Billionaire Ray Dalio’s Top 12 Dividend Stock Picks
In this article, we will take a look at billionaire Ray Dalio's top 12 stock picks. You can skip our detailed analysis of Ray Dalio's hedge fund and recent developments, and go directly to read Billionaire Ray Dalio's Top 5 Dividend Stock Picks.
Ray Dalio founded Bridgewater Associates in 1975. Today, it is one of the world’s largest and most successful hedge funds due to its distinctive approach to investing. Dalio’s investment philosophy emphasizes radical transparency, meritocracy, and the importance of understanding and managing risk. Dalio's approach combines macroeconomic analysis with fundamental research to identify investment opportunities and manage portfolio risk. Under Dalio's leadership, Bridgewater Associates has achieved remarkable success and has been recognized as one of the top-performing hedge funds in the world. The firm manages assets for a wide range of clients, including institutional investors, pension funds, and sovereign wealth funds.
Currently, Nir Bar Dea is serving as the chief executive officer of Bridgewater Associates, as Dalio gave up control of the hedge fund to a new generation of investors in 2022. However, he has kept his seat on the firm’s board. Following his decision to retire, Dalio has recently announced to set up his family office branch in Abu Dhabi, as reported by Bloomberg. Previously, he had a business relationship with Abu Dhabi's sovereign wealth fund, the Abu Dhabi Investment Authority (ADIA).
As an influential investor and market commentator, Dalio often provides his perspectives on various economic topics and trends through interviews, public speeches, and his writings. The recent Silicon Valley Bank (SVB) failure has created a new uncertain environment across the stock market and Dalio has also shared his insights on this matter. In his interview with Business Insider, he shared that this bank fallout would have larger implications for the stock market in the coming years. Dalio has also given a skeptical outlook for the market. Here are some comments from the billionaire investor:
“Markets will see more borrowing in the coming years as the federal government grapples with massive budget deficits, he said. In order to fill the deficit hole, the government must borrow money by selling debt, such as US Treasurys, but debt investors need to have a high enough real return.”
As of the end of Q1 2023, Bridgewater Associates’ 13F portfolio had a value of $16.3 billion, down from $18.3 billion in the last quarter. The hedge fund had widely invested in dividend stocks such as Target Corporation (NYSE:TGT), Becton, Dickinson and Company (NYSE:BDX), and Merck & Co., Inc. (NYSE:MRK). In this article, we will further discuss the top dividend stock picks of billionaire Ray Dalio.
Ray Dalio of Bridgewater Associates
Our Methodology:
For this list, we selected top dividend-paying stocks from the latest 13F portfolio of Bridgewater, where Dalio remains a mentor, board member, and investor. The stocks are ranked in ascending order of their stake value.
12. Mondelez International, Inc. (NASDAQ:MDLZ)
Bridgewater Associates’ Stake Value: $155,760,825
Dividend Yield as of May 17: 1.98%
Mondelez International, Inc. (NASDAQ:MDLZ) is an Illinois-based multinational food company that also produces snacks and beverages. At the end of the first quarter of 2023, Bridgewater Associates owned over 2.2 million shares in the company, worth over $155.7 million. The company represented 0.95% of the firm's 13F portfolio. It is among the top dividend stock picks of billionaire Ray Dalio alongside some other dividend stocks like Target Corporation (NYSE:TGT), Becton, Dickinson and Company (NYSE:BDX), and Merck & Co., Inc. (NYSE:MRK).
Mondelez International, Inc. (NASDAQ:MDLZ) currently pays a quarterly dividend of $0.385 per share for a dividend yield of 1.98%, as of May 17. The company has been growing its dividends consistently for the past nine years.
Mizuho appreciated the Q1 upside and stronger volume of Mondelez International, Inc. (NASDAQ:MDLZ) and raised its price target on the stock to $86 in May. The firm also maintained a Buy rating on MDLZ.
