11 Best S&P 500 Stocks To Buy According to Ray Dalio’s Bridgewater Associates
In this article, we discuss the 11 best S&P 500 stocks to buy according to Bridgewater Associates. To skip the details about the firm's performance and Q2 bets, go directly to the 5 Best S&P 500 Stocks To Buy according to Bridgewater Associates.
Bridgewater Associates was founded by Ray Dalio in 1975, merely two years after he received his MBA from Harvard Business School. While Dalio stepped down from the position of the co-CIO of the firm in 2022, he still acts as the mentor of the three co-chief investors of the firm. Dalio has no plans of returning to the firm and plans to keep running his family office and focus on his mentor role. Ray Dalio is also spending his time researching and monitoring the markets in addition to actively presenting his viewpoint on the current economic and political conditions on social media. As of November 4, Ray Dalio is worth $15.4 billion.
Bridgewater’s Performance Over the Years
Ray Dalio has found success in his investments since he was just 12 years old. By the time he graduated high school, he had already made several thousand dollars. His business acumen combined with his Harvard education has made Bridgewater Associates one of the largest and best performing hedge funds. By 2022, Bridgewater’s flagship fund, Pure Alpha II, posted an average annual return of 11.4% since its inception in 1991.
Moreover, Bridgewater Associates has been known to take advantage of major global economic events. For example, Ray Dalio predicted the Great Financial Crisis in 2006 and was well prepared for it. In 2008, Bridgewater Associates posted gains of 8.7% after fees, while the S&P 500 was down nearly 38.5%. In 2018, the firm impressed everyone once again when its flagship fund posted returns of 14.6% when other hedge funds lost 6.7% on average. In that year, it was reported that Dalio's personal compensation was around $2 billion. After the phenomenal gains, when asked how he managed such an incredible feat, he said in a LinkedIn post:
“I regret that I won’t be able to adequately provide it in this limited space (though I will eventually pass along the most important principles in my upcoming Economic & Investment Principles.) But I will pass along one important thought. If you are worried when the stock market goes down and happy when it goes up it probably indicates that your portfolio is unbalanced. If your income is also tied to how the economy does, you are doubly at risk because your portfolio can go down when your income is worst which is scary. Most people and companies are in that position and many make it even riskier by borrowing money to be in that position in an even bigger way. That’s what makes the financial rollercoaster ups and downs so big and dramatic. To me, the key is to not have any systematic biases by structuring your portfolios and your incomes so that they hedge each other and are in balance. Achieving good balance is the most important thing.”
In 2022, Bridgewater Associates added $10 billion worth of short positions in European stocks to its portfolio, and in the first half of 2022, the firm's flagship fund returned 32% to its investors. However, the fund lost most of its gains in the second half but still performed significantly better than the major market indices. Overall, Bridgewater Associates portfolio has gained nearly 79% in the last decade according to Tipranks, and has a 3-year annualized return of 6.8%.
In the second quarter of 2023, Bridgewater Associates’ 13F portfolio was valued at around $16.193 billion. Ray Dalio’s firm added 77 new stocks to its portfolio and its top 3 additions by weightage were AT&T Inc. (NYSE:T), DoorDash, Inc. (NASDAQ:DASH), and Micron Technology, Inc. (NASDAQ:MU). In addition, the firm increased its holding in 270 stocks, sold out of 91 stocks, and reduced holdings in over 340 stocks. Bridgewater Associates’ best S&P 500 stocks include The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO). For best S&P 500 dividend stocks you can check out 15 Best S&P 500 Stocks For Dividend Growth.
Ray Dalio of Bridgewater Associates
Our Methodology
For this article, we chose the top 11 S&P 500 stocks according to Bridgewater Associates’ second-quarter 13F portfolio. These stocks are listed in ascending order of their position (in terms of dollar value) in Ray Dalio’s hedge fund portfolio.
Best S&P 500 Stocks To Buy According to Bridgewater Associates
11. Abbott Laboratories (NYSE:ABT)
Percentage of Bridgewater Associates’ portfolio as of Q2 2023: 1.22%
Number of Hedge Fund Holders: 62
Abbott Laboratories (NYSE:ABT) is an American multinational healthcare company that primarily focuses on the manufacture and sale of pharmaceutical products and medical devices. Abbott Laboratories (NYSE:ABT) represents 1.22% of Bridgewater Associates’ 13F portfolio with 1.8 million shares worth $198.742 million.
