividend. It is one of the best dividend aristocrat stocks on our list with 66 years of dividend growth. The stock has a dividend yield of 2.62%, as of May 29.
Walmart Inc. (NYSE:WMT), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV) are some other best dividend aristocrat stocks according to hedge funds.
The number of hedge funds tracked by Insider Monkey owning stakes in Emerson Electric Co. (NYSE:EMR) grew to 47 in Q1 2023, from 32 in the previous quarter. The collective value of these stakes is nearly $2 billion. With over 4.2 million shares, Citadel Investment Group was the company’s leading stakeholder in Q1.
24. Air Products and Chemicals, Inc. (NYSE:APD)
Number of Hedge Fund Holders: 48
Air Products and Chemicals, Inc. (NYSE:APD) is an American chemical industry company that sells gases and chemicals for industrial uses. Deutsche Bank maintained a Buy rating on the stock in May with a $325 price target, expressing concerns about higher costs.
Air Products and Chemicals, Inc. (NYSE:APD), one of the best dividend aristocrat stocks, currently pays a quarterly dividend of $1.75 per share. The company’s dividend growth streak stands at 41 years. The stock’s dividend yield on May 29 came in at 2.56%.
At the end of Q1 2023, 48 hedge funds in Insider Monkey’s database reported having stakes in Air Products and Chemicals, Inc. (NYSE:APD), up from 41 in the previous quarter. These stakes are collectively valued at over $490.2 million.
23. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 49
An American technology company, International Business Machines Corporation (NYSE:IBM) experienced a positive hedge fund sentiment in Q1 2023. As per Insider Monkey’s database, 49 elite funds held stakes in the company in Q1, compared with 43 in the preceding quarter. The consolidated value of these stakes is over $1.47 billion.
International Business Machines Corporation (NYSE:IBM) is among the best dividend aristocrat stocks on our list with 28 years of consecutive dividend growth. It currently pays a quarterly dividend of $1.66 per share and has a dividend yield of 5.15%, as of May 29.
22. Cardinal Health, Inc. (NYSE:CAH)
Number of Hedge Fund Holders: 50
Cardinal Health, Inc. (NYSE:CAH) is an American multinational healthcare services company, based in Ohio. This year in May, the company raised its dividend for the 37th consecutive year, which makes it one of the best dividend aristocrat stocks. It pays a quarterly dividend of $0.5006 per share for a dividend yield of 2.42%, as of May 29.
In May, UBS lifted its price target on Cardinal Health, Inc. (NYSE:CAH) to $93 and kept a Buy rating on the shares, following the company’s recent quarterly earnings.
As of the close of Q1 2023, 50 hedge funds tracked by Insider Monkey reported having stakes in Cardinal Health, Inc. (NYSE:CAH), worth collectively over $1.36 billion.
Ariel Investments mentioned Cardinal Health, Inc. (NYSE:CAH) in its Q3 2022 investor letter. Here is what the firm has to say:
“Additionally, distributor of pharmaceutical and medical products Cardinal Health, Inc. (NYSE:CAH) advanced in the period as leadership changes were viewed to be a positive for shares. Management provided a new profit outlook for Fiscal 2023 and announced an improvement plan for the medical segment. We are encouraged by these changes and think CAH’s underlying fundamentals and competitive advantages around preventative maintenance screenings and medication management will continue to improve. We believe valuations of health care companies like CAH that focus on cost optimization and promote technological efficiency across the supply chain will be rewarded over the long term.”
21. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 51
3M Company (NYSE:MMM) manufactures a broad range of products belonging to different industries. The company holds one of the longest dividend growth streaks of 65 years. It currently pays a quarterly dividend of $1.50 per share with a dividend yield of 6.19%. MMM is among the best dividend aristocrat stocks on our list.
At the end of March 2023, 51 hedge funds in Insider Monkey’s database reported having stakes in 3M Company (NYSE:MMM), compared with 52 in the previous quarter. The collective worth of these stakes is over $697.3 million. Citadel Investment Group was the company’s leading stakeholder in Q1.
