S&P 500 Dividend Aristocrats List: Sorted by Hedge Fund Popularity
In this article, we will discuss the 15 S&P 500 dividend aristocrats popular among hedge funds. You can skip our detailed analysis of dividend stocks and their performance over the years, and go directly to read S&P 500 Dividend Aristocrats: Top 5 Among Hedge Funds.
Investors are regaining confidence in the stock market as the S&P 500 delivered a 4.92% year-to-date return. Moreover, global inflation is likely to drop from 8.8% in 2022 to 6.6% in 2023, as reported by International Monetary Fund in January. The report also mentioned that 84% of countries are expected to experience lower headline inflation this year as compared to 2022. Considering this positive outlook of the market, investors show an inclination toward stocks that would help them achieve stable regular income. In this regard, dividend-focused companies with strong dividend growth track records remain popular among investors.
Dividend growers have historically outperformed their peers, becoming top choices for investors. According to a report by Merrill Edge, an American financial services company, dividend stocks can help to alleviate portfolio losses when stock prices fall. The report further highlighted that the S&P 500 Dividend Aristocrats — stocks that have raised their dividend for 25 years or more — delivered an annual average return of 12.13% from 1990 to 2018, compared with a 9.96% return of the broader market. In addition to this, dividend stocks reflected a volatility of 13.22%, in contrast with a 14.22% volatility for the S&P 500.
Analysts expect that dividend stocks will be able to maintain their performance in 2023 as well. According to UBS, dividends per share in the S&P 500 will grow by 1% this year, even with a potential 11% decline in earnings per share in a recessionary environment. The financial services company also estimated that dividends per share could grow by 20% in the next two years if the Federal Reserve successfully avoids a recession.
McDonald’s Corporation (NYSE:MCD), Roper Technologies, Inc. (NYSE:ROP), and Aflac Incorporated (NYSE:AFL) are some of the most important companies that have raised their dividends for a significant period of time. Moreover, these companies have strong cash flow generation that promises further dividend growth. In view of these arguments, we will discuss the dividend aristocrats that are popular among 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. For this list, we scanned Insider Monkey’s database of 943 hedge funds and picked the top 15 dividend aristocrats, which means the stocks mentioned in this list are the most popular dividend aristocrats among hedge funds as of the fourth quarter of 2022. The list is ranked in ascending order of the number of hedge funds having stakes in the companies.
S&P 500 Dividend Aristocrats List: Sorted By Hedge Fund Popularity
15. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 57
A California-based energy company, Chevron Corporation (NYSE:CVX) specializes in the exploration and production of oil and natural gas. In the fourth quarter of 2022, the company posted revenue of $56.4 billion, which showed a 17.3% growth from the same period last year. During the quarter, the company paid nearly $11 billion to shareholders in dividends.
On January 25, Chevron Corporation (NYSE:CVX) declared a 6.3% hike in its quarterly dividend to $1.51 per share. This marked the company's 36th consecutive year of dividend growth. As of February 24, the stock has a dividend yield of 3.77%. Other popular dividend stocks among investors include McDonald’s Corporation (NYSE:MCD), Roper Technologies, Inc. (NYSE:ROP), and Aflac Incorporated (NYSE:AFL).
In January, Chevron Corporation (NYSE:CVX) authorized the repurchase of the company's common stock worth $75 billion. Given this, Truist raised its price target on the stock in February to $179 and maintained a Hold rating on the shares.
At the end of December 2022, 57 hedge funds tracked by Insider Monkey reported owning stakes in Chevron Corporation (NYSE:CVX), down from 66 in the previous quarter. However, the value of these stakes grew to $32.2 billion this quarter, from $27.1 billion a quarter earlier.
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.”
14. Medtronic plc (NYSE:MDT)
Number of Hedge Fund Holders: 58
Medtronic plc (NYSE:MDT) is an American multinational healthcare company that develops medical devices. The company offers a quarterly dividend of $0.68 per share and has a dividend yield of 3.29%, as of February 24. It maintains a 45-year streak of consistent dividend growth.
Medtronic plc (NYSE:MDT) is one of the top dividend stocks among hedge funds as 58 elite funds in Insider Monkey's database owned stakes in the company in Q4 2022, up from 55 in the previous quarter. The collective value of these stakes is over $2.6 billion.
Deutsche Bank raised its price target on Medtronic plc (NYSE:MDT) to $87 in February and maintained a Hold rating on the shares, highlighting the company's solid recent quarterly earnings.
