Dividend Aristocrats Ranked: Top 15 According To Hedge Funds (Updated)
In this article, we discuss top 15 dividend aristocrats according to hedge funds. You can skip our detailed analysis of dividend stocks and their performance over the years, and go directly to read Dividend Aristocrats Ranked: Top 5 According To Hedge Funds.
Investors are flocking to dividend stocks as recession fears mount and uncertainty in the market grows. According to a report by Wall Street Journal, companies in the S&P 500 distributed over $561 billion in dividends last year, compared with $511.2 billion in 2021. Moreover, analysts see another record for dividend spending this year.
Dividend stocks have surpassed the inflation rate over the years, recording their best performance during periods of high inflation. Dividends have grown at an average of 5.7% per year since 1957 versus a 3.63% growth in the Consumer Price Index (CPI) during the same time, as reported by Wisdom Tree. Similarly, the S&P 500 dividends grew by 5.45% over the last 30 years, compared with a 2.51% growth in the CPI. Last year’s returns have also shown the dominance of strong dividend growers over other asset classes. As of December 31, high dividend stocks delivered an 8.38% return to shareholders, compared with a 29.1% decline in growth equities and a 7.54% drop in value stocks.
Achilleas Taxildaris, a portfolio manager at Bristol Gate Capital Partners, spoke to Morningstar about dividend stocks in his January interview. He mentioned that dividend-growing companies perform better over the long term as they have ‘pristine balance sheets’. He further emphasized the significance of strong fundamentals when investing in dividend stocks.
Some of the companies that have shown solid dividend growth over the years include Caterpillar Inc. (NYSE:CAT), Exxon Mobil Corporation (NYSE:XOM), and AbbVie Inc. (NYSE:ABBV). We will further discuss top dividend aristocrats according to hedge funds.
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Our Methodology:
Dividend aristocrats are the companies in the S&P 500 index that have increased their dividends consistently over the past 25 consecutive years. We scanned Insider Monkey's database of 920 hedge funds and picked the top 15 dividend aristocrats, which means the stocks mentioned in this list are the most popular dividend aristocrats among the elite hedge funds in America. The list is ranked in ascending order of the number of hedge funds having stakes in the companies.
Dividend Aristocrats Ranked: Top 15 According To Hedge Funds
15. McDonald's Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 53
Founded in 1940, McDonald's Corporation (NYSE:MCD) is an American multinational fast food chain. In January, Loop Capital raised its price target on the stock to $328 with a Buy rating on the shares, highlighting the company's same-store sales growth. The company is one of the best dividend stocks to buy according to hedge funds.
McDonald's Corporation (NYSE:MCD) currently pays a quarterly dividend of $1.52 per share, having raised it by 10% in October. The company has been raising its dividends consistently for the past 46 years. The stock's dividend yield on January 18 came in at 2.22%.
In addition to other dividend stocks like Caterpillar Inc. (NYSE:CAT), Exxon Mobil Corporation (NYSE:XOM), and AbbVie Inc. (NYSE:ABBV), investors and analysts are appreciating McDonald's Corporation (NYSE:MCD) due to the company's strong dividend growth record.
McDonald’s Corporation (NYSE:MCD) was a part of 53 hedge fund portfolios in Q3 2022, up from 50 in the previous quarter, according to Insider Monkey’s data. The stakes owned by these hedge funds are worth over $1.8 billion collectively. Among these hedge funds, Bridgewater Associates was the company's leading stakeholder in Q3.
14. Medtronic plc (NYSE:MDT)
Number of Hedge Fund Holders: 55
Medtronic plc (NYSE:MDT) is a multinational medical device company that provides other medical services and solutions to its consumers. On December 8, the company declared a quarterly dividend of $0.68 per share, which fell in line with its previous dividend. The company maintains a 45-year streak of consistent dividend growth, which makes it one of the best dividend stocks to buy according to hedge funds. The stock has a dividend yield of 3.39%, as of January 18.
For the six months that ended in October, Medtronic plc (NYSE:MDT) reported an operating cash flow of $2 billion and its free cash flow for the period came in at $1.2 billion. In fiscal Q2 2023, the company posted revenue of roughly $7.6 billion.