20. Medtronic plc (NYSE:MDT)
Number of Hedge Fund Holders: 52
Medtronic plc (NYSE:MDT) is a Minnesota-based medical device company that also provides other medical-related services and products. In May, Stifel appreciated the company’s performance in the most recent quarter and its guidance. In view of this, the firm raised its price target on the stock to $92 with a Buy rating on the shares.
On May 25, Medtronic plc (NYSE:MDT) announced a quarterly dividend of $0.69 per share, having raised it by 1.5%. This was the company’s 46th consecutive year of dividend growth. With a dividend yield of 3.39%, MDT is among the best dividend aristocrat stocks on our list.
According to Insider Monkey’s Q1 2023 database, 52 hedge funds owned stakes in Medtronic plc (NYSE:MDT), worth over $1.64 billion collectively.
19. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 52
Caterpillar Inc. (NYSE:CAT) is an American construction and mining equipment company, headquartered in Texas. At the end of Q1 2023, the company was a part of 52 hedge fund portfolios, up from 50 in the preceding quarter, as per Insider Monkey’s data. The stakes owned by these funds have a consolidated value of over $2.88 billion.
Evercore ISI presented a positive outlook on the industrial machinery group in May. Given this, the firm maintained an Outperform rating on Caterpillar Inc. (NYSE:CAT) with a $263 price target. One of the best dividend aristocrat stocks on our list, CAT also attracted a Buy rating from Stifel in May.
Caterpillar Inc. (NYSE:CAT) currently pays a quarterly dividend of $1.20 per share and has a dividend yield of 2.27%, as of May 29. The company maintains a 28-year streak of consistent dividend growth.
18. Ecolab Inc. (NYSE:ECL)
Number of Hedge Fund Holders: 53
Ecolab Inc. (NYSE:ECL) offers services related to the treatment, cleaning, and hygiene of water in a wide range of applications. After the company posted solid quarterly earnings, BMO Capital and Deutsche Bank raised their price targets on the stock to $188 and $182, respectively.
One of the best dividend aristocrat stocks, Ecolab Inc. (NYSE:ECL) declared a quarterly dividend of $0.53 per share on May 4. In 2022, the company took its dividend growth streak to 31 years. The stock’s dividend yield on May 29 came in at 1.27%.
At the end of Q1 2023, 53 hedge funds in Insider Monkey’s database were long Ecolab Inc. (NYSE:ECL), up from 47 in the previous quarter. The stakes held by these funds have a collective value of $2.15 billion. With over 5.2 million shares, Bill & Melinda Gates Foundation Trust was the company’s leading stakeholder in Q1.
17. Automatic Data Processing, Inc. (NASDAQ:ADP)
Number of Hedge Fund Holders: 53
Automatic Data Processing, Inc. (NASDAQ:ADP) is next on our list of the best dividend aristocrat stocks. The management services company offers a per-share dividend of $1.25 every quarter for a dividend yield of 2.35%, as of May 29. It has been rewarding shareholders with growing dividends for the past 48 years.
As of the close of Q1 2023, 53 hedge funds reported having stakes in Automatic Data Processing, Inc. (NASDAQ:ADP), compared with 49 in the previous quarter, according to Insider Monkey’s database. These stakes are collectively worth over $3.7 billion.
Madison Investments mentioned Automatic Data Processing, Inc. (NASDAQ:ADP) in its Q1 2023 investor letter. Here is what the firm has to say:
“We eliminated Automatic Data Processing, Inc. (NASDAQ:ADP) from the portfolio due to concerns that the economy is close to a peak job market and interest income on the company’s float has also peaked along with interest rates. The company’s valuation does not reflect the potential downside in the job market from a weakening economy.”
16. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 55
Colgate-Palmolive Company (NYSE:CL) is a multinational consumer products company that manufactures household, healthcare, and other consumer products. Evercore ISI highlighted the company’s volume recovery in the first quarter and raised its price target on the stock to $91. The firm reiterated its Outperform rating on CL, which is among the best dividend aristocrat stocks on our list.
Colgate-Palmolive Company (NYSE:CL) pays a quarterly dividend of $0.48 per share, having raised it by 2% in March this year. The company has raised its payouts for 61 years running. The stock’s dividend yield on May 29 was 2.52%.