In the third quarter, Abbott Laboratories (NYSE:ABT)’s revenues dropped by 2.5% year-over-year (YoY) to $10.14 billion but outperformed the estimates by $320 million. The company beat the EPS estimates of $1.1 after posting a non-GAAP EPS of $1.14. Abbott Laboratories (NYSE:ABT) expects its full-year adjusted diluted EPS to be between the range of $4.42 to $4.46 and expects its 2023 organic sales, excluding COVID-19 testing-related sales, to grow in the low double digits.
Abbott Laboratories (NYSE:ABT) is a Dividend King that has been increasing its dividends for the last 51 years. As of November 4, the company has a dividend yield of 2.13%.
The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO) are some of the best S&P 500 stocks to buy according to Bridgewater Associates in addition to Abbott Laboratories (NYSE:ABT).
10. Alphabet Inc. (NASDAQ:GOOGL)
Percentage of Bridgewater Associates’ portfolio as of Q2 2023: 1.44%
Number of Hedge Fund Holders: 204
Alphabet Inc. (NASDAQ:GOOGL) is a U.S. conglomerate that was established in 2015 after Google was restructured. The corporation provides tech products and services including AI, cloud computing, internet, robotics, and more.
On October 27, Alphabet Inc. (NASDAQ:GOOGL)’s Google announced that it would add an additional $2 billion investment in rival AI company, Anthropic. Google had already invested $550 million in the company earlier in 2023. Currently, Anthropic is racing to develop its AI chatbot called Claude which is expected to rival ChatGPT.
On November 2, an extension of the collaboration between Alphabet Inc. (NASDAQ:GOOGL) and CGI Inc. (NYSE:GIB) was announced to further the ethical utilization of AI through Google Cloud and CGI PulseAI solution. The two companies will also work on creating AI sandboxes with Google Cloud technologies to drive development for the distribution of innovative solutions.
Ensemble Capital Management mentioned Alphabet Inc. (NASDAQ:GOOGL) in its third quarter 2023 investor letter. Here is what it said:
“Alphabet Inc. (NASDAQ:GOOG) (+9.32%): Separate from all the discussion of artificial intelligence, Google’s core Search business, having experienced a significant slowdown in 2022, now shows clear signs of reacceleration. While the future of AI and its impact on Google is still subject to a healthy debate, the company seems to have put to bed investor concerns about any rapid negative impact. With Search revenue growth accelerating, and the company rolling out lots of new AI tools, the investor panic from the beginning of the year about AI immediately hurting Google appears to have been overblown.”
9. Visa Inc. (NYSE:V)
Percentage of Bridgewater Associates’ portfolio as of Q2 2023: 1.49%
Number of Hedge Fund Holders: 171
Visa Inc. (NYSE:V) is a global corporation that is engaged primarily in payment card services. It is one of the best S&P 500 stocks to buy and has its headquarters in Foster City, California. In October 2023, the company announced a $25 billion multi-year share repurchase program of its class A common stock.
On October 30, Mizuho raised the price target on Visa Inc. (NYSE:V) stock to $243 from $240 and maintained a Neutral rating. The analyst made a note of personal consumption expenditures as an important measure of the company’s long-term competitive edge in the U.S.
On October 24, Visa Inc. (NYSE:V) announced a quarterly dividend of $0.52. It is payable by December 1 to shareholders of record on November 9. The new dividend shows an increase of 15.56% from the previous dividend of $0.45. As of November 4, the dividend yield of the company is 0.85%.
Visa Inc. (NYSE:V) was mentioned in Ensemble Capital Management’s third-quarter 2023 investor letter. Here is what is said:
“Mastercard is a company that pretty much everyone has heard of. In fact, when we meet with Ensemble’s clients, we occasionally tell them that we’re nearly certain that they are carrying a Mastercard in their wallet or purse as we speak, and if not, they are carrying a Visa Inc. (NYSE:V). Most people carry both.
People carry Mastercard and Visa because they are accepted nearly everywhere in developed markets. And they are accepted in most emerging economies, at least at locations where higher income people spend money. As a shopper you can show up at a bodega in Peru, a high end hotel in Tokyo, a truck stop in Alabama, or an ice cream cart in Milan, show them a piece of plastic and they’ll let you walk away with goods and services without any worry that they aren’t going to get paid…” (Click here to read the full text)
8. Starbucks Corporation (NASDAQ:SBUX)
Percentage of Bridgewater Associates’ portfolio as of Q2 2023: 1.66%
Number of Hedge Fund Holders: 59
Starbucks Corporation (NASDAQ:SBUX) is one of the biggest chains of coffeehouses and operates famous brands of Teavana, Starbucks Reserve, Princi, and Ethos. As of February 2023, the multinational corporation has over 36,000 stores in 84 markets and is one of the best S&P 500 stocks to buy according to Bridgewater Associates.
