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In this article, we will discuss the top dividend stocks to buy according to billionaire Ray Dalio. You can skip our detailed analysis of Dalio's investment strategy and his hedge fund's performance in the past, and go directly to read Billionaire Ray Dalio's Top 5 Dividend Stocks.
Ray Dalio’s Bridgewater Associates is one of the largest hedge funds in the world. The firm uses a principled-based approach and focuses on distinctive approaches for experienced institutional investors around the globe. Dalio’s investment strategy revolves around the diversification of portfolios, as investments in different industries and asset classes reduce risks in different market situations. His ‘All Weather’ strategy is a testament to the fluctuating market conditions, like the one we are facing today. Recently, Dalio stepped down from running Bridgewater Associates and announced to remain on the fund’s board and public research team. As of November, the billionaire’s real-time net worth stands at $19.1 billion, according to Forbes.
The continuous hike in interest rates this year has seasoned as well as retail investors worried about the future of the market. In one of his interviews with Business Insider this September, Dalio spoke about the trend of interest rate hikes. He said that higher interest rates will result in the slowdown of the economy in 2023, with the S&P 500 falling about another 20%. He further asserted that a well-balanced portfolio is one of the most reliable ways to ride out the stock market downturn.
Over the years, Bridgewater Associates has delivered solid returns to shareholders. According to a report by Bloomberg, the firm’s flagship fund Pure Alpha II delivered an annual average return of 11.4% since its inception in 1991 through June 2022. In the first half of the year, the flagship fund returned 32% due to increased economic volatility. Another report by Business Insider revealed that Bridgewater Associates gained 25% this year through September.
As of the end of Q3 2022, Bridgewater Associates’ 13F portfolio had a value of over $19.7 billion, down from $23.5 billion in the preceding quarter. The hedge fund invested in several sectors, with services, healthcare, and consumer goods making up the major portions of the portfolio. Some of the firm’s major holdings in Q3 include Alphabet Inc. (NASDAQ:GOOG), Visa Inc. (NYSE:V), and Meta Platforms, Inc. (NASDAQ:META). In this article, we will discuss the fund’s top dividend stocks.
Ray Dalio of Bridgewater Associates
Our Methodology:
For this list, we selected stocks from Bridgewater Associates' 13F portfolio as of the third quarter of 2022. The stocks are ranked according to their stake value in the portfolio.
Billionaire Ray Dalio's Top 10 Dividend Stocks
10. Starbucks Corporation (NASDAQ:SBUX)
Bridgewater Associates’ Stake Value: $252,598,000
Dividend Yield as of November 16: 2.17%
Starbucks Corporation (NASDAQ:SBUX) is an American multinational coffeehouse company that operates in over 80 countries around the world. The company has been a strong dividend payer for years and has raised its payouts for 12 years in a row. It currently pays a quarterly dividend of $0.53 per share and has a dividend yield of 2.17%, as of November 16.
Bridgewater Associates has been investing in Starbucks Corporation (NASDAQ:SBUX) since the fourth quarter of 2010, purchasing shares worth $690,000. At the end of Q3 2022, the hedge fund owned roughly 3 million SBUX shares, worth over $252.5 million. The company represented 1.27% of billionaire Ray Dalio's portfolio. The company is the fund's important holding alongside Alphabet Inc. (NASDAQ:GOOG), Visa Inc. (NYSE:V), and Meta Platforms, Inc. (NASDAQ:META).
Appreciating the company's strong fiscal Q4 earnings, Street analysts presented a positive outlook on Starbucks Corporation (NASDAQ:SBUX) in November. Both Evercore ISI and Citigroup raised their price targets on the stock to $97 and $93, respectively.
At the end of Q2 2022, Starbucks Corporation (NASDAQ:SBUX) was a part of 55 hedge fund portfolios, compared with 58 in the previous quarter. The stakes owned by these hedge funds have a total value of over $1.43 billion.
Polen Capital mentioned Starbucks Corporation (NASDAQ:SBUX) in its Q2 2022 investor letter. Here is what the firm has to say:
“Starbucks, which garners a lower weighting in the Portfolio, had slightly better than average three-month performance. Samestore sales were up double-digits in the U.S. and International exChina, with solid revenue growth across those regions. The company is experiencing cost pressures from wages and input costs though, and China same-store sales were down 23% due to zero-COVID policy restrictions and lockdowns.”
9. CVS Health Corporation (NYSE:CVS)
Bridgewater Associates’ Stake Value: $293,711,000
Dividend Yield as of November 16: 2.25%
CVS Health Corporation (NYSE:CVS) is an American healthcare company that owns retail pharmacies and also provides health insurance services to its consumers. The company has been a part of Bridgewater Associates' portfolio since the third quarter of 2012 when the hedge fund opened its position with shares worth $2.7 million. During Q3 2022, the fund reduced its position in the company by 3% which takes its total CVS stake worth $293.7 million. The company represented 1.48% of billionaire Ray Dalio's portfolio.
On September 22, CVS Health Corporation (NYSE:CVS) declared a quarterly dividend of $0.55 per share, in line with its previous dividend. As of November 16, the stock has a dividend yield of 2.25%.
In November, Raymond James reiterated its Outperform rating on CVS Health Corporation (NYSE:CVS) with a $115 price target, following the company's strong Q3 earnings. The firm also appreciated the company's retail business.
Of the 895 elite funds tracked by Insider Monkey, 65 hedge funds owned stakes in CVS Health Corporation (NYSE:CVS) in Q2 2022, compared with 72 in the previous quarter. The collective value of these stakes is over $2.03 billion.