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. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 58
An American multinational beverage corporation, The Coca-Cola Company (NYSE:KO) is next on our list of top dividend stocks among hedge funds. It offers a quarterly dividend of $0.46 per share, having raised it by 4.5% on February 16. This marked the company's 61st consecutive year of dividend growth. The stock has a dividend yield of 3.09%, as of February 24.
In February, Citigroup initiated its coverage of The Coca-Cola Company (NYSE:KO) with a Buy rating and a $68 price target, appreciating the company's structural sales growth last year.
As of the close of Q4 2022, 58 hedge funds in Insider Monkey's database owned stakes in The Coca-Cola Company (NYSE:KO), compared with 59 in the preceding quarter. The collective value of these stakes is over $28.8 billion. With 400 million shares, Berkshire Hathaway was the company's leading stakeholder in Q4.
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%).”
12. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Holders: 60
Abbott Laboratories (NYSE:ABT) is an American multinational medical device company, based in Illinois. In January, Barclays raised its price target on the stock to $125 with an Overweight rating on the shares, appreciating the company's medical device growth.
Abbott Laboratories (NYSE:ABT), one of the top dividend stocks among hedge funds, currently pays a quarterly dividend of $0.51 per share. The company has been raising its dividends consistently for the past 51 years. As of February 24, the stock has a dividend yield of 2.03%.
In the fourth quarter of 2022, Abbott Laboratories (NYSE:ABT) reported revenue of $10.1 billion, which beat Street estimates by $410 million. The company's full-year sales grew by 1.3% year-over-year and its organic sales showed a 6.4% growth.
As per Insider Monkey's Q4 2022 database, 60 hedge funds tracked by Insider Monkey reported owning stakes in Abbott Laboratories (NYSE:ABT), compared with 62 in the previous quarter. These stakes are collectively valued at over $3.2 billion.
Vulcan Value Partners mentioned Abbott Laboratories (NYSE:ABT) in its Q4 2022 investor letter. Here is what the firm has to say:
“Abbott Laboratories (NYSE:ABT) is one of the largest and most diversified health care companies in the world. It operates in four segments: diagnostics, medical devices, nutritional products and established pharmaceuticals. The company quickly established itself as a global leader in the development and deployment of COVID-19 rapid diagnostic tests. Consequently, its revenue and profit growth accelerated during the pandemic. As demand for testing slowed to a more sustainable level, the company is facing difficult earnings comparisons. In addition, Abbott voluntarily recalled certain infant formula products and shut down a plant in Michigan where the products were manufactured, which put more pressure on its earnings comparisons. The plant has resumed production, and Abbott is regaining lost market share. We believe that these events, one positive and one negative, have distorted Abbott’s sustainable earning power and has given us an opportunity to purchase it with a margin of safety.”
11. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 61
NextEra Energy, Inc. (NYSE:NEE) is a renewable energy company, based in Florida, US. On February 17, the company declared a 10% hike in its quarterly dividend to $0.4675 per share. This increase took the company's dividend growth streak to 27 years. As of February 24, the stock has a dividend yield of 2.58%. The company is one of the top dividend stocks among hedge funds.
In January, Guggenheim maintained a Buy rating on NextEra Energy, Inc. (NYSE:NEE) with a $96 price target, appreciating the company's recent quarterly beat.
At the end of December 2022, 61 hedge funds tracked by Insider Monkey owned investments in NextEra Energy, Inc. (NYSE:NEE), worth over $2.15 billion collectively. Ken Griffin and Jos Shaver were some of the company's leading stakeholders in Q4.
ClearBridge Investments mentioned NextEra Energy, Inc. (NYSE:NEE) in its Q3 2022 investor letter. Here is what the firm has to say:
“NextEra Energy, Inc. (NYSE:NEE) is an integrated utility business with a regulated utility operating in Florida and the largest wind business in the U.S. NextEra’s regulated business includes Florida Power & Light, which serves nine million people in Florida. NextEra’s share price rose along with the passage of the U.S. Inflation Reduction Act, which considerably expands support for renewable energy.”
10. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 61
Colgate-Palmolive Company (NYSE:CL) is a New York-based multinational consumer products company. It is one of the top dividend stocks among hedge funds, with 61 hedge fund positions in Q4 2022, up from 57 in the previous quarter, as per Insider Monkey's data. The stakes owned by these hedge funds have a total value of over $4.46 billion.
Citigroup initiated its coverage on Colgate-Palmolive Company (NYSE:CL) with a Buy rating and an $84 price target, as the firm presented a positive outlook on the consumer sector.
Colgate-Palmolive Company (NYSE:CL) maintains a 60-year streak of consistent dividend growth. It currently pays a quarterly dividend of $0.47 per share and has a dividend yield of 2.58%, as of February 24.