At the end of March 2023, 55 hedge funds in Insider Monkey’s database owned stakes in Colgate-Palmolive Company (NYSE:CL), with a collective value of over $3.2 billion. Jean-Marie Eveillard, Dan Loeb, and Guardian Capital were some of the company’s leading stakeholders in Q1.
15. Becton, Dickinson and Company (NYSE:BDX)
Number of Hedge Fund Holders: 56
Becton, Dickinson and Company (NYSE:BDX) is an American medical technology company that specializes in the production of medical devices. The company also provides other medical-related services to its consumers. It has been raising its dividends consistently for the past 51 years and currently pays a quarterly dividend of $0.91 per share. The stock has a dividend yield of 1.51%, as of May 29.
The number of hedge funds tracked by Insider Monkey holding stakes in Becton, Dickinson and Company (NYSE:BDX) stood at 56 in Q1 2023, growing from 52 in the previous quarter. These stakes have a consolidated value of roughly $3 billion.
14. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 59
NextEra Energy, Inc. (NYSE:NEE) is a renewable energy company, based in Florida. In April, BMO Capital kept its Outperform rating on the stock with a $90 price target, presenting a neutral stance on the company’s performance in the upcoming quarters.
NextEra Energy, Inc. (NYSE:NEE), one of the best dividend aristocrat stocks, currently offers a quarterly dividend of $0.4675 per share. The company has a 27-year-long dividend growth streak. The stock’s dividend yield on May 29 came in at 2.53%.
As of the close of Q1 2023, 59 hedge funds tracked by Insider Monkey owned investments in NextEra Energy, Inc. (NYSE:NEE), worth over $1.11 billion collectively.
13. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 61
The Coca-Cola Company (NYSE:KO) has been raising its dividends for 61 years. The company pays a quarterly dividend of $0.46 per share and has a dividend yield of 3.05%, as of May 29. It is among the best dividend aristocrat stocks on our list.
Warren Buffett’s Berkshire Hathaway was the leading stakeholder of The Coca-Cola Company (NYSE:KO) with 400 million shares at the end of Q1 2023. Overall, 61 hedge funds in Insider Monkey’s database owned stakes in the company, with a collective value of over $24.8 billion.
Here is what Rown Street had to say about The Coca-Cola Company (NYSE:KO) in its Q4 2022 investor letter.
“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%).”
12. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 64
McDonald’s Corporation (NYSE:MCD) ranks twelfth on our list of the best dividend aristocrat stocks. The multinational fast-food chain declared a $1.52 per share quarterly dividend on May 26. The company maintains a 46-year streak of consistent dividend growth. MCD has a dividend yield of 2.13%, as of May 29.
Highlighting the company’s same-store sales growth over the past quarters, Loop Capital maintained its Buy rating on MCD in May with a $346 price target.
At the end of Q1 2023, 64 hedge funds tracked by Insider Monkey reported having stakes in McDonald’s Corporation (NYSE:MCD), up from 57 in the previous quarter. These stakes have a collective value of over $4 billion.
11. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 64
Chevron Corporation (NYSE:CVX) is an American oil and natural gas company, based in California. On May 17, the company declared a quarterly dividend of $1.51 per share, which was in line with its previous dividend. The company’s shares boast a dividend yield of 3.92%, as of May 29. It is one of the best dividend aristocrat stocks on our list as it holds a 36-year track record of consistent dividend growth.
In addition to CVX, analysts and hedge funds are paying attention to Walmart Inc. (NYSE:WMT), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV).
Insider Monkey’s Q1 2023 database shows that 64 hedge funds owned stakes in Chevron Corporation (NYSE:CVX), up from 54 a quarter earlier. These stakes are worth over $23.6 billion collectively. With over 132.4 million shares, Berkshire Hathaway was the company’s leading stakeholder in Q1.
Click to continue reading and see S&P 500 Dividend Aristocrats List: Top 10 Picks by Hedge Funds.
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Disclosure. None. S&P 500 Dividend Aristocrats List: Top 10 Among Hedge Funds is originally published on Insider Monkey.
