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10 Best Blue Chip Dividend Stocks Hedge Funds are Buying

In this article, we will be looking at the 10 best blue chip dividend stocks hedge funds are buying. To skip our detailed analysis of blue chip stocks and dividend investing, you can go directly to see the 5 Best Blue Chip Dividend Stocks Hedge Funds are Buying.

Blue chip stocks are generally among some of the safest investment options in the market, for the sheer fact that these companies tend to be established well, recognizable, and have steadily growing or already well-developed financial standings. They are also the stocks that would make up the majority of an investment portfolio, provided the investor is following a certain set of rules outlining a dividend investment strategy. There are multiple reasons for this, but one plausible reason can be that such stocks tend to have stronger balance sheets which can also be a good thing for they company dividend.

For instance, those companies, or blue chip stocks, that have lower payout ratios would most likely be better able to continue paying out their dividends as well, and for longer time periods. To cement the above claim, we can use a Credit Suisse Quantitative Research department analysis that revealed that those dividend stocks that had lower payout ratios were evidently outperforming other dividend stocks with higher payout ratios between 1990 and 2006. This outperformance was valued at 8.2% per year between the studied time period.

Blue chip stocks tend to be a good bet in any case though, whether they are dividend paying companies, like McDonalds Corporation (NYSE: MCD), The Coca-Cola Company (NYSE: KO), and PepsiCo, Inc. (NASDAQ: PEP), or not, like and Amazon.com, Inc. (NASDAQ: AMZN). But just when dealing with dividend stocks, especially blue chip dividend stocks, it becomes imperative to note the importance of these companies in any well-balanced portfolio especially in times of economic strife. Dividend stocks do tend to benefit investors during times of recession. Firstly, these stocks manage to be the only hedge against unemployment in truly dire situations, as they offer stable incomes even to those who are at the risk of losing their jobs and to those about to retire. Secondly, dividend stocks have historically been highly influential especially during bearish markets, between for instance 1900 and 2000. During this time period, it has been estimated that 90% of the total return of the S&P 500 came from dividends, for instance.

The importance and benefits of dividend stocks notwithstanding, it should be noted as well that these stocks must not be recklessly picked up for tens of thousands of dollars to be poured into. Even when picking among dividend stocks, certain factors such as consistent increases in yield must be taken into account. The S&P 500 Dividend Aristocrats Index, made of up companies with 25 or more years of dividend increases without break, has outperformed the S&P 500 index between 2006 and 2015 by almost 3% each year, for instance.

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Investing is becoming difficult by the day, even for the smart money. 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 124 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 124 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.

Without further ado, lets look at the 10 best blue chip dividend stocks hedge funds are buying.

Our Methodology

We have used Insider Monkeys data of about 866 hedge funds to pick blue chip stocks most popular among hedge funds today, and have thus ranked the stocks on our list below from the lowest to the highest number of hedge fund holders. We have also mentioned the dividend yields of each stock, while ensuring that all companies listed have mostly positive analysts ratings and robust fundamentals to fall back on in terms of reliability and financial strength.

Best Blue Chip Dividend Stocks Hedge Funds are Buying

10. Pfizer Inc. (NYSE: PFE)

Number of Hedge Fund Holders: 65Dividend Yield: 3.5%

Pfizer Inc. (NYSE: PFE) is a pharmaceuticals company that works to discover and develop biopharmaceutical products for marketing and distribution across the globe. The company is based in New York and was the first to come out with a successful vaccine against the COVID-19 pandemic. It ranks 10th on our list of the best blue chip dividend stocks hedge funds are buying.

Reiterating a Neutral rating on shares of Pfizer Inc. (NYSE: PFE) this July, Mizuho analyst Vamil Divan raised his price target on the stock. The new price target stands at $43.

In the second quarter of 2021, Pfizer Inc. (NYSE: PFE) had an EPS of $1.07, beating estimates by $0.09. The company’s revenue was $18.98 billion, up 60.81% year over year and also beating estimates by $249.96 million. Pfizer Inc. (NYSE: PFE) has also gained 32.35% in the past 6 months and 24.91% year to date.

By the end of the first quarter of 2021, 65 hedge funds out of the 866 tracked by Insider Monkey held stakes in Pfizer Inc. (NYSE: PFE) worth roughly $2.01 billion. This is compared to 63 hedge funds in the previous quarter with a total stake value of approximately $1.85 billion.

Like McDonalds Corporation (NYSE: MCD), The Coca-Cola Company (NYSE: KO), PepsiCo, Inc. (NASDAQ: PEP), and Amazon.com, Inc. (NASDAQ: AMZN), Pfizer Inc. (NYSE: PFE) is a good stock to invest in.

9. McDonalds Corporation (NYSE: MCD)

Number of Hedge Fund Holders: 67Dividend Yield: 2.2%

McDonalds Corporation (NYSE: MCD), an American food company operating through its restaurant franchises across the globe, ranks 9th on our list of the best blue chip dividend stocks hedge funds are buying. The company operated about 39,198 restaurants as of December 31st, 2020.

John Staszak, an analyst at Argus, this July raised his price target on shares of McDonalds Corporation (NYSE: MCD) from $260 to $275. The analyst also reiterated a Buy rating on the stock in light of its Q2 earnings beat.

In the second quarter of 2021, McDonalds Corporation (NYSE: MCD) had an EPS of $2.37, beating estimates by $0.25. The company’s revenue was $5.89 billion, up 56.53% year over year and also beating estimates by $319.30 million. McDonalds Corporation (NYSE: MCD) has also gained 9.46% in the past 6 months and 11.64% year to date.

