In this detailed exploration, we present the 10 Top Widow and Orphan Stocks To Invest In Today. For an expanded list, take a look at our article on 5 Best Widow and Orphan Stocks To Buy.
A widow and orphan stock represents a stable equity investment that typically offers a reliable dividend. These stocks are often regarded as low-risk, defensive, and exhibit minimal volatility. Generally, they are comprised of large-cap, established companies operating in non-cyclical sectors. The steady dividends from these equities provide investors with a safety net, particularly in challenging capital market conditions. Notably, dividend-paying stocks have shown superior performance compared to non-dividend stocks and bonds throughout the year, making them an attractive option for risk-averse investors.
Investing in companies that consistently increase their dividend payouts year after year can significantly enhance long-term portfolio returns, especially in an unpredictable market climate. While many investors are drawn to the allure of high-yield dividend stocks, these often come with heightened risk. It is crucial for investors to target stocks that boast a solid history of annual dividend growth. Nick Lentini from the Morgan Stanley Equity Strategy team remarked on November 9:
“The investing backdrop of the past year, driven by macroeconomic conditions and combined with the rising risk of recession, have fueled outperformance for many dividend-paying stocks.”
Sectors poised for consistent dividend growth include Energy, Packaged Food, Beverages, Household Products, Utilities, and Banks. Noteworthy widow and orphan stocks worth considering are Walmart Inc. (NYSE:WMT), The Procter & Gamble Company (NYSE:PG), and Exxon Mobil Corporation (NYSE:XOM).
How We Selected These Top Stocks
The widow and orphan stocks listed here were chosen based on positive analyst evaluations, robust business fundamentals, and a consistent track record of dividend growth spanning more than 30 years. Our analysis included insights on hedge fund sentiment sourced from Insider Monkey’s extensive database tracking 920 elite hedge funds as of the end of Q3 2022. The stocks are organized based on the number of hedge fund holders for each company.
Photo by Jp Valery on Unsplash
Top Picks for Widow and Orphan Stocks to Consider Now
10. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
<i>Number of Hedge Fund Holders: 39</i>
Dividend Yield as of December 21: 4.98%
Founded in 1901 and headquartered in Deerfield, Illinois, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) operates as an integrated healthcare provider, pharmacy, and retailer across the United States, United Kingdom, Germany, and other international markets. The company is divided into three main segments: U.S. Retail Pharmacy, International, and U.S. Healthcare. Recently, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) declared a quarterly dividend of $0.48 per share, continuing its impressive streak of 46 consecutive years of annual dividend increases, reflecting its commitment to returning value to shareholders.
On December 14, Mizuho analyst Ann Hynes raised her price target for Walgreens Boots Alliance, Inc. (NASDAQ:WBA) from $36 to $41, maintaining a Neutral rating. She believes that the earnings visibility for managed care and drug distributors remains strong, although hospitals show the most improvement in their outlook, indicating a shift in market dynamics.
According to Insider Monkey’s data, at the end of September 2022, 39 hedge funds expressed bullish sentiment toward Walgreens Boots Alliance, Inc. (NASDAQ:WBA), slightly down from 40 in the previous quarter. The largest stakeholder of the company is Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital, holding approximately 6 million shares valued at $186.5 million.
In addition to prominent names like Walmart Inc. (NYSE:WMT), The Procter & Gamble Company (NYSE:PG), and Exxon Mobil Corporation (NYSE:XOM), Walgreens Boots Alliance, Inc. (NASDAQ:WBA) stands out as a top choice for risk-conscious investors looking to strengthen their portfolios.
Insights from Aristotle Capital Management Global Equity regarding Walgreens Boots Alliance, Inc. (NASDAQ:WBA) in its Q1 2022 investor letter highlight:
“We first invested in Walgreens Boots Alliance in early 2013. Over our holding period, Walgreens merged with U.K.-based Boots Alliance, establishing itself as a global leading retail pharmacy chain. CEO Stefano Pessina set the company on a path of pursuing strategic partnerships (as opposed to vertical integration deals) to increase store traffic and to, over time, transform the business into a neighborhood health destination around a more modern pharmacy. Using its strong FREE cash flow generation, the company ramped up its investments in technology, aiming to accelerate the digitalization of health information. Mr. Pessina was not successful, however, at turning around the firm’s U.S. retail segment and had to deal with increasing prescription drug reimbursement pressures. He stepped down as CEO in 2020, and in 2021, Roz Brewer took the reins of the firm. We admire Ms. Brewer’s impressive track record at companies that include Starbucks (NASDAQ:SBUX) and Walmart (Sam’s Club). However, given management’s decision to divest core cash-generative businesses and redeploy capital to embryonic healthcare startups, we prefer to step aside while we follow the company’s progress.”
9. Sysco Corporation (NYSE:SYY)
Number of Hedge Fund Holders: 40
Dividend Yield as of December 21: 2.52%
Sysco Corporation (NYSE:SYY), based in Texas, specializes in the marketing and distribution of food products primarily to the foodservice or food-away-from-home sectors across the United States, Canada, the United Kingdom, France, and other international markets. Sysco operates through various segments, including U.S. Foodservice Operations, International Foodservice Operations, SYGMA, and Others, making it a significant player in the food distribution industry.
On November 17, Sysco Corporation (NYSE:SYY) announced a quarterly dividend of $0.49 per share, consistent with previous payouts. This dividend will be payable on January 27, 2023, to shareholders on record as of January 6. The company’s dividend yield as of December 21 stood at 2.52%, and it has a remarkable history of increasing annual dividends for 53 consecutive years, earning it the esteemed title of a dividend king.
On November 2, Argus analyst John Staszak raised the price target for Sysco Corporation (NYSE:SYY) from $92 to $96, maintaining a Buy rating on the shares. Despite a miss in Q1 earnings, the analyst expressed optimism regarding the company’s strategies to mitigate lower food sales to restaurants and hotels through effective cost control and a focus on grocery store sales. Sysco’s strong liquidity and access to credit position it well to weather current economic challenges.
According to Insider Monkey’s Q3 data, 40 hedge funds were invested in Sysco Corporation (NYSE:SYY), an increase from 32 funds in the prior quarter. The largest stakeholder is Nelson Peltz’s Trian Partners, holding 7.2 million shares valued at approximately $507.5 million.
8. Emerson Electric Co. (NYSE:EMR)
Number of Hedge Fund Holders: 48
Dividend Yield as of December 21: 2.15%
Emerson Electric Co. (NYSE:EMR) is a renowned technology and engineering firm providing industrial, commercial, and consumer solutions across the Americas, Asia, the Middle East, Africa, and Europe. The company operates through several segments, including Automation Solutions, AspenTech, and Commercial & Residential Solutions. Emerson Electric Co. (NYSE:EMR) has achieved the distinguished status of a dividend king due to its impressive record of increasing dividends for the last 65 years.
On November 2, Emerson Electric Co. (NYSE:EMR) announced a quarterly dividend of $0.52 per share, representing a 1% increase from the previous dividend of $0.515. This dividend was paid out on December 9, with a yield of 2.15% as of December 21.
Citi analyst Andrew Kaplowitz, on December 9, raised the price target for Emerson Electric Co. (NYSE:EMR) from $99 to $109, maintaining a Buy rating on the shares. The analyst suggested that emerging megatrends and ongoing fiscal tailwinds should help mitigate potential downsides for industrials in a challenging macroeconomic environment.
Insider Monkey’s data indicates that 48 hedge funds were bullish on Emerson Electric Co. (NYSE:EMR) at the end of Q3 2022, an increase from 47 funds in the previous quarter. D E Shaw holds the largest position in the company, with approximately 2 million shares valued at $145 million.
7. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 57
Dividend Yield as of December 21: 2.39%
Colgate-Palmolive Company (NYSE:CL) is a leading American multinational consumer products manufacturer, operating through two main segments: Oral, Personal and Home Care, and Pet Nutrition. The company’s extensive product range includes well-known brands such as Colgate, Darlie, Palmolive, Protex, Sanex, Softsoap, Speed Stick, EltaMD, Filorga, PCA SKIN, Ajax, Axion, Fabuloso, and Murphy, among others. Colgate-Palmolive Company (NYSE:CL) boasts an impressive history, having paid uninterrupted dividends since 1895 and has increased its payments to shareholders annually for the past 60 years, establishing itself as a premier choice for widow and orphan stock investment.
On December 6, Deutsche Bank analyst Steve Powers raised the price target for Colgate-Palmolive Company (NYSE:CL) from $85 to $87, while maintaining a Buy rating on the shares, indicating confidence in the company’s growth potential.
