10 Best Large Cap Dividend Stocks to Buy According to Hedge Funds

Fatima Farooq
11 min read

In This Article:

In this article, we will be looking at the 10 best large cap dividend stocks to buy according to hedge funds. If you want to skip our detailed analysis of large-cap stocks, and dividend investing, you can go directly to the 5 Best Large Cap Dividend Stocks to Buy According to Hedge Funds.

According to CNBC, as of this year, small and mid-cap value stocks were outperforming their large-cap counterparts, especially in the months preceding this June. Dave Nadig, the chief investment officer and director of research at ETF Trends, was reported to comment that small-cap and mid-cap value stocks were beginning to attract investors this year, with CNBC mentioning that the iShares S&P 500 Value ETF (IVE) was able to outperform the iShares S&P 500 Growth ETF as of June 2021, being up 16% versus the latter's gain of 10%. Additionally, during 2020 the Russell 2000 Index comprising mainly of small-cap stocks was also able to beat the S&P 500 index of large-cap stocks with its 86.7% gain versus the S&P 500's 48.8%, according to Refinitiv data cited by Reuters this April. Hence, the case was beginning to be made for the triumph of small-cap and mid-cap stocks over large-cap stocks.

Yet, as of this June, this case can be said to have come crumbling down. In the US alone, large-cap funds were reported to have brought in about $13.4 billion in net inflow, the largest value reported since January 2018. In comparison, small-cap and mid-cap stocks underperformed. Reuters this June reported that this development came about as a result of value stocks losing their charm as soon as concerns over the Federal Reserve raising interest rates earlier than expected faded away. Additionally, the fact that the S&P 500's gains of 5.2% since this April have been higher than those of the Russell 2000 at 2.3% also bears witness to the claim that large-cap stocks have been able to outperform the market in 2021. To drive the nail home, it can be observed that before this April as well, the S&P 500 managed to bring in higher gains of 8.5% versus 5% for the Russell 2000 Index from January to March 2021. As such, large-cap stocks, and primarily large-cap dividend stocks like Apple Inc. (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Visa Inc. (NYSE: V), and JPMorgan Chase & Co. (NYSE: JPM) are seeming more attractive to investors.

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 February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. 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.

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