Top 5 Dividend Stocks To Buy According To Hedge Funds

In this article, we will discuss top 5 dividend stocks to buy according to hedge funds. If you want to read our detailed analysis of dividend stocks and their performance, go directly to read Top 16 Dividend Stocks To Buy According To Hedge Funds. 

5. Apple Inc. (NASDAQ:AAPL)

Number of Hedge Fund Holders: 131

Apple Inc. (NASDAQ:AAPL) ranks fifth on our list of the top dividend stocks according to hedge funds. In May, Atlantic Equities lifted its price target on the stock to $200 with an Overweight rating on the shares, appreciating the company’s revenue and earnings in the most recent quarter.

Apple Inc. (NASDAQ:AAPL) currently pays a quarterly dividend of $0.24 per share, having raised it by 4.3% in May. This marked the company’s 11th consecutive year of dividend growth. The stock has a dividend yield of 0.56%, as of May 24. In fiscal second quarter, the company returned $23 billion to shareholders in dividends and share repurchases.

At the end of March, 131 hedge funds tracked by Insider Monkey had stakes in Apple Inc. (NASDAQ:AAPL), compared with 135 in the previous quarter. These stakes have a collective value of $165.2 billion. Among these hedge funds, Berkshire Hathaway was the company’s leading stakeholder with 915.56 million shares.

Fred Alger Management mentioned Apple Inc. (NASDAQ:AAPL)’s outperformance in its Q1 2023 investor letter.

“Apple Inc. (NASDAQ:AAPL) is a leading technology provider in telecommunications, computing, and services. Apple’s iOS operating system is the company’s unique intellectual property and competitive strength. This software drives particularly tight engagement with consumers and enterprises, which is fostering the growing purchase of high margin services like music, apps, and Apple Pay. While iPhone sales were down year-over-year (YoY). services revenues grew 7% YoY which was slightly above analyst estimates. Company earnings were also better-than-anticipated due to lower input costs, such as memory chips and cost control initiatives. Aside from production disruptions, negative sentiment had also weighed on shares as investors questioned how an economic slowdown would affect consumer demand for Apple products in 2023. However, management projected an acceleration in earnings for the fiscal first quarter, where they noted that iPhone and services growth should remain strong, along with encouraging impacts around product mix, lower input costs, and continued cost controls.”

4. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 132

NVIDIA Corporation (NASDAQ:NVDA) is a California-based multinational tech company that specializes in GPUs for gaming, cryptocurrency mining, and other professional applications. The company currently pays a quarterly dividend of $0.04 per share and has a dividend yield of 0.054%, as recorded on May 24. In FY22, it returned over $10.4 billion to shareholders in dividends and share repurchases, which makes it one of the best dividend stocks on our list.

The number of hedge funds tracked by Insider Monkey owning stakes in NVIDIA Corporation (NASDAQ:NVDA) grew tremendously to 132 in Q1 2023, from 106 in the previous quarter. Ken Griffin, Rajiv Jain, and Philippe Laffont were some of the company’s leading stakeholders at the end of March.

3. Mastercard Incorporated (NYSE:MA)

Number of Hedge Fund Holders: 138

Mastercard Incorporated (NYSE:MA) is also among the best dividend stocks on our list. Mastercard is one of the world’s largest payment-processing companies. It also provides a wide range of other financial services to its consumers. Recently, Tigress Financial has lifted its price target on the stock to $476 and kept a Strong Buy rating on the shares, noting the company’s strong consumer spending and global travel trends. During the first quarter of 2023, Mastercard Incorporated (NYSE:MA) paid $545 million to shareholders in dividends. The company currently pays a quarterly dividend of $0.57 per share and its stock has a dividend yield of 0.62%.  It maintains a 10-year streak of dividend growth.

Mastercard Incorporated (NYSE:MA) was a part of 138 hedge fund portfolios at the end of the first quarter, according to Insider Monkey’s database. The stakes owned by these hedge funds have a collective value of over $14.2 billion.

Oakmark Funds highlighted the reasons for selling Mastercard Incorporated (NYSE:MA) in its Q1 2023 investor letter.

“A brief discussion of Mastercard Incorporated (NYSE:MA) is also appropriate given we have held this company for nearly 13 years. It’s the 13th-largest contributor to performance for the Fund in our nearly 24-year history, but the largest in total dollars and percentage terms at nearly 1760%. While a terrific company, there were better priced alternatives in the quarter, so we sold our position. Our history with Mastercard fits the adage that all good things must come to an end.”