On November 2, Starbucks Corporation (NASDAQ:SBUX) posted its Q4 non-GAAP EPS of $1.06, surpassing the estimates by $0.09. The revenue of the company for the quarter grew by 11.4% YoY to $9.37 billion and topped the analysts’ estimates by $90 million. In the quarter, the store count grew to 38,038 stores internationally.
On November 3, Starbucks Corporation (NASDAQ:SBUX) announced its reinvention plan called Triple Shot Reinvention. Among other things in the program, the company is driven to expand its stores to 55,000 internationally by 2030.
ClearBridge Investments mentioned Starbucks Corporation (NASDAQ:SBUX) in its second quarter 2023 investor letter. Here is what it said:
“Top heavy leadership has overshadowed weakness across much of the equity market. We took advantage of the narrow breadth in the second quarter to increase our exposure to the consumer discretionary sector with two purchases that further enhance portfolio diversification and should help support consistent performance through a full cycle.
Starbucks Corporation (NASDAQ:SBUX) is the leading provider of specialty coffee beverages, operating close to 19,000 global stores primarily in North America, China and Japan and 37,000 licensed partner locations. We view Starbucks as a quality compounder with strong free cash flow, operating in a segment and in dayparts that are very much routine-based and habitual, balancing the business’s exposure to discretionary spending. Additionally, Starbucks is still in the early stages of its reinvention plan to help accelerate revenue growth over the next several years on the back of better same store sales and unit growth. Coupled with the benefits of margin expansion, we believe the company can drive double-digit EPS growth at scale.”
7. Walmart Inc. (NYSE:WMT)
Percentage of Bridgewater Associates’ portfolio as of Q2 2023: 2.48%
Number of Hedge Fund Holders: 81
Walmart Inc. (NYSE:WMT) is an Arkansas-based retailer that operates through grocery stores, neighborhood markets, and more. The company’s products are available under various brands, including but not limited to, Equate, Mainstays, George, Onn, and Parent’s Choice.
According to TipRanks, Walmart Inc. (NYSE:WMT) stock has been covered by 30 Wall Street analysts in the last three months with an average price target of $179.82. Out of the 30 analysts, 26 of them maintain a Buy rating on the stock.
On October 25, TD Cowen analyst Oliver Chen gave an Outperform rating on Walmart Inc. (NYSE:WMT) stock with a $185 price target. The company stock was one of the top retail picks of the firm and the analyst highlighted the company’s execution of its data-centric loyalty program and limited weather exposure as its positive aspects.
On October 17, Walmart Inc. (NYSE:WMT) opened its third fulfillment center that covers an area of 1.5 million square feet. The Dallas-based fulfillment center will considerably increase the company’s order fulfillment capacity and ability to ship and deliver at a faster pace.
6. McDonald's Corporation (NYSE:MCD)
Percentage of Bridgewater Associates’ portfolio as of Q2 2023: 2.61%
Number of Hedge Fund Holders: 68
McDonald's Corporation (NYSE:MCD) is one of the biggest fast-food retailers in the world. The company has more than 38,000 locations in the world in over 100 countries.
On October 30, McDonald's Corporation (NYSE:MCD) released its Q3 earnings result in which the non-GAAP EPS was $3.19, surpassing the estimates by $0.20. The revenue topped the estimates by $140 million and grew 14% YoY to $6.69 billion.
On October 5, McDonald's Corporation (NYSE:MCD) announced a 9.9% increase in its quarterly dividend to $1.67 from $1.52. It is payable by December 15 to shareholders of record on December 1.
According to Insider Monkey’s database that tracks 910 elite hedge funds, 68 hedge funds had a stake in McDonald's Corporation (NYSE:MCD) stock in Q2, up from 64 in the previous quarter. Ken Griffin’s Citadel Investment Group increased its stake in the company by 59% to 2.6 million shares worth nearly $777.058 million making it the company’s largest hedge fund investor. Bridgewater Associates owned 1.4 million McDonald's Corporation (NYSE:MCD) shares worth $423.441 million. The company covered 2.61% of the firm’s portfolio in Q2.
McDonald's Corporation (NYSE:MCD) is one of the best S&P 500 stocks to buy along with The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO).
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