Investing

Does Cathie Wood and Ark Funds Really Own 5 Mega Cap Blue Chip Dividend Stocks?

Lee Jackson

Published: April 22, 2024 8:51 am

Much has been written and discussed about the incredible success and then failure of Cathie Woods’s phenomenal ARK Innovation fund (NYSE: ARKK), which exploded in 2020 only to implode in the fall of 2021 and trade sideways most of 2022. The huge parabolic move in 2020 and 2021 saw the ARK Innovation exchange-traded fund rise a stunning 313% between March 15 of 2020 and February 7 of 2021. Investors late to the party saw the fund crash and burn, trading from a $156.58 all-time high to a $30.97 closing low on December 19, 2022, a massive round-trip decline.

Despite the Ark Innovation Fund’s departure from the dramatic highs of 2020 and early 2021, it has stabilized since August 2022 and has traded sideways since then. This period of sideways trading has resulted in the fund’s shares maintaining their current value, offering a sense of stability to potential investors.

One exemplary data point for investors who still believe in her strategies