By the end of the first quarter of 2021, 67 hedge funds out of the 866 tracked by Insider Monkey held stakes in McDonalds Corporation (NYSE: MCD) worth roughly $3.78 billion. This is compared to 62 hedge funds in the previous quarter with a total stake value of approximately $2.89 billion.

8. The Home Depot, Inc. (NYSE: HD)

Number of Hedge Fund Holders: 68%Dividend Yield: 2%

The Home Depot, Inc. (NYSE: HD), a consumer discretionary home improvement retail company, ranks 8th on our list of the best blue chip dividend stocks hedge funds are buying. The company operates its own brand of stores across the US under the Home Depot name, offering a range of home improvement, construction, and decoration products, among other things.

Reiterating an Outperform rating on shares of The Home Depot, Inc. (NYSE: HD) this May, Credit Suisse also raised its price target on the stock. The new price target currently stands at $330, versus the previous target of $319.

In the fiscal first quarter of 2022, The Home Depot, Inc. (NYSE: HD) had an EPS of $3.86, beating estimates by $0.81. The company’s revenue was $37.50 billion, up 32.70% year over year and also beating estimates by $2.87 billion. The Home Depot, Inc. (NYSE: HD) has also gained 17.97% in the past 6 months and 24.57% year to date.

By the end of the first quarter of 2021, 68 hedge funds out of the 866 tracked by Insider Monkey held stakes in The Home Depot, Inc. (NYSE: HD) worth roughly $4.36 billion. This is compared to 79 hedge funds in the previous quarter with a total stake value of approximately $4.92 billion.

Like McDonalds Corporation (NYSE: MCD), The Coca-Cola Company (NYSE: KO), PepsiCo, Inc. (NASDAQ: PEP), and Amazon.com, Inc. (NASDAQ: AMZN), The Home Depot, Inc. (NYSE: HD) is a good stock to invest in.

7. Verizon Communications Inc. (NYSE: VZ)

Number of Hedge Fund Holders: 69Dividend Yield: 4.5%

Verizon Communications Inc. (NYSE: VZ) is next on our list of the best blue chip dividend stocks hedge funds are buying, and is a communications services company leading in the wireless and broadband products and services fields. The company ranks 7th on our list and is based in New York.

This July, Tigress Financial initiated a 12-month target price on shares of Verizon Communications Inc. (NYSE: VZ) of about $67. The firm also reiterated a Buy rating on the stock, upheld by analyst Ivan Feinseth.

In the second quarter of 2021, Verizon Communications Inc. (NYSE: VZ) had an EPS of $1.37, beating estimates by $0.07. The company’s revenue was $33.76 billion, up 10.89% year over year and also beating estimates by $1.03 billion. Verizon Communications Inc. (NYSE: VZ) has also gained 0.29% in the past 6 months.

By the end of the first quarter of 2021, 69 hedge funds out of the 866 tracked by Insider Monkey held stakes in Verizon Communications Inc. (NYSE: VZ) worth roughly $11.4 billion. This is compared to 67 hedge funds in the previous quarter with a total stake value of approximately $10.5 billion.

Like McDonalds Corporation (NYSE: MCD), The Coca-Cola Company (NYSE: KO), PepsiCo, Inc. (NASDAQ: PEP), and Amazon.com, Inc. (NASDAQ: AMZN), Verizon Communications Inc. (NYSE: VZ) is a good stock to invest in.

Miller/Howard Investments, an investment management firm, mentioned Verizon Communications Inc. (NYSE: VZ) in its first-quarter 2021 investor letter. Heres what they said:

“We sold Verizon (VZ) based on concerns over how much they might spend in ongoing spectrum auctions. Management may legitimately view spending billions of dollars to expand their spectrum holdings as necessary, but we believe the payoff will be slow and will make it challenging to grow the dividend at a good pace.”

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

Number of Hedge Fund Holders: 70Dividend Yield: 2.5%

The Procter & Gamble Company (NYSE: PG) is a consumer staples company offering a range of household and other products in North and Latin America, Europe, the Asia Pacific, Greater China, India, the Middle East, and Africa. The company ranks 6th on our list of the best blue chip dividend stocks hedge funds are buying.

Bill Chappell, an analyst at Truist, raised the price target on The Procter & Gamble Company (NYSE: PG) from $140 to $145 this August, while reiterating a Hold rating on the shares as well.

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. The Procter & Gamble Company (NYSE: PG) has also gained 10.89% in the past 6 months and 3.16% year to date.

By the end of the first quarter of 2021, 70 hedge funds out of the 866 tracked by Insider Monkey held stakes in The Procter & Gamble Company (NYSE: PG) worth roughly $8.54 billion. This is compared to 83 hedge funds in the previous quarter with a total stake value of approximately $10.4 billion.

Like McDonalds Corporation (NYSE: MCD), The Coca-Cola Company (NYSE: KO), PepsiCo, Inc. (NASDAQ: PEP), and Amazon.com, Inc. (NASDAQ: AMZN), The Procter & Gamble Company (NYSE: PG) is a good stock to invest in.

Click to continue reading and see the 5 Best Blue Chip Dividend Stocks Hedge Funds are Buying.

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Disclosure: None. 10 Best Blue Chip Dividend Stocks Hedge Funds are Buying is originally published on Insider Monkey.

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