At the end of December 2022, 46 hedge funds tracked by Insider Monkey reported having stakes in Mondelez International, Inc. (NASDAQ:MDLZ), compared with 52 in the previous quarter. These stakes have a collective value of over $1.5 billion.
Here’s what Coho Partners said about Mondelez International, Inc. (NASDAQ:MDLZ) in its Q3 2022 investor letter:
“Analysts’ bottom-up estimates for both 2022 and 2023 for the S&P 500 Index are beginning to decline. Coho is not immune to the earnings pressure exerted by a strong USD, although the portfolio on the whole has modestly less foreign revenue exposure relative to the S&P 500 Index. The two most impacted Coho stocks includes Mondelez International (NASDAQ:MDLZ), which gets about 75% of its revenues outside the U.S.”
11. CVS Health Corporation (NYSE:CVS)
Bridgewater Associates’ Stake Value: $183,825,849
Dividend Yield as of May 17: 3.61%
CVS Health Corporation (NYSE:CVS) is an American healthcare and pharmacy company that is one of the top dividend stock picks of billionaire Ray Dalio. The company pays a quarterly dividend of $0.605 per share with a dividend yield of 3.61%, as of May 17. It has raised its dividend for the past two years in a row.
In May, Wells Fargo maintained an Equal Weight rating on CVS Health Corporation (NYSE:CVS) with a $76 price target. The firm mentioned that the company's recent quarterly earnings were modestly ahead of expectations.
At the end of Q1 2023, Bridgewater Associates owned over 2.4 million shares, with a total value of over $183.8 million. The hedge fund has been investing in the company since the third quarter of 2012. During the most recent quarter, the firm reduced its position in the company by 10%, which represented 1.12% of its 13F portfolio.
Insider Monkey's Q4 2022 database shows that 70 hedge funds owned stakes in CVS Health Corporation (NYSE:CVS), up from 67 in the previous quarter. These stakes have a total value of $2.13 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.”
10. Abbott Laboratories (NYSE:ABT)
Bridgewater Associates’ Stake Value: $218,590,165
Dividend Yield as of May 17: 1.86%
Abbott Laboratories (NYSE:ABT) is an American multinational medical devices and healthcare company. It holds one of the longest dividend growth streaks in the market, having raised its payouts for 51 years. The company pays a quarterly dividend of $0.51 per share and has a dividend yield of 1.86%, as of May 17. It is among the top dividend stock picks of billionaire Ray Dalio.
Bridgewater Associates first initiated its position in Abbott Laboratories (NYSE:ABT) during the fourth quarter of 2010 with shares worth over $4.8 million. In the most recent quarter, the hedge fund owned ABT stakes worth nearly $218.6 million. The company accounted for 1.33% of the firm's 13F portfolio.
Appreciating the strong earnings and organic growth of Abbott Laboratories (NYSE:ABT) in the most recent quarter, Street analysts gave positive ratings to the stock. In April, both UBS and Barclays raised their price targets on the stock to $130 and $127, respectively.
At the end of December 2022, 60 hedge funds tracked by Insider Monkey reported having stakes in Abbott Laboratories (NYSE:ABT), worth collectively $3.2 billion.
Polen Capital mentioned Abbott Laboratories (NYSE:ABT) in its Q1 2023 investor letter. Here is what the firm has to say:
“As stated below in the portfolio activity section, Abbott Laboratories (NYSE:ABT) is expected to see roughly $6 billion in COVID test sales evaporate this year, creating a headwind for margins and underlying earnings per share. As long-term owners of the business, these test sales were never part of our original investment case. The core business, our primary focus, has a clear path of growing high single digits in 2023 with durable growth beyond, in our view. We believe the current price of 23x NTM P/E , while reasonable, is also misleading considering earnings this year will be artificially depressed because of the drop in COVID testing sales. On normalized earnings, the price is lower. We anticipate underlying EPS growth of at least low-teens over the next three to five years.
