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Jim Simons’ Renaissance Technologies Portfolio: 10 Dividend Stock Picks

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·9 min read
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In this article, we discuss 10 dividend stocks in Jim Simons' portfolio. You can skip our detailed analysis of Renaissance Technologies' returns and overall performance, and go directly to read Jim Simons' Renaissance Technologies Portfolio: 5 Dividend Stock Picks

Jim Simons is one of the most successful investors of his time due to his revolutionary investing techniques. He founded Renaissance Technologies in 1982. Having a background in Mathematics, Simons introduced a quantitative analysis investment method, which is widely used today.

Simons realized the importance of using computer models to analyze and monitor the fluctuations in the market prices. His hedge fund used statistical and mathematical methods, which Simons called Monometrics, to analyze the scoring trading gains. For this purpose, he employed experts from different fields, such as data analysis, coding, programming, and cryptography.

According to a report published by CNBC, due to these ultra-modern and innovative investing strategies, Renaissance Technologies’ flagship Medallion Fund managed to generate an annual return of 66%, from 1998 to 2018. In 2021, the firm’s three public hedge funds generated positive returns, after facing losses in 2020 due to the pandemic. The firm’s RIEF, RIDA, and RIDGE gained 20%, 15%, and 10% in 2021, respectively. However, the hedge fund has been experiencing consistent outflows over the past year. In 2021, despite generating double-digit gains of its public funds, Renaissance Technologies saw nearly $15 billion in outflows, as reported by Bloomberg. According to the firm, the hedge fund’s beta models did not perform as expected and led to miscalculations. But the firm is optimistic about its overall result as long as the Medallion fund is stable, which generated 76% in 2020.

As of Q1 2022, holds a 13F portfolio value of $85.2 billion, up from $80.5 billion in the previous quarter. The hedge fund invested heavily in technology, healthcare, consumer goods, and finance sectors, among others. Some of the hedge fund's major holdings include The Coca-Cola Company (NYSE:KO), Exxon Mobil Corporation (NYSE:XOM), and PepsiCo, Inc. (NASDAQ:PEP).

Jim Simons' Renaissance Technologies Portfolio: 10 Dividend Stock Picks
Jim Simons' Renaissance Technologies Portfolio: 10 Dividend Stock Picks

Jim Simons of Renaissance Technologies Our Methodology: 

In this article, we discuss the 10 best dividend stocks in Jim Simons' portfolio. For this list, we collected data from Renaissance Technologies' 13F portfolio for Q1 2022.

Jim Simons' Renaissance Technologies Portfolio: 10 Dividend Stock Picks

10. The Kroger Co. (NYSE:KR)

Dividend Yield as of May 19: 1.75%

 

Number of Hedge Fund Holders: 41

 

Renaissance Technologies’ Stake Value: $942,446,000

The Kroger Co. (NYSE:KR) increased its annual dividend by 17% in 2021 to $0.21 per share. This marked the company’s 15th annual dividend raise. The stock’s dividend yield stood at 1.75%, as of the close of May 19.

Jim Simons’ Renaissance Technologies started investing in The Kroger Co. (NYSE:KR) during the fourth quarter of 2010. In Q1 2022, the hedge fund reduced its stake in the company by 7% and held stakes worth over $942.4 million. The company accounted for 1.1% of Jim Simons’ portfolio. Along with KR, the hedge fund also has positions in some notable blue-chip companies, such as The Coca-Cola Company (NYSE:KO), Exxon Mobil Corporation (NYSE:XOM), and PepsiCo, Inc. (NASDAQ:PEP). As consumers are moving towards retailers due to broad-based inflation, in April, BofA lifted its price target on The Kroger Co. (NYSE:KR) to $75, while upgrading the stock to Buy from Neutral.

The number of hedge funds tracked by Insider Monkey holding positions in The Kroger Co. (NYSE:KR) increased to 41 in Q4 2021, from 39 in the previous quarter. Warren Buffett’s Berkshire Hathaway was the company’s largest shareholder in Q12022, holding shares worth over $3.3 billion.

9. The Hershey Company (NYSE:HSY)

Dividend Yield as of May 19: 1.76%

 

Number of Hedge Fund Holders: 37

 

Renaissance Technologies’ Stake Value: $662,946,000

The Hershey Company (NYSE:HSY) experienced a positive hedge fund sentiment in Q4 2021. 37 hedge funds tracked by Insider Monkey reported owning stakes in the company, up from 33 in the previous quarter.

In 2021, The Hershey Company (NYSE:HSY) hiked its annual dividend by 12% to $0.901 per share, with a dividend yield of 1.76%, as of May 19. The company has been increasing its dividend for the past 12 years, coming through as one of the best dividend stocks in Jim Simons’ portfolio. This April, RBC Capital raised its price target on The Hershey Company (NYSE:HSY) to $237, with an Outperform rating on the shares, appreciating the company’s Q1 2022 results despite rising inflation.

Renaissance Technologies started building its position in The Hershey Company (NYSE:HSY) during the fourth quarter of 2010. In Q1 2022, the hedge fund held a stake worth roughly $663 million in the company, after slashing its position by 4%. The Hershey Company (NYSE:HSY) represented 0.77% of Jim Simons’ portfolio.