2. Visa Inc. (NYSE:V)

Number of Hedge Fund Holders: 173

Visa Inc. (NYSE:V) is a global leader in financial services that specializes in electronic payments around the world. It is one of the best dividend stocks on our list as it returned $3.2 billion to shareholders in dividends and share repurchases during fiscal second quarter. In addition to this, the company has been growing its dividends consistently for the past 16 years. It pays a quarterly dividend of $0.45 per share, resulting in a dividend yield of 0.81%.

Following the company’s strong quarterly earnings, Barclays raised its price target on Visa Inc. (NYSE:V) to $272 and maintained an Overweight rating on the stock.

As of the close of Q1 2023, 173 hedge funds in Insider Monkey’s database own stakes in Visa Inc. (NYSE:V), worth collectively over $26 billion.

Polen Capital mentioned Visa Inc. (NYSE:V) in its Q1 2023 investor letter and made the following comment.

“We trimmed Mastercard and Visa Inc. (NYSE:V) to equal weights of the Portfolio. Mastercard and Visa operate as a duopoly in a large and growing market. Over the last 50 years, global personal consumer expenditures (PCE) has grown 7-9% annualized. We expect 4-5% long-term PCE growth going forward. Additionally, the shift from cash to credit continues unabated, with a total credit penetration of only approximately 50% globally.3 This shift provides Visa and Mastercard with another ~4-6% of growth. When combined with PCE, this gives both companies high-single-digit to low-double[1]digit revenue growth opportunities. This growth estimate is before accounting for growth amplifiers like the acceleration of e[1]commerce, the shift from offline to online, and additional services. Both companies enjoy extremely strong network effects that provide strong competitive advantages.

We have trimmed Visa and Mastercard because their combined weight grew to over 12% of the Global Growth Portfolio because of their recent performance and to fund our increase in Amazon’s position size. We added to both positions when their prices were depressed due to cross-border transactions deteriorating materially from the pandemic. Cross-border volumes came roaring back when travel corridors reopened, and although we are several quarters removed from the cross-border nadir, Visa still grew volumes >30% in 1Q23. Total cross-border volumes are now 132% of 2019 levels. At 4.5% each, both companies remain high conviction positions for Global Growth.”

1. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 289

Microsoft Corporation (NASDAQ:MSFT) leads our list of the top dividend stocks according to hedge funds. The company saw a growth in the number of bullish hedge funds at the end of the first quarter as 289 funds tracked by Insider Monkey owned stakes in the company, up from 259 in the preceding quarter. These stakes have a collective value of roughly $58 billion.

In the third quarter of fiscal 2023, Microsoft Corporation (NASDAQ:MSFT) returned $9.7 billion to shareholders in dividends and share repurchases. The company pays a quarterly dividend of $0.68 per share and has raised its dividends for 16 years in a row. With a dividend yield of 0.87% Microsoft is one of the best dividend stocks according to hedge funds.

Fred Alger Management revealed why Microsoft Corporation (NASDAQ:MSFT) is investors’ favorite choice in its Q1 2023 investor letter. 

“Microsoft Corporation (NASDAQ:MSFT) is a beneficiary of corporate America’s transformative digitization. Microsoft’s CEO expects technology spending as a percent of Gross Domestic Product (GDP) to jump from about 5% now to 10% in 10 years and that Microsoft will continue to capture market share within the technology sector. The company operates through three segments: Productivity and Business Processes (Office. LinkedIn, and Dynamics), Intelligent Cloud (Server Products and Cloud Services. Azure, and Enterprise Services), and More Personal Computing (Windows Devices, Gaming, and Search). While the company reported decent fiscal second quarter results, their investment in OpenAl’s ChatGPT captured the attention of investors. contributing to positive performance. Throughout the quarter. Microsoft surprised investors with continual rollouts of new Al capabilities across the company’s portfolio (e.g., Bing, GitHub. Teams, Office 365). Furthermore, the company announced Microsoft 365 Copilot, which leverages GPT-4, a large language model, combined with the Microsoft Graph of data to provide Al virtual assistance. We believe Microsoft’s investment in OpenAl provides a first-mover advantage in the Al transformer model space. Despite challenges in the early days of Al-powered applications, the pace of Al innovation is faster than any other enterprise technology previously observed, in our view.”

You can also take a look at 11 Stocks with Heavy Insider Buying and 12 Cheap Dividend Stocks With High Yields

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