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Dividend Stock Portfolio: 10 Stock Picks By Hedge Funds

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·10 min read
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In this article, we will be taking a look at 10 stock picks by hedge funds. To skip our detailed analysis of dividend investing, you can go directly to see the Dividend Stock Portfolio: 5 Stock Picks by Hedge Funds.

With the rise of the COVID-19 pandemic, the entire world witnessed a fall in practically everything: employment rates, salaries, interpersonal interactions, and much more. As schools and workplaces closed down, the US economy witnessed the sharpest decline in job creation in the nine months preceding September, according to a Reuters report. The reasons for this were primarily attributed to increased restrictions placed on social interaction and generally working outside the home amidst fears of the Delta variant this summer. However, the September job report showed unemployment rates falling to 4.8%, and just before it global equity markets and Treasury yields also began showing an upward incline.

The benchmark 10-year US Treasury yield, for instance, was reported to have risen past 1.6% for the first time since June, while Wall Street began showing a more positive outlook on stocks at the same time. MSCI's all-country world index also rose 0.14%, alongside the Dow Jones Industrial Average with its 0.10% rise and the S&P 500's 0.04% rise. Finally, this October's early rally lifted the global stock market showcasing a further optimistic future for stock trading and investing in general. In light of more positive sentiments surrounding the economy and the market, dividend investing is steadily becoming a more attractive possibility for investors looking for exciting opportunities.

Dividend investing has long been considered a profitable and thrilling investing practice. AFH Wealth Management has, for instance, quoted Bloomberg in stating that for the 10-year period leading up to the end of 2016, the FTSE 100 index brought in returns of under 15% excluding dividends and about 67% including dividends, signifying the power of dividend stocks. Not only does this mean that dividend stocks can prove to be outperformers in the market, but it also means that for the individual income investor, these stocks can become viable passive income streams. AFH Wealth Management, for instance, mentioned that many stocks in the FTSE 100 index yield over 4%, a value that can allow income investors to build a strong portfolio generating a sizeable income.

Some of the most popular dividend stocks among hedge funds include Morgan Stanley (NYSE:MS), Procter & Gamble Company (NYSE:PG), Intel Corporation (NASDAQ:INTC) and Medtronic plc (NYSE:MDT), among others discussed in detail below.

Because of the pandemic, the entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Dividend Stock Portfolio: 10 Stock Picks By Hedge Funds
Dividend Stock Portfolio: 10 Stock Picks By Hedge Funds

Photo by NeONBRAND on Unsplash

Without further ado, let's take a look at the 10 stock picks by hedge funds.

Our Methodology

Here at Insider Monkey, we track the data for about 873 hedge funds, and we have used this data to pick 10 dividend stocks that are among the top picks of hedge funds today. The stocks have dividend yields of 2% and above and are ranked from the lowest to the highest dividend yield. For each stock, we have mentioned the number of hedge funds holding stakes in it alongside its dividend yield as well. Finally, we have used analysts' ratings to pick stocks with mostly positive ratings on the market today, while taking into account factors like their fundamental business strengths and past performance as well.

10. Medtronic plc (NYSE:MDT)

Number of Hedge Fund Holders: 68

Dividend Yield: 2.02%

Medtronic plc (NYSE:MDT) is a healthcare company that develops and distributes equipment in the medical sector. The company offers device-based medical therapies such as implantable cardiac pacemakers. It ranks 10th on our list of stock picks by hedge funds.

This August, analyst David Toung at Argus raised the price target on shares of Medtronic plc (NYSE:MDT) from $150 to $165. The analyst also reiterated a Buy rating on the stock.

In the fiscal first quarter of 2022, Medtronic plc (NYSE:MDT) had an EPS of $1.41, beating estimates by $0.09. The company’s revenue was $7.99 billion, up 22.74% year over year and beating estimates by $107.73 million.

By the end of the second quarter of 2021, 68 hedge funds out of the 873 tracked by Insider Monkey held stakes in Medtronic plc (NYSE:MDT) worth roughly $3.4 billion. This is compared to 65 hedge funds in the previous quarter with a total stake value of approximately $3.6 billion.

Like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Intel Corporation (NASDAQ:INTC), Medtronic plc (NYSE:MDT) is a notable stock pick among investors today.

9. Union Pacific Corporation (NYSE:UNP)

Number of Hedge Fund Holders: 69

Dividend Yield: 2.09%

Union Pacific Corporation (NYSE:UNP) is an industrials company that engages in the railroad business through its subsidiary company, Union Pacific Railroad Company. The company ranks 9th on our list of stock picks by hedge funds and is based in Omaha.

This October, Barclays analyst Brandon Oglenski upgraded shares of Union Pacific Corporation (NYSE:UNP) from Equal Weight to Overweight. The analyst also raised the price target on shares of the stock from $240 to $260.

