Hedge Funds Love These 8 Dividend Blue Chips, And So Should You

This article was published on Dividend Kings on Monday, February 6th, 2023.

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Wall Street is home to some of the world’s best-paid analysts, backed up by multi-million dollar salaries, an army of quantitative analysts, and the most powerful supercomputers.

Rocket scientist PhDs from Stanford, Princeton, and MIT sometimes program their machine trading algorithms.

Does that mean their recommendations are fantastic? No. But lists of the most popular stocks among hedge funds can serve as a useful source of ideas for further research.

I recently found this article on Yahoo Finance, which highlighted the 15 most popular dividend blue-chips among hedge funds.

• 15 Best Dividend Leaders to Buy According to Hedge Funds.

Note that the article’s title is a bit misleading because Yahoo’s screen doesn’t measure how large of a position each company is. It can only determine how many hedge funds owned a particular company based on 13-F filings with a 3 to 5-month lag.

Also note that long stocks are just one of over a dozen strategies hedge funds employ. In other words, even the largest position in a dividend blue-chip might make up just 1% or 2% of the overall portfolio.

• Almost no hedge fund or fund of any kind is “swinging for the fences” with giant positions in any single stock.

My last such article was focused on growth blue-chips, and was very well received.

• Hedge Funds Love These 10 Blue-Chips, And So Should You.

So let’s take a look at the 15 most popular dividend blue chips in the hedge funds, to see why X are actually worth considering buying today.

And just like last time, we’ll do a countdown starting with the 15th most popular company and working our way to the 1st most popular. Each company will get a short summary of its fundamentals and both short and long-term return potential.

15th Most Popular Dividend Blue Chip With Hedge Funds – Cardinal Health (CAH)

Further Reading

Cardinal Health Is Being Undervalued, Has Significant Upside In The Near Term.

• The number Of Hedge Funds That Own It: 45
• Price: $78.67
• Fair Value: $58.65
• Historical Discount: -34%
• Quality Rating: 80% very low risk 11/13 SWAN quality dividend aristocrat
• DK Rating: hold
• Yield: 2.5%
• Growth Consensus: 2.5%
• Long-Term Return Potential: 5.0%.

2025 Consensus Total Return Potential

Note that hedge funds don’t always strive to own the best stocks for the long term; they sometimes buy momentum stocks, which CAH became in 2022.

14th Most Popular Dividend Blue-Chip With Hedge Funds – Altria (MO)

Further Reading

Altria: Buy This 8% Yielding Dividend Aristocrat Before The Yield Goes To 10.5%.

• The number Of Hedge Funds That Own It: 47
• Price: $46.91
• Fair Value: $69.59
• Historical Discount: 33%
• Quality Rating: 98% medium-risk 13/13 Ultra SWAN dividend king
• DK Rating: Potential very strong buy
• Yield: 8.0%
• Growth Consensus: 5.5%
• Long-Term Return Potential: 13.5%.

2025 Consensus Total Return Potential

13th Most Popular Dividend Blue-Chip With Hedge Funds – 3M (MMM)

Further Reading

3M Is Struggling, So Buy These 7+% Yielding Dividend Aristocrats Instead.

• The number Of Hedge Funds That Own It: 49
• Price: $117.49
• Fair Value: $182.16
• Historical Discount: 36%
• Quality Rating: 97% very low risk 12/13 Super SWAN dividend king
• DK Rating: Potential very strong buy
• Yield: 5.1%
• Growth Consensus: 6.6%
• Long-Term Return Potential: 11.7%.

2025 Consensus Total Return Potential

12th Most Popular Dividend Blue-Chip With Hedge Funds – Pioneer Natural Resources (PXD)

Further Reading

Pioneer Natural Resources: 10% Total Yield And Rising

• The number Of Hedge Funds That Own It: 49
• Price: $220
• Fair Value: $301.39 (8.03X cash flow)
• Historical Discount: 27%
• Quality Rating: NA
• DK Rating: Potential Good Buy
• Yield: 11.6% (including variable dividend)
• Growth Consensus: 7.2%
• Long-Term Return Potential: NA.