Lastly, we trimmed Abbott Laboratories, bringing it back to a more average position size and to also fund our increase in Thermo Fisher. Abbott is entering a year in which the company is expected to see approximately $6bn in COVID-19 test sales disappear, thus, creating a headwind for margins and EPS. That said, the core business has a clear path to growing high single digits in FY23. EPS grew at a 20% CAGR from 2019-2022, far beyond our expectations when we initiated our investment. Now, we expect a more normal growth rate of low teens EPS beyond this year. Further, management’s adeptness at allocating capital continues to impress us. We expect Abbott to drive top line growth without heavily investing in R&D and SG&A this year— management effectively “front-loaded” those investments in 2021 and 2022 when COVID test sales created a bolus of cash. We believe this should allow for leverage on the operating margin going forward. Combined, Abbott and Thermo Fisher now represent 7% of the Portfolio.”
9. Visa Inc. (NYSE:V)
Bridgewater Associates’ Stake Value: $223,390,052
Dividend Yield as of May 17: 0.78%
During the first quarter of 2023, Bridgewater Associates boosted its position in Visa by 19%, ending the quarter with stakes worth $223.4 million. The company made up 1.36% of the firm's 13F portfolio.
Visa Inc. (NYSE:V) has been rewarding shareholders with 16 years of consecutive dividend growth. The company offers a quarterly dividend of $0.45 per share for a dividend yield of 0.78%, as of May 17.
As per Insider Monkey's database, 177 hedge funds owned stakes in Visa Inc. (NYSE:V) in Q4 2022, up from 165 in the previous quarter. These stakes have a collective value of over $26.4 billion.
Polen Capital mentioned Visa Inc. (NYSE:V) in its Q1 2023 investor letter. Here is what the firm has to say:
“We trimmed Mastercard and Visa Inc. (NYSE:V) to equal weights of the Portfolio. Mastercard and Visa operate as a duopoly in a large and growing market. Over the last 50 years, global personal consumer expenditures (PCE) has grown 7-9% annualized. We expect 4-5% long-term PCE growth going forward. Additionally, the shift from cash to credit continues unabated, with a total credit penetration of only approximately 50% globally.3 This shift provides Visa and Mastercard with another ~4-6% of growth. When combined with PCE, this gives both companies high-single-digit to low-double[1]digit revenue growth opportunities. This growth estimate is before accounting for growth amplifiers like the acceleration of e[1]commerce, the shift from offline to online, and additional services. Both companies enjoy extremely strong network effects that provide strong competitive advantages.
We have trimmed Visa and Mastercard because their combined weight grew to over 12% of the Global Growth Portfolio because of their recent performance and to fund our increase in Amazon’s position size. We added to both positions when their prices were depressed due to cross-border transactions deteriorating materially from the pandemic. Cross-border volumes came roaring back when travel corridors reopened, and although we are several quarters removed from the cross-border nadir, Visa still grew volumes >30% in 1Q23. Total cross-border volumes are now 132% of 2019 levels. At 4.5% each, both companies remain high conviction positions for Global Growth.”
8. Starbucks Corporation (NASDAQ:SBUX)
Bridgewater Associates’ Stake Value: $259,065,131
Dividend Yield as of May 17: 2.01%
Starbucks Corporation (NASDAQ:SBUX) is a Washington-based multinational chain of coffeehouses that also specializes in a wide range of other beverages. In May, Wells Fargo raised its price target on the stock to $125 and maintained an Overweight rating on the shares, appreciating the company's impressive quarterly earnings.
On April 3, Starbucks Corporation (NASDAQ:SBUX) declared a quarterly dividend of $0.53 per share, which was in line with its previous dividend. The company has been growing its dividends consistently for the past 12 years. The stock's dividend yield on May 17 came in at 2.01%.