In the second quarter of 2021, Union Pacific Corporation (NYSE:UNP) had an EPS of $2.73, beating estimates by $0.18. The company's revenue was $5.50 billion, up 29.69% year over year and beating estimates by $118.17 million. Union Pacific Corporation (NYSE:UNP) has gained 1.92% year to date and 2.77% in the past year.

By the end of the second quarter of 2021, 69 hedge funds out of the 873 tracked by Insider Monkey held stakes in Union Pacific Corporation (NYSE:UNP) worth roughly $5.03 billion. This is compared to 75 hedge funds in the previous quarter with a total stake value of approximately $4.7 billion.

Like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Intel Corporation (NASDAQ:INTC), Union Pacific Corporation (NYSE:UNP) is among the more popular stock picks for investors so far this year.

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

Number of Hedge Fund Holders: 68

Dividend Yield: 2.5%

The Procter & Gamble Company (NYSE:PG) is next on our list of stock picks by hedge funds, and is a consumer staples company that provided branded consumer packaged goods. The company operates in North and Latin America, Europe, the Asia Pacific, Greater China, India, the Middle East, and Africa. The company ranks 8th on our list.

This October, BofA reinitiated coverage of The Procter & Gamble Company (NYSE:PG) with a Buy rating.

In the fiscal fourth quarter of 2021, The Procter & Gamble Company (NYSE:PG) had an EPS of $1.13, beating estimates by $0.04. The company’s revenue was $18.95 billion, up 7.05% year over year and also beating estimates by $569.63 million.

By the end of the second quarter of 2021, 68 hedge funds out of the 873 tracked by Insider Monkey held stakes in The Procter & Gamble Company (NYSE:PG) worth roughly $6.9 billion. This is compared to 70 hedge funds in the previous quarter with a total stake value of approximately $8.5 billion.

Like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Intel Corporation (NASDAQ:INTC), The Procter & Gamble Company (NYSE:PG) is a consistently noteworthy stock pick for hedge funds so far this year.

7. Intel Corporation (NASDAQ:INTC)

Number of Hedge Fund Holders: 78

Dividend Yield: 2.6%

Intel Corporation (NASDAQ:INTC), an information technology company based in California, is next on our list of stock picks by hedge funds. The company provides essential technologies for the cloud, smart, and connected devices for retail, industrial, and consumer uses across the globe. It ranks 7th on our list.

This September, Deutsche Bank analyst Ross Seymore resumed coverage of shares of Intel Corporation (NASDAQ:INTC) with a Hold rating. The analyst also has a $58 price target on the stock.

In the second quarter of 2021, Intel Corporation (NASDAQ: INTC) had an EPS of $1.24, beating estimates by $0.19. The company’s revenue was $18.53 billion, beating estimates by $735.06 million.

By the end of the second quarter of 2021, 78 hedge funds out of the 873 tracked by Insider Monkey held stakes in Intel Corporation (NASDAQ: INTC) worth roughly $6.8 billion. This is compared to 83 hedge funds in the previous quarter with a total stake value of approximately $7.6 billion.

6. Morgan Stanley (NYSE:MS)

Number of Hedge Fund Holders: 69

Dividend Yield: 2.9%

Morgan Stanley (NYSE:MS) is a financial holding company based in New York. The company provides financial products and services to a range of customers in the US, Europe, the Middle East, Africa, and Asia. It ranks 6th on our list of stock picks by hedge funds.

In the second quarter of 2021, Morgan Stanley (NYSE:MS) had an EPS of $1.89, beating estimates by $0.23. The company’s revenue was $14.76 billion, up 10.03% year over year and also beating estimates by $763.58 million.

By the end of the second quarter of 2021, 69 hedge funds out of the 873 tracked by Insider Monkey held stakes in Morgan Stanley (NYSE:MS) worth roughly $5.3 billion. This is compared to 79 hedge funds in the previous quarter with a total stake value of approximately $5.28 billion.

ClearBridge Investments, an investment management firm, mentioned Morgan Stanley (NYSE:MS) in its second-quarter 2021 investor letter. Here's what they said:

“The Strategy also benefited from strong showings from financials holdings such as recent addition Morgan Stanley, a leading bank holding company offering a variety of financial services worldwide, and one of the largest broker-dealers, investment banks and wealth managers in the U.S. Morgan Stanley has been a leader in helping direct capital to address global sustainability challenges. Its sustainability efforts include capital markets actions such as issuing green bonds and it was early in its support for sustainability in investing and its concern for the environment. Morgan Stanley reported a great quarter with record revenues and strength across the businesses as it works to integrate and find synergies with recent acquisition E*TRADE. Following stress tests for banks, Morgan Stanley increased its dividend and share repurchase plan more than expected.”

To see the rest of the stocks on this list click Dividend Stock Portfolio: 5 Stock Picks by Hedge Funds.

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Disclosure: None. Dividend Stock Portfolio: 10 Stock Picks by Hedge Funds is originally published on Insider Monkey.