2025 Consensus Total Return Potential

11th Most Popular Dividend Blue-Chip With Hedge Funds – Devon Energy (DVN)

Further Reading

Devon Energy: China Is A Game Changer.

• The number Of Hedge Funds That Own It: 51
• Price: $60.85
• Fair Value: $55.91 (4.87X cash flow)
• Historical Discount: -7%
• Quality Rating: NA
• DK Rating: Hold
• Yield: 8.5% (including variable component)
• Growth Consensus: 12.1%
• Long-Term Return Potential: NA.

2025 Consensus Total Return Potential

10th Most Popular Dividend Blue-Chip With Hedge Funds- U.S. Bancorp (USB)

Further Reading

U.S. Bancorp: Strong Acquisitions And Partnerships Grow Core Business.

• The number Of Hedge Funds That Own It: 52
• Price: $49.30
• Fair Value: $65.79
• Historical Discount: 25%
• Quality Rating: 73% medium-risk 10/13 blue-chip
• DK Rating: Potential good buy
• Yield: 3.9%
• Growth Consensus: 3.8%
• Long-Term Return Potential: 7.7%.

2025 Consensus Total Return Potential

9th Most Popular Dividend Blue-Chip With Hedge Funds – United Parcel Service (UPS)

Further Reading

United Parcel Service Delivers The Dividend Goods.

• The number Of Hedge Funds That Own It: 55
• Price: $191.66
• Fair Value: $221.64
• Historical Discount: 14%
• Quality Rating: 86% very low risk 12/13 Super SWAN
• DK Rating: Potential buy
• Yield: 3.9%
• Growth Consensus: 10.8%
• Long-Term Return Potential: 14.2%.

2025 Consensus Total Return Potential

8th Most Popular Dividend Blue-Chip With Hedge Funds – Gilead Sciences (GILD)

Further Reading

Gilead Sciences: Potential To Continue Its Upward Trend.

• The number Of Hedge Funds That Own It: 56
• Price: $84.5
• Fair Value: $63
• Historical Discount: -25%
• Quality Rating: NA
• DK Rating: Hold
• Yield: 3.6%
• Growth Consensus: 4.7%
• Long-Term Return Potential: 8.3%.

2025 Consensus Total Return Potential

7th Most Popular Dividend Blue-Chip With Hedge Funds – Blackstone (BX)

Further Reading

Blackstone: A 6.6% Yielding Retirement Dream Blue-Chip.

• The number Of Hedge Funds That Own It: 61
• Price: $97.13
• Fair Value: $91.39
• Historical Discount: -6%
• Quality Rating: 93% low risk 10/13 blue-chip
• DK Rating: hold
• Yield: 4.5%
• Growth Consensus: 11.8%
• Long-Term Return Potential: 16.3%.

2025 Consensus Total Return Potential

6th Most Popular Dividend Blue-Chip With Hedge Funds – Verizon (VZ)

Further Reading

Verizon And AT&T: One Could Potentially Triple In 5 Years.

• The number Of Hedge Funds That Own It: 62
• Price: $41.51
• Fair Value: $59.03
• Historical Discount: 30%
• Quality Rating: 85% medium-risk 12/13 Super SWAN
• DK Rating: Potential very strong buy
• Yield: 6.3%
• Growth Consensus: 3.2%
• Long-Term Return Potential: 9.5%.

2025 Consensus Total Return Potential

5th Most Popular Dividend Blue-Chip With Hedge Funds – Philip Morris International (PM)

Further Reading

The Good, Bad, And Wonderful News About Philip Morris.

• The number Of Hedge Funds That Own It: 63
• Price: $102.59
• Fair Value: $104.83
• Historical Discount: 2%
• Quality Rating: 98% very low risk 13/13 Ultra SWAN dividend king
• DK Rating: Potential reasonable buy
• Yield: 5.0%
• Growth Consensus: 4.1%
• Long-Term Return Potential: 9.1%.