8. Target Corporation (NYSE:TGT)

Dividend Yield as of May 19: 2.31%

 

Number of Hedge Fund Holders: 49

 

Renaissance Technologies’ Stake Value: $354,900,000

In May, Deutsche Bank called Target Corporation (NYSE:TGT) its top pick as a defensive play. The firm set a $294 price target on the stock while maintaining a Buy rating on the shares.

In Q1 2022, Renaissance Technologies increased its position in Target Corporation (NYSE:TGT) by 1%, equaling shares worth roughly $355 million. The company represented 0.41% of Jim Simons’ portfolio. The hedge fund has been investing in the company for over a decade now.

In 2021, Target Corporation (NYSE:TGT) increased its annual dividend by 32.4% to $0.90 per share. The company has increased its dividend by 300% over the last 10 years. As of May 19, the stock’s current dividend yield stood at 2.31%.

At the end of Q4 2021, 49 hedge funds tracked by Insider Monkey held stakes in Target Corporation (NYSE:TGT), the same as in the previous quarter. These stakes hold a consolidated value of roughly $4 billion. With shares worth over $530.5 million, Arrowstreet Capital was the company’s largest shareholder in Q1 2022.

Nelson Capital Management mentioned Target Corporation (NYSE:TGT) in its Q2 2021 investor letter. Here is what the firm has to say:

“We added Target (tkr: TGT) to our consumer staples sector. Target offers a broad array of products in owned and known brand items at affordable prices. Its omnichannel fulfilment centers allow customers to receive their items via in-store pickup, curbside pickup, same-day shipping and regular shipping while simultaneously reducing operating costs. With a significantly lower valuation than peers and a unique operating strategy, Target is an attractive holding.”

7. Bank of America Corporation (NYSE:BAC)

Dividend Yield as of May 19: 2.42%

 

Number of Hedge Fund Holders: 84

 

Renaissance Technologies’ Stake Value: $280,311,000

Bank of America Corporation (NYSE:BAC) is an American multinational financial services holding company and an investment bank. In Q1 2022, the hedge fund held shares worth over $280.3 million in the company, after increasing its position by 30%. The company represented 0.32% of Jim Simons’ portfolio.

In Q1 2022, Adam Capital was the largest shareholder of Bank of America Corporation (NYSE:BAC), holding shares worth over $52.3 billion. Overall, 84 hedge funds tracked by Insider Monkey held stakes in the company in Q4 2021, up from 72 in the previous quarter. The consolidated value of these stakes is over $47.8 billion.

In 2021, Bank of America Corporation (NYSE:BAC) increased its annual dividend by 17% to $0.21 per share. The stock’s dividend yield came in at 2.42%, as of May 19. In April, Citigroup called Bank of America Corporation (NYSE:BAC)’s Q1 earnings better than expected and raised its price target on the stock to $47, with a Buy rating on the shares.

Miller Value Partners mentioned Bank of America Corporation (NYSE:BAC) in its Q1 2022 investor letter. Here is what the firm has to say:

“There are many times when volatility and beta give false signals. Banks outperformed in the post-tech bubble bear market of the early 2000s. At the market peak prior to the financial crisis (when risk was the highest in those names!), Bank of America (NYSE:BAC) had a 0.9x beta (based on the trailing 5 years) suggesting its “risk” was below the market’s. Wrong! It massively underperformed in the financial crisis. Realized beta over the 5 years from the pre-crisis’ 2006 peak measured 2.3x.

A much better indicator of actual risk, both before and after the financial crisis, was the quality of the balance sheet and risk-taking appetite. Beta is backwards looking and non-stationary. Relying on it underestimated risk going into the financial crisis and overestimated coming out of it (its beta has continued to fall over the past decade).

We care greatly about risk. We spend a significant amount of time thinking about the risks to our investments. We measure risk as permanent impairment of capital, which means the prices and values don’t bounce back. Business fundamentals determine risk.”

6. Colgate-Palmolive Company (NYSE:CL)

Dividend Yield as of May 19: 2.51%

 

Number of Hedge Fund Holders: 48

 

Renaissance Technologies’ Stake Value: $431,381,000

Colgate-Palmolive Company (NYSE:CL), announced a 4.4% increase in its annual dividend to $0.47 per share in March 2022. The company maintains a 59-year streak of consecutive dividend growth. The stock’s dividend yield stood at 2.51%, as of the close of May 19.

Renaissance Technologies started investing in Colgate-Palmolive Company (NYSE:CL) during the fourth quarter of 2010. In Q1 2022, the hedge fund increased its position in the company by 152%, with shares worth over $431.3 million. Colgate-Palmolive Company (NYSE:CL) accounted for 0.5% of Jim Simons’ portfolio. This April, Deutsche Bank appreciated the company’s strong sales trend and set a $91 price target on the stock, with a Buy rating on the shares. In the first quarter of 2022, analysts also presented a positive outlook on The Coca-Cola Company (NYSE:KO), Exxon Mobil Corporation (NYSE:XOM), and PepsiCo, Inc. (NASDAQ:PEP).

At the end of Q4 2021, 48 hedge funds tracked by Insider Monkey reported owning stakes in Colgate-Palmolive Company (NYSE:CL), down from 54 in the previous quarter. These stakes hold a consecutive value of over $2.06 billion.

 

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Disclosure. None. Jim Simons' Renaissance Technologies Portfolio: 10 Dividend Stock Picks is originally published on Insider Monkey.