Third Point mentioned Colgate-Palmolive Company (NYSE:CL) in its recently-published Q4 2022 investor letter. Here is what the firm has to say:
“Colgate-Palmolive Company (NYSE:CL) remains one of the firm’s largest equity positions. The company offers defensive growth at a reasonable valuation, and we continue to see the potential for shares to deliver attractive risk adjusted returns over the next several years.
Fourth Quarter results were disappointing. The company missed on gross margins, guided 2023 well below the Street, and took another large impairment charge on its portfolio of skin care brands. The price action on the day of the print (down 5%) was extreme and perhaps reflective of growing investor frustration that the company has failed to sustainably grow earnings over the past decade.
We believe some of this “miss” was beyond the company’s control and that Colgate is on the road to delivering more predictable results. Organic growth remains strong and we expect it to start translating into earnings growth as execution improves, margins recover, and external pressures calm down…” (Click here to read the full text)
9. The Sherwin-Williams Company (NYSE:SHW)
Number of Hedge Fund Holders: 64
The Sherwin-Williams Company (NYSE:SHW) specializes in the production of painting and coating material. In January, RBC Capital maintained an Outperform rating on the stock with a $267 price target. The firm mentioned that the company is well-positioned to benefit from US housing fundamentals.
On February 15, The Sherwin-Williams Company (NYSE:SHW) declared a quarterly dividend of $0.605 per share, having raised it by 0.8%. Through this increase, the company extended its dividend growth streak to 44 years, which makes it one of the top dividend stocks among hedge funds. The stock has a dividend yield of 1.10%, as recorded on February 24.
At the end of Q4 2022, 64 hedge funds tracked by Insider Monkey reported owning stakes in The Sherwin-Williams Company (NYSE:SHW), up from 63 in the previous quarter. The collective value of these stakes is over $2.44 billion. With over 1.3 million shares, Farallon Capital was the company's leading stakeholder in Q4.
8. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 66
An American retailer corporation, Walmart Inc. (NYSE:WMT) announced a 2% hike in its quarterly dividend to $0.57 per share. Through this increase, the company achieved its Dividend King status as it has been raising its payouts consistently for the past 50 years. The stock's dividend yield on February 24 came in at 1.61%.
As of the close of Q4 2022, 66 hedge funds tracked by Insider Monkey reported owning stakes in Walmart Inc. (NYSE:WMT), down from 68 in the previous quarter. These stakes have a total value of over $4.8 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. Lowe's Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 68
Lowe's Companies, Inc. (NYSE:LOW) is an American home improvement company, based in North Carolina. Barclays presented a positive outlook on the retail sector and initiated its coverage of the stock with a Neutral rating and a $215 price target.
Lowe's Companies, Inc. (NYSE:LOW) is one of the top dividend stocks among hedge funds as it has been raising its dividends consistently for the past 59 years. The company offers a quarterly dividend of $1.05 per share and has a dividend yield of 2.10%, as of February 24.
Lowe's Companies, Inc. (NYSE:LOW) was a popular stock among hedge funds in Q4 2022, as 68 funds tracked by Insider Monkey owned stakes in the company, up from 61 in the previous quarter. These stakes are valued at roughly $5.7 billion.
Pershing Square Holdings mentioned Lowe’s Companies, Inc. (NYSE:LOW) in its Q2 2022 investor letter. Here is what the firm has to say:
“Lowe’s Companies, Inc. (NYSE:LOW)’s is a high-quality business with significant long-term earnings growth potential underpinned by a superb management team that is successfully executing a multi-faceted business transformation. (Click here to read the full text)
6. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 70
An American multinational food, beverage, and snack company, PepsiCo, Inc. (NASDAQ:PEP) ranks sixth on our list of top dividend stocks among hedge funds. The company offers a per-share dividend of $1.15 every quarter and has a dividend yield of 2.63%, as of February 24. It maintains a 50-year streak of consistent dividend growth.
In addition to PepsiCo, Inc. (NASDAQ:PEP), McDonald’s Corporation (NYSE:MCD), Roper Technologies, Inc. (NYSE:ROP), and Aflac Incorporated (NYSE:AFL) are some other popular dividend stocks favored by investors.
As of the close of Q4 2022, 70 hedge funds in Insider Monkey's database owned stakes in PepsiCo, Inc. (NASDAQ:PEP), worth over $4.4 billion collectively.
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 S&P 500 Dividend Aristocrats: Top 5 Among Hedge Funds.
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Disclosure. None. S&P 500 Dividend Aristocrats List: Sorted By Hedge Fund Popularity is originally published on Insider Monkey.