2025 Consensus Total Return Potential

4th Most Popular Dividend Blue-Chip With Hedge Funds – Cisco Systems, Inc. (CSCO)

Further Reading

Cisco And Intel: Avoid One Of These High-Yield Blue-Chips.

• The number Of Hedge Funds That Own It: 68
• Price: $48.63
• Fair Value: $51.60
• Historical Discount: 6%
• Quality Rating: 98% very low risk 13/13 Ultra SWAN
• DK Rating: Potential good buy
• Yield: 3.1%
• Growth Consensus: 6.9%
• Long-Term Return Potential: 10.0%.

2025 Consensus Total Return Potential

3rd Most Popular Dividend Blue-Chip With Hedge Funds – Exxon Mobil Corporation (XOM)

Further Reading

Cardinal Health Is Being Undervalued, Has Significant Upside In The Near Term.

• The number Of Hedge Funds That Own It: 75
• Price: $111.92
• Fair Value: $102.90 (2025 consensus estimates since cash flows are expected to fall every year through 2025)
• Historical Discount: -9%
• Quality Rating: 75% medium-risk 10/13 blue-chip aristocrat
• DK Rating: hold
• Yield: 3.3%
• Growth Consensus: 6.9%
• Long-Term Return Potential: 10.2%.

2025 Consensus Total Return Potential

2nd Most Popular Dividend Blue-Chip With Hedge Funds – AbbVie Inc. (ABBV)

Further Reading

Johnson & Johnson Vs. AbbVie: The Better Dividend Aristocrat Buy Might Shock You.

• The number Of Hedge Funds That Own It: 80
• Price: $145.20
• Fair Value: $145.05
• Historical Discount: 0%
• Quality Rating: 100% very low-risk % 13/13 Ultra SWAN dividend king
• DK Rating: Potential reasonable buy
• Yield: 4.1%
• Growth Consensus: 7.9%
• Long-Term Return Potential: 12.0%.

2025 Consensus Total Return Potential

Most Popular Dividend Blue-Chip With Hedge Funds – Citigroup Inc. (C)

Further Reading

Citigroup: A Quick Look At A Potential Dividend Grower.

• The number Of Hedge Funds That Own It: 85
• Price: $50.95
• Fair Value: $61.28
• Historical Discount: 18%
• Quality Rating: NA
• DK Rating: potential good buy
• Yield: 4.0%
• Growth Consensus: 5.8%
• Long-Term Return Potential: 9.8%.

2025 Consensus Total Return Potential

Bottom Line: Hedge Funds Love These 8 Blue Chips, And So Should You

Let me be clear: I’m NOT calling the bottom in any of these companies (I’m not a market-timer).

Blue-chip quality and even Ultra SWAN quality do NOT mean “can’t fall hard and fast in a bear market.”

Fundamentals are all that determine safety and quality, and my recommendations.

• over 30+ years, 97% of stock returns are a function of pure fundamentals, not luck
• in the short term; luck is 25X as powerful as fundamentals
• in the long term, fundamentals are 33X as powerful as luck.

While I can’t predict the market in the short term, here’s what I can tell you about these 15 companies.

CAH, MO, MMM, PXD, DVN, USB, UPS, GILD, BX, VZ, PM, CSCO, XOM, ABBV, and C are all generally quality companies with strong balance sheets.

However, many of these are overvalued companies that hedge funds likely own because of strong results in 2022.

There are just seven that have strong long-term return potentials and are trading at reasonable to attractive valuations that I can recommend buying today.

1. MO
2. UPS (slightly overvalued but has good long-term return potential)
3. BX (slightly overvalued but excellent long-term return potential)
4. VZ
5. PM
6. CSCO
7. ABBV
8. XOM (slightly overvalued but has decent long-term return potential).

Of these five, XOM, BX, and UPS are watchlist stocks that could become attractive buys in the coming weeks, while the rest are potentially reasonable to very strong buys today.