In January, RBC Capital gave a Sector Perform rating on Medtronic plc (NYSE:MDT) with an $89 price target, presenting a positive outlook on the medical supply and device stocks.
At the end of Q3 2022, 55 hedge funds in Insider Monkey’s database owned stakes in Medtronic plc (NYSE:MDT), up from 54 in the previous quarter. The collective value of these stakes is over $2.6 billion.
Artisan Partners mentioned Medtronic plc (NYSE:MDT) in its Q2 2022 investor letter. Here is what the firm has to say:
“While Medtronic plc (NYSE:MDT)’s procedure volumes recovered to pre-COVID levels, foreign exchange headwinds overshadowed underlying business value growth, and supply chain issues, including those related to China’s lockdowns, impacted the surgical innovations business. The downdraft in the market during the quarter led to a pile-on. We are being patient with our investment in Medtronic because the company continues to be a strong free cash flow generator and is attractively priced, with a FCF yield of 5% on trailing one-year numbers and a dividend yield of 3%. Medtronic is under new management that is focused on growing the company’s top line, reinvesting in R&D, returning cash to shareholders and growing operating profits. We like new management’s strategy and believe new product launches, increased surgery visits, sound M&A transactions and a shareholder returns focus, should reinvigorate the business. We added to our positions in these health care names during the quarter.”
13. Linde plc (NYSE:LIN)
Number of Hedge Fund Holders: 56
Linde plc (NYSE:LIN) is an Ireland-based multinational chemicals company that provides its services and products to a variety of industries. In the third quarter of 2022, the company reported an operating cash flow of $2.6 billion, which showed a 3% growth from the same period last year. Its free cash flow for the quarter came in at $1.87 billion and paid $1.7 billion to shareholders in dividends and stock repurchases. The company is among the best dividend stocks to buy according to hedge funds.
In December, Citigroup raised its price target on Linde plc (NYSE:LIN) to $402 with a Buy rating on the shares. The firm appreciated the company's performance and advised investing in defensive names this year.
Linde plc (NYSE:LIN) pays a quarterly dividend of $1.17 per share and has a dividend yield of 1.42%, as of January 18. The company holds a 28-year track record of consistent dividend growth.
At the end of September, 56 hedge funds tracked by Insider Monkey reported owning stakes in Linde plc (NYSE:LIN), growing from 48 in the previous quarter. The collective value of these stakes is over $3.4 billion. With over 3 million shares, Impax Asset Management was the company's leading stakeholder in Q3.
Madison Funds mentioned Linde plc (NYSE:LIN) in its Q4 2022 investor letter. Here is what the firm has to say:
“Linde plc (NYSE:LIN) stock was strong during the fourth quarter following a solid third quarter. Linde remains well positioned with the passage of the Inflation Reduction Act and energy transition with carbon dioxide sequestration opportunities, gasification services, and various hydrogen projects. Linde and Schlumberger announced that they entered into a collaboration of carbon capture, utilization, and sequestration (CCUS) projects to accelerate decarbonization solutions across industrial and energy sectors. The collaboration will combine decades of experience in carbon dioxide capture and sequestration. The collaboration will focus on hydrogen and ammonia production where carbon dioxide is a by-product. The International Energy Agency estimates that 6 Gigatons of carbon dioxide will need to be abated with CCUS in order to reach net zero by 2050. During the quarter, Linde also announced that it became a signatory to the United Nations Global Compact (UNGC), the world’s largest corporate sustainability initiative. As a signatory, Linde has committed to aligning its strategy and activities with the UNGC’s Ten Principles across human rights, labor, environment, and anti-corruption.”
12. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 57
Colgate-Palmolive Company (NYSE:CL) is a multinational consumer products company, based in New York, US. In January, JPMorgan raised its price target on the stock to $86 with an Overweight rating on the shares, expecting inflation to 'drive sales momentum' for consumer and household companies.
On January 12, Colgate-Palmolive Company (NYSE:CL) declared a quarterly dividend of $0.47 per share, in line with its previous dividend. The company has raised its dividends for 60 years in a row. Its dividend yield on January 18 came in at 2.40% and it is one of the best dividend stocks according to hedge funds.