Starbucks Corporation (NASDAQ:SBUX) is one of the top dividend stock picks of billionaire Ray Dalio. At the end of Q1 2023, Bridgewater Associates owned over 2.4 million shares in the company, worth roughly $260 million. The company represented 1.58% of the firm's 13F portfolio.
Starbucks Corporation (NASDAQ:SBUX) was a popular stock among hedge funds in Q4 2022, according to Insider Monkey's database. 61 hedge funds owned stakes in the company in Q4, up from 54 in the previous quarter. The total value of these stakes stood at over $2.65 billion.
Polen Capital mentioned Starbucks Corporation (NASDAQ:SBUX) in its Q4 2022 investor letter. Here is what the firm has to say:
“We also liquidated our remaining position in Starbucks Corporation (NASDAQ:SBUX). While the company remains a unique and resilient franchise, China is a very important growth market for the company, and zero-COVID policies have made it challenging for the company to operate in this important market. While we expect China to return to more “normal” operation at some point, any COVID flare-ups, in China or other markets, present a very real headwind to Starbucks’ profitability. L’Oreal, Estée Lauder, and other holdings continue to have meaningful exposure to China, but in each of these cases, our research indicates they’re able to better adapt to these operating challenges and realize the growth opportunity in China through their online businesses. In short, we think there are better risk-reward opportunities.”
7. Walmart Inc. (NYSE:WMT)
Bridgewater Associates’ Stake Value: $393,706,835
Dividend Yield as of May 17: 1.52%
Walmart Inc. (NYSE:WMT) owns grocery stores and department stores across the country. In 2023, the company achieved its Dividend King status after raising its payouts for 50 consecutive years. It currently offers a quarterly dividend of $0.57 per share and has a dividend yield of 1.52%, as of May 17.
JPMorgan raised its price target on Walmart Inc. (NYSE:WMT) to $155 in May and kept a Neutral rating on the shares, highlighting the company's overall performance.
Bridgewater Associates initiated its position in Walmart Inc. (NYSE:WMT) during the fourth quarter of 2010. At the end of Q1 2023, the hedge fund owned over 2.6 million shares in the company with a total value of $393.7 million. The company represented 2.4% of the firm's 13F portfolio.
At the end of December 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%.”
6. Costco Wholesale Corporation (NASDAQ:COST)
Bridgewater Associates’ Stake Value: $427,957,112
Dividend Yield as of May 17: 0.82%
Costco Wholesale Corporation (NASDAQ:COST) is an American big-box retail company. It is among the top dividend stock picks of billionaire Ray Dalio in the first quarter of 2023. Bridgewater Associates owned COST stakes worth $428 million at the end of the quarter, which made up 2.61% of the firm's 13F portfolio.
On April 19, Costco Wholesale Corporation (NASDAQ:COST) declared a 13% hike in its quarterly dividend to $1.02 per share. This increase stretched the company's dividend growth streak to 19 years. The stock has a dividend yield of 0.82%, as of May 19. It can be added to dividend portfolios alongside some of the best dividend stocks like Target Corporation (NYSE:TGT), Becton, Dickinson and Company (NYSE:BDX), and Merck & Co., Inc. (NYSE:MRK).
As per Insider Monkey’s Q4 2022 database, 66 hedge funds owned stakes in Costco Wholesale Corporation (NASDAQ:COST), with a total value of $3.4 billion.
Madison Funds mentioned Costco Wholesale Corporation (NASDAQ:COST) in its Q4 2022 investor letter. Here is what the firm has to say:
“Costco Wholesale Corporation (NASDAQ:COST) stock fell after November sales results showed a slowing consumer. The slower November sales were followed by a slight first quarter miss with lower-than-expected margins. Costco commented that they are not seeing trade-down but private label penetration has increased modestly. Traffic continues to be positive, and Costco remains well-positioned in a more challenging macro environment due to its strong value proposition.”
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Disclosure. None. Billionaire Ray Dalio's Top 12 Dividend Stock Picks is originally published on Insider Monkey.