Insider Monkey’s data shows that Colgate-Palmolive Company (NYSE:CL) was included in 57 hedge fund portfolios by the end of September 2022, up from 55 in the previous quarter. The total stakes increased from $2.93 billion in Q2 to $4.13 billion in Q3 2022, highlighting growing investor interest. Dan Loeb’s Third Point is the largest stakeholder, holding 11.55 million shares valued at $811.3 million.
Third Point’s Q3 2022 investor letter provided further insights into Colgate-Palmolive Company (NYSE:CL), stating:
“Third Point recently acquired a significant position in Colgate-Palmolive Company (NYSE:CL). The investment fits several important criteria in the current investment environment. First, the business is defensive and has significant pricing power in inflationary conditions. Second, there is meaningful hidden value in the company’s Hill’s Pet Nutrition business, which we believe would command a premium multiple if separated from Colgate’s consumer assets. Third, there is a favorable industry backdrop in consumer health, with new entrants via spin-offs and potential for consolidation. Finally, the current valuation is attractive both because earnings growth is poised to inflect higher, and because shareholders are paying very little for the optionality around Hill’s or Colgate’s ability to participate in further consolidation in the consumer health sector.
Colgate has a strong portfolio of brands and operates across four categories that should perform well across most economic conditions: oral care, home care, personal care, and pet nutrition. Although Colgate has delivered organic sales growth of 5-6% over the past few years, earnings growth has been disappointing, and the stock has become a perennial underperformer. Foreign exchange headwinds have pressured reported results. Business reinvestment, supply chain disruption, and inflationary pressures have weighed heavily on margins; those headwinds are now reversing. Stepped up investments in demand generation, product innovation, and digital capabilities are starting to pay off. Global supply chain bottlenecks are easing and product availability on the shelf is improving. And, most importantly, raw material, transportation, and wage pressures are stabilizing, and even reversing in some areas, at the same time additional pricing takes effect. Taken together, the stage is set for Colgate to deliver several years of outsized earnings growth, as sales continue to increase, foreign exchange movements are annualized, and margins finally recover…” (Click here to view the full text)
6. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Holders: 62
Dividend Yield as of December 21: 1.89%
Abbott Laboratories (NYSE:ABT) is a prominent healthcare company based in Illinois, known for discovering, developing, and manufacturing a diverse range of healthcare products globally. The company operates across four key segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices. On December 9, Abbott Laboratories (NYSE:ABT) announced a quarterly dividend of $0.51 per share, marking an impressive 8.5% increase from its previous dividend of $0.47. This dividend is set to be paid on February 15, 2023, to shareholders on record as of January 13. Abbott has maintained an impressive streak with 51 consecutive years of dividend growth, underscoring its reliability as a dividend-paying stock.
On December 12, Citi analyst Joanne Wuensch raised her price target for Abbott Laboratories (NYSE:ABT) from $114 to $125, continuing to maintain a Buy rating on the shares. Although the North American medical supplies and technology group faces numerous challenges in 2023, the analyst expects these headwinds to ease in the latter half of the year, potentially providing relief for operating margins.
According to Insider Monkey’s Q3 database, 62 hedge funds had established long positions in Abbott Laboratories (NYSE:ABT), a slight increase from 61 funds in the previous quarter. Ken Fisher’s Fisher Asset Management stands as the largest stakeholder in the company, holding 9.12 million shares valued at approximately $883.2 million.
Similar to Walmart Inc. (NYSE:WMT), The Procter & Gamble Company (NYSE:PG), and Exxon Mobil Corporation (NYSE:XOM), Abbott Laboratories (NYSE:ABT) is a top-tier choice for investors seeking reliable widow and orphan stocks.
Stewart Asset Management’s Q3 2022 investor letter provided additional context on Abbott Laboratories (NYSE:ABT), stating:
“We also need to point out one global consequence of the rapid rise in interest rates: an irrepressibly strong dollar. This hurts the reported earnings of U.S. companies who sell their goods and services overseas. Foreign currency earnings translate into fewer dollars and thus lower earnings. Most of the companies in your portfolios gain a notable amount of earnings from their international operations. While the strength or weakness of a currency doesn’t change the quality of a business or its longer-term earnings power, it can change the reported earnings of a company over short periods of time. It is difficult to forecast this effect accurately because many of our companies manufacture where they sell, which to some extent dulls the sharp negative effect of a surging dollar. Abbott (NYSE:ABT), among others, is a good example.”
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Disclosure: None. 10 Top Widow and Orphan Stocks To Invest In Today was originally published on Insider Monkey.
