Ken Griffin is the founder and CEO of Citadel, a hedge fund established in 1990, whose long-term performance has been excellent. Citadel's track record suggests that Griffin knows a thing or two about how to beat the market, so it's not a bad idea to look into the fund's portfolio to get some ideas.
During the second quarter, Griffin and his team purchased many stocks, including Coca-Cola (KO +0.67%) and Medtronic (MDT +1.40%). The fund increased its stake in Coca-Cola by nearly 2,000%, and in Medtronic by around 13%.
Here's why dividend-focused investors should consider following Griffin's lead and add these companies to their portfolios.
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1. Coca-Cola
Coca-Cola has several strengths that make it a top dividend stock. First, it has a resilient business. This is a leading consumer staples company that tends to perform relatively well even during tough economic times. And while many worry about the impact of tariffs on various corporations, Coke's business is somewhat insulated from that threat, as it tends to manufacture locally. Coca-Cola has been a reliable, consistent performer for a long time for these (and other) reasons, and it should remain so.
Second, Coca-Cola knows how to adapt its business to evolving consumer needs and demands. The company's best-known drinks remain part of its core offerings, but it also regularly launches new products or brands. Its portfolio is designed to cater to a wide range of preferences, offering drinks across practically every known category.
NYSE: KO
Key Data Points
Third, the company benefits from a strong moat thanks to its brand name. Coca-Cola has one of the most recognizable logos in the world, which inspires confidence and trust. That makes it easy to command shelf space in grocery stores, which can be a challenging feat for newcomers to the industry.
Lastly, Coca-Cola has a terrific dividend track record. The company has increased its payouts for 63 consecutive years, earning it the title of Dividend King; very few corporations have a more impressive streak than that. Coca-Cola currently offers a forward yield of 3%, well above the S&P 500's average of 1.3%.
Its business might not be as exciting as, say, a company focused on artificial intelligence (AI). But Coca-Cola's stability and reliability, as well as its terrific dividend program, make it a top pick for income seekers.
2. Medtronic
Medtronic, a leading medical device company, is more vulnerable to the threat of tariffs, but has performed well this year anyway. One reason is its strong financial results, which have often surpassed analyst expectations this year.
The company is also implementing important changes that should positively affect its earnings well beyond this year. For instance, Medtronic is spinning off its only consumer-facing segment, its diabetes business, into a stand-alone company. The diabetes unit carried lower margins than the rest of its operations, so this decision should boost Medtronic's bottom line.
Additionally, the company is awaiting clearance from the U.S. Food and Drug Administration for its robotic-assisted surgery (RAS) device, the Hugo system, in urologic procedures. Medtronic has been planning to join this market in the U.S. for years, since RAS is an underpenetrated industry that presents massive long-term potential. The medical device specialist will finally get its wish.
NYSE: MDT
Key Data Points
More recently, the Hugo system aced clinical trials in hernia repairs, so Medtronic is already planning label expansions: After urologic procedures, it will target hernia repairs and other indications. The Hugo system will enhance Medtronic's already strong presence in the medical device market.
The company boasts dozens of other products across several therapeutic areas, and routinely adds new ones to its portfolio. That's what has allowed Medtronic to generate consistent revenue and earnings.
The dividend looks good, too. Medtronic offers a forward yield of 3% and has increased its payouts for 48 consecutive years. All this makes it another great long-term buy for dividend investors.