In the third quarter of 2022, Colgate-Palmolive Company (NYSE:CL) reported a strong cash position. The company returned $1.3 billion to shareholders in dividends during the quarter.
At the end of Q3 2022, 57 hedge funds tracked by Insider Monkey presented a bullish stance on Colgate-Palmolive Company (NYSE:CL), up from 55 a quarter earlier. The collective value of stakes owned by these hedge funds is over $4 billion.
Third Point mentioned Colgate-Palmolive Company (NYSE:CL) in its recently-published Q3 2022 investor letter. Here is what the firm has to say:
“Third Point recently acquired a significant position in Colgate-Palmolive Company (NYSE:CL). The investment fits several important criteria in the current investment environment. First, the business is defensive and has significant pricing power in inflationary conditions. Second, there is meaningful hidden value in the company’s Hill’s Pet Nutrition business, which we believe would command a premium multiple if separated from Colgate’s consumer assets. Third, there is a favorable industry backdrop in consumer health, with new entrants via spin-offs and potential for consolidation. Finally, the current valuation is attractive both because earnings growth is poised to inflect higher, and because shareholders are paying very little for the optionality around Hill’s or Colgate’s ability to participate in further consolidation in the consumer health sector.
Colgate has a strong portfolio of brands and operates across four categories that should perform well across most economic conditions: oral care, home care, personal care, and pet nutrition. Although Colgate has delivered organic sales growth of 5-6% over the past few years, earnings growth has been disappointing, and the stock has become a perennial underperformer. Foreign exchange headwinds have pressured reported results. Business reinvestment, supply chain disruption, and inflationary pressures have weighed heavily on margins; those headwinds are now reversing. Stepped up investments in demand generation, product innovation, and digital capabilities are starting to pay off. Global supply chain bottlenecks are easing and product availability on the shelf is improving. And, most importantly, raw material, transportation, and wage pressures are stabilizing, and even reversing in some areas, at the same time additional pricing takes effect. Taken together, the stage is set for Colgate to deliver several years of outsized earnings growth, as sales continue to increase, foreign exchange movements are annualized, and margins finally recover…” (Click here to view the full text)
11. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 59
An American multinational beverage company, The Coca-Cola Company (NYSE:KO) is another one of the best dividend stocks to buy according to hedge funds. The stock also gained positive ratings from analysts due to its strong performance. In December, Atlantic Equities raised its price target on the stock to $69 with an Overweight rating on the shares, highlighting its ongoing investment and strong execution.
The Coca-Cola Company (NYSE:KO) currently pays a quarterly dividend of $0.44 per share and has a dividend yield of 2.85%, as of January 18. The company is one of the strongest dividend payers in the market, making consistent dividend payments since 1920. Moreover, it has raised its payouts for the past 60 years.
As of the end of Q3 2022, 59 hedge funds in Insider Monkey’s database owned stakes in The Coca-Cola Company (NYSE:KO), with a collective value of $25 billion. Berkshire Hathaway owned the largest stake in the company, worth over $22.4 billion.
Rowan Street Capital mentioned The Coca-Cola Company (NYSE:KO) in its Q4 2022 investor letter. Here is what the firm has to say:
“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%).”
10. The Sherwin-Williams Company (NYSE:SHW)
Number of Hedge Fund Holders: 63
The Sherwin-Williams Company (NYSE:SHW) is an Ohio-based manufacturing company that specializes in paint and coating materials. The company has business in around 109 countries. In the first nine months of the 2022, the company generated strong cash to fulfill shareholder obligations. Its operating cash flow for the period came in at $1.28 billion and it returned $1.2 billion to shareholders in dividends and share repurchases.
The Sherwin-Williams Company (NYSE:SHW) also gained strong ratings from the Street analysts due to its performance during a market downturn. In December, both Citigroup and JPMorgan raised their price targets on the stock to $270 and $260, respectively.
The Sherwin-Williams Company (NYSE:SHW) has been raising its dividends consistently for the past 43 years. The company currently pays a quarterly dividend of $0.60 per share for a dividend yield of 0.97%, as recorded on January 18.
The Sherwin-Williams Company (NYSE:SHW) is one of the best dividend stocks according to hedge funds, as 63 funds tracked by Insider Monkey owned stakes in the company in Q3 2022, up from 52 in the previous quarter. These stakes have a consolidated value of over $2.8 billion.
ClearBridge Investments mentioned The Sherwin-Williams Company (NYSE:SHW) in its Q3 2022 investor letter. Here is what the firm has to say:
“The third strategy is buying growth companies with idiosyncratic or stock-specific catalysts unrelated to the direction of the market like The Sherwin-Williams Company (NYSE:SHW). The stock is an example of a company we categorize in our cyclical bucket that should experience a step change in earnings over the medium to long term with solid execution and its ability to pass through price increases. While relative performance has been challenged by binary decisions around a handful of mega cap technology stocks, we’re entering a lower-growth period in which we’ve historically delivered strong relative results from our balanced approach.”
9. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 66
Chevron Corporation (NYSE:CVX) is an American multinational energy company, based in California. The company has been raising its dividends consistently for the past 35 years. It currently offers a per-share dividend of $1.42 every quarter for a dividend yield of 3.15%, as of January 18. The company is among the best dividend stocks to buy according to hedge funds.
In the third quarter of 2022, Chevron Corporation (NYSE:CVX) reported revenue of $66.6 billion, which showed a 49% growth from the same period last year. The company's cash generation also remained strong with its operating cash flow of $15.3 billion and its free cash flow of $12.3 billion. It also paid $2.7 billion to shareholders in dividends during the quarter.
The number of hedge funds tracked by Insider Monkey owning stakes in Chevron Corporation (NYSE:CVX) grew to 66 in Q3 2022, from 59 in the previous quarter. These stakes have a total value of over $27 billion.
Diamond Hill Capital mentioned Chevron Corporation (NYSE:CVX) in its Q1 2022 investor letter. Here is what the firm had to say:
“Other top contributors in Q1 included multinational energy company Chevron Corp. (NYSE:CVX). The company benefited from increased energy demand as COVID-related economic restrictions eased in tandem with concerns regarding supply interruptions related to Russia’s invasion of Ukraine.”
8. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 68
Walmart Inc. (NYSE:WMT) is an American multinational retail corporation. In December, Credit Suisse raised its price target on the stock to $170 with an Outperform rating on the shares, calling the company one of the most important defensive names in the inflationary environment.
Walmart Inc. (NYSE:WMT), one of the best dividend stocks according to hedge funds, currently pays a quarterly dividend of $0.56 per share and has a dividend yield of 1.55%. The company has been raising its dividends consistently for the past 49 years.
In Q3 2022, Walmart Inc. (NYSE:WMT) posted revenue of $152.8 billion, up 8.8% from the same period last year. The company also showed growth in its US comparable sales and e-commerce sales as well. Moreover, it returned $1.5 billion to shareholders during the first nine months of the year.
As of the end of Q3 2022, 68 hedge funds tracked by Insider Monkey were bullish on Walmart Inc. (NYSE:WMT), compared with 67 in the previous quarter. The collective value of stakes owned by these hedge funds is over $4.08 billion.
Leaven Partners mentioned Walmart Inc. (NYSE:WMT) in its Q3 2022 investor letter. Here is what the firm has to say:
“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Walmart (NYSE:WMT), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6%[2] from 7.2% in early August and slashing full-year profit growth to 4.5%.”
7. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 69
The Procter & Gamble Company (NYSE:PG) is an American manufacturer and marketer of consumer goods and other personal care and hygiene products. The company has been raising its dividends consistently for the past 66 years and currently pays a quarterly dividend of $0.9133 per share. The stock's dividend yield on January 18 came in at 2.43%.
JPMorgan maintained a Neutral rating on The Procter & Gamble Company (NYSE:PG) in January and lifted its price target on the stock to $150. The firm presented a positive stance on consumer goods and household companies this year.
As of the close of Q3 2022, 69 hedge funds tracked by Insider Monkey reported owning stakes in The Procter & Gamble Company (NYSE:PG), down from 71 in the previous quarter. The collective value of these stakes is over $4.08 billion. Among these hedge funds, Bridgewater Associates was the company's leading stakeholder in Q3.
Rowan Street Capital mentioned The Procter & Gamble Company (NYSE:PG) in its Q4 2022 investor letter. Here is what the firm has to say:
“Let’s look at The Procter & Gamble Company (NYSE:PG). Dividend yield is 2.4%. Earnings are forecasted to grow at 5.9%, and its current earnings multiple is at 25x. Now, lets say over the next 3-5 years the market loses interest in the “safe”, mature companies that grow at anemic rates and gets an appetite for growth again. It’s very unlikely that Mr. Market will be paying 25x for 5.9% earnings growth. Lets assume that multiple declines to the market average of 18x — that would be ~6.9% drag per year on the total expected return over next 3-5 years. If we get 2.4% (dividend) + 5.9% (earnings growth) – 6.9% (decrease in earnings multiple) = 1.4% (annual return we can expect on average from this stock).”
6. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 72
PepsiCo, Inc. (NASDAQ:PEP) is a popular dividend stock among hedge funds, as 72 funds in Insider Monkey's database owned stakes in the company in Q3 2022, compared with 65 in the previous quarter. These stakes are valued at over $4.8 billion collectively.
PepsiCo, Inc. (NASDAQ:PEP) holds a 50-year track record of consistent dividend growth. The company currently pays a quarterly dividend of $1.15 per share and has a dividend yield of 2.61%, as recorded on January 18. The company can be added to dividend portfolios alongside dividend stocks like Caterpillar Inc. (NYSE:CAT), Exxon Mobil Corporation (NYSE:XOM), and AbbVie Inc. (NYSE:ABBV).
JPMorgan gave a positive outlook to the consumer companies heading into 2023 and raised its price target on PepsiCo, Inc. (NASDAQ:PEP) to $150 with a Neutral rating on the shares.
Lindsell Train mentioned PepsiCo, Inc. (NASDAQ:PEP) in its Q3 2022 investor letter. Here is what the firm has to say:
“At this point, it may help to give a further example of these self-reinforcing moats to illustrate the idea, drawing from the consumer franchises side of our portfolio. In our view, strong consumer brands can similarly exhibit Lindycompatible anti-ageing properties. Consider, that the longer a company invests in its brands through advertising and R&D, the stronger and more resonant they may get. When successful, a self-sustaining feedback loop is established, whereby it becomes ever harder to recreate a heritage-rich brand from scratch, raising barriers to entry, and proportionately increasing its likely lifespan. There are plenty of long-lived portfolio franchises I could reference here, but I’ve gone with PepsiCo (NYSE:PEP); partly because we have good time-series stats on it (beware data bias!) but also, as I hope will become evident, because Pepsi over its 129 years has succeeded in creating some wonderfully deep moats.
With Pepsi Cola you get the flagship soft drinks brand, which is both global and generational, but you also get the Frito-Lay salty snacks portfolio assembled alongside it, claiming nearly 40% of the global market. That’s ten-times greater than the nearest competitor and likely higher than the next 65 competitors combined. These are exceptionally strong global bands with market shares to match; the long-term empirical result being Pepsi’s dividend record which over the past 66 years (as far back as we’ve been able to go) has compounded at an annualised rate of 10%. Pepsi is no ‘in at the ground floor’ start-up today, but it wasn’t six decades ago either. Early growth investor Philip Fisher put it well when in 1958 (two years into Pepsi’s current winning streak) he wrote of “companies which in spite of outstanding prospects of major further growth are so financially strong, with roots going so deep into the economic soil, that they qualify under the general classification of ‘institutional stocks’”. PepsiCo fits this description well…” (Click here to see the full text)
Click to continue reading and see Dividend Aristocrats Ranked: Top 5 According To Hedge Funds.
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Disclosure. None. Dividend Aristocrats Ranked: Top 15 According To Hedge Funds is originally published on Insider Monkey. An earlier version of the article used the wrong gender for Achilleas Taxildaris.
