We recently published a list of The 10 best dividend-paying stocks to buy according to quant hedge fund AQRIn this article, we’ll look at how Comcast Corporation (NASDAQ:CMCSA) compares to the other dividend-paying stocks to buy, according to quant hedge fund AQR.
Only a handful of hedge funds pursue unique investment strategies, and Cliff Asness’ Applied Quantitative Research, or AQR Capital, stands out among them. Known for his quantitative value strategies, Asness co-founded AQR in 1998 after working at Goldman Sachs. He and his partners developed the firm’s investment approach while in the University of Chicago’s Ph.D. program, emphasizing value and momentum strategies. These different approaches have delivered strong results for the fund over the years. In fact, AQR’s longest-running multi-strategy fund returned 18.5% after fees last year and had its best year in 2022, gaining 43.5%. In January 2023, Asness predicted that buying undervalued companies in certain sectors and shorting overvalued companies would be particularly beneficial this year.
With the growing focus on generative AI and machine learning, Asness mentioned that he has a natural tendency to swim against the grain. However, he admits that he has to overcome this instinct as he sees significant opportunities in machine learning. During a recent Bloomberg Invest conference, Asness emphasized that AQR is increasingly relying on automated decision-making and expressed the belief that the machine could give a small edge to human judgment. The company’s improved performance in recent years can be attributed in part to market cycles, but it has also made some changes.
Although Asness now focuses on artificial intelligence, diversification has always been a fundamental aspect of his investment strategy. He believes that concentrating investments in a single asset does not adequately account for the inherent risks of financial markets. According to Asness, the reason for favoring a diversified portfolio is that it can provide a higher return for the risk taken, rather than simply offering a higher expected return.
When it comes to diversification, different investment strategies can have different advantages. Dividend investments are particularly popular among investors. In his Magazine for financial analystsfor which he twice received the Graham and Dodd Award for best paper of the year, Asness emphasized the value of dividends. He explained that companies that pay higher dividends generally experience stronger earnings growth over the following decade than those that pay lower dividends. Asness argued that high dividend payouts often indicate a company’s confidence in its future prospects, as companies are reluctant to cut dividends and would typically not pay them if they expected poor performance. In addition, companies that pay high dividends must be more selective in their investment projects, potentially leading to wiser investment decisions. On the other hand, companies that pay minimal dividends may either be struggling (as demonstrated by the inflated earnings in 1999) or in the process of “empire building,” where managers with plenty of cash may imprudently invest in less profitable ventures.
Asness’s penchant for dividend stocks is also evident in his Q2 2024 portfolio, which includes a significant number of dividend-paying stocks. With that in mind, we’ll look at some of the best dividend-paying stocks according to AQR Capital.
Why do we care about the stocks hedge funds invest in? The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (Further details can be found here).
A couple watches their favorite show on television and enjoys the service of the entertainment network.
Comcast Corporation (NASDAQ:CMCSA)
AQR Capital’s investment value: USD 339,222,683
Dividend yield as of August 22: 3.13%
Comcast Corporation (NASDAQ:CMCSA) is a Pennsylvania-based telecommunications and media conglomerate. It is one of the largest and most diverse companies in the world. The stock has fallen over 10% year-to-date, and dropped nearly 4% between July 23 and July 24, when the company reported its second-quarter results. The company faced challenges in its studios and theme parks divisions, reporting declines of 27% and 10.6%, respectively, from the same period last year. The company’s total revenue was $29.6 billion for the quarter, down 3% year-over-year.
Despite the challenges, several other segments of Comcast Corporation (NASDAQ:CMCSA) reported growth. The media division saw a return to adjusted EBITDA growth, largely due to Peacock, its streaming service, which delivered the strongest year-over-year improvement in a quarter since its launch in 2020. A highlight of Comcast’s second-quarter results was Peacock’s performance. Streaming subscribers grew 38% during the quarter, reaching 33 million, while losses narrowed to $348 million, compared to $651 million in the second quarter of 2023.
Comcast Corporation (NASDAQ:CMCSA) generated a lot of money during the quarter, which is good news for income-seeking investors. The company’s operating cash flow was $4.7 billion and it generated free cash flow of $1.3 billion. The company stayed true to its commitment to shareholders, returning $3.4 billion to investors in the form of dividends and share buybacks.
On July 23, Comcast Corporation (NASDAQ:CMCSA) announced a quarterly dividend of $0.31 per share, which was in line with its previous dividend. Overall, the company has increased its payouts for 16 consecutive years, making CMCSA one of the highest dividend-paying stocks on our list. The stock’s dividend yield was 3.13% as of August 22.
AQR Capital increased its stake in Comcast Corporation (NASDAQ:CMCSA) by a significant 93% in the second quarter of 2024 and now owns over 8.7 million shares of the company. The hedge fund’s CMCSA stake was worth around $340 million at the end of the quarter. The company represented 0.51% of the company’s 13F portfolio.
At the end of the second quarter of 2024, 61 hedge funds in Insider Monkey’s database held shares in Comcast Corporation (NASDAQ:CMCSA), compared to 63 in the previous quarter. These shares have a total value of over $3.6 billion. Among these hedge funds, First Eagle Investment Management was the largest shareholder of the company in the second quarter.
CMCSA total takes 8th place on our list of the best dividend-paying stocks to buy according to quant hedge fund AQR. While we recognize CMCSA’s potential as an investment, we believe some highly undervalued dividend stocks promise higher returns, and in a shorter time frame. If you’re looking for a highly undervalued dividend stock that has more promise than CMCSA, but trades at less than 7 times earnings and yields nearly 10%, read our report on the dirt cheap dividend stock.
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Disclosure: None. This article was originally published on Insider Monkey.