Vltava Fund mentioned CVS Health Corporation (NYSE:CVS) in its Q3 2022 investor letter. Here is what the firm has to say:
“CVS is a leader in the provision of healthcare services in the USA. It has three main businesses: an enormous network of pharmacies, a health insurance company, and “prescription benefit management”, which is a kind of intermediary between insurance companies and pharmacies. This is the result of large acquisitions over the past 15 years – most notably of Caremark (2007) and Aetna (2018). The markets had deemed its acquisition of health insurer Aetna too expensive (and we agree), so CVS stock then fell into disfavour for a few years.
We took advantage of this in the summer of 2020 and brought the stock into our portfolio at a time when its price was pressed down still further by the coronavirus pandemic. CVS is a giant. It has revenues of USD 300 billion, making it one of the largest companies in the world. It is a relatively stable and highly profitable company with strong free cash flow. Over the past few years, CVS has focused primarily on reducing debt.
This is already much lower than it had been after the Aetna acquisition, and most of the cash is now likely to go to shareholders through share buybacks or be used for smaller acquisitions to grow the company further. CVS trades at about 11 times annual earnings, which is a very appealing valuation given the expected future growth in profitability and overall modest cyclicality in its business.”
8. Abbott Laboratories (NYSE:ABT)
Bridgewater Associates’ Stake Value: $298,016,000
Dividend Yield as of November 16: 1.81%
Abbott Laboratories (NYSE:ABT) is a Chicago-based medical device company that also offers other medical services to its patients across the globe. In October, Mizuho initiated its coverage on Abbott Laboratories (NYSE:ABT) with a Neutral rating and a $105 price target, highlighting the company's solid position in the medical tech market, which is one of the fastest-growing industries today.
During the third quarter of 2022, Bridgewater Associates increased its position in Abbott Laboratories (NYSE:ABT) by 11%. The hedge fund now owns over 3 million shares in the company, with a total value of over $298 million. The company made up 1.5% of billionaire Ray Dalio's portfolio.
Abbott Laboratories (NYSE:ABT) is a Dividend King as the company has been raising its dividends consistently for the past 50 years. It currently offers $0.47 per share in quarterly dividends and has a dividend yield of 1.81%, as of November 16.
As of the close of Q2 2022, 61 hedge funds in Insider Monkey's database owned stakes in Abbott Laboratories (NYSE:ABT), holding a total value of over $3.6 billion.
Diamond Hill Capital mentioned Abbott Laboratories (NYSE:ABT) in its Q3 2022 investor letter. Here is what the firm has to say:
“Also among our bottom contributors were health care products manufacturer Abbott Laboratories (NYSE:ABT), global pharmaceutical company Pfizer, media and technology giant Alphabet, and insurance company American International Group (AIG).
Abbott has been working through a recall of its infant formula brand Similac in the US, which has continued to pressure its share price. Although the recall will impact near-term revenues, we are not concerned about any long-term impacts. We remain optimistic about the company given it is one of the highest quality names in health care, in our view, with a talented management team that makes smart capital allocation decisions. Abbott also has leading health care and consumer franchises with a particularly strong competitive position in its medical device business. The company continues to launch innovative products in key strategic areas (such as diabetes, structural heart, and diagnostics), which should help drive not only revenue growth but margin expansion.”
7. McDonald’s Corporation (NYSE:MCD)
Bridgewater Associates’ Stake Value: $487,730,000
Dividend Yield as of November 16: 2.22%
An American multinational fast-food chain, McDonald’s Corporation (NYSE:MCD) has been raising its dividends consistently for the past 46 years. The company currently offers a quarterly payout of $1.52 per share and has a dividend yield of 2.22%, as recorded on November 16.
Bridgewater Associates first opened its position in McDonald’s Corporation (NYSE:MCD) during the first quarter of 2011 with shares worth over $4.6 million. During Q3 2022, the hedge fund increased its position in the company by 3% and owned over 2.1 million MCD shares worth $487.7 million. The company accounted for 2.46% of billionaire Ray Dalio's portfolio.
RBC Capital appreciated the company's ability to perform in the current situation and also highlighted its Q3 earnings. Given this, the firm raised its price target on the stock to $295 in October with an Outperform rating on the shares.
As of the close of Q2 2022, 50 hedge funds tracked by Insider Monkey owned stakes in McDonald’s Corporation (NYSE:MCD), worth $2.3 billion collectively.
6. Walmart Inc. (NYSE:WMT)
Bridgewater Associates’ Stake Value: $522,693,000
Dividend Yield as of November 16: 1.51%
Walmart Inc. (NYSE:WMT) is an American multinational retail corporation. At the end of Q2 2022, the company was a part of 67 hedge fund portfolios, growing from 60 a quarter earlier, according to Insider Monkey's database. The stakes owned by these hedge funds have a total value of over $3.78 billion.
As of the end of Q3 2022, Bridgewater Associates owned over 4 million shares in Walmart Inc. (NYSE:WMT), with a total value of roughly $522.7 million. The company represented 2.64% of billionaire Ray Dalio's portfolio and is one of his most prominent holdings including Alphabet Inc. (NASDAQ:GOOG), Visa Inc. (NYSE:V), and Meta Platforms, Inc. (NASDAQ:META).
In November, Street analysts appreciated the recent quarterly earnings of Walmart Inc. (NYSE:WMT) and its growing e-commerce business. In view of this, Truist and DA Davidson raised their price target on the stock to $150 and $173, respectively.
Walmart Inc. (NYSE:WMT) currently pays a quarterly dividend of $0.56 per share and has a dividend yield of 1.51%, as of November 16. The company is just one year away from becoming a dividend king as it has been raising its payouts consistently for the past 49 years.
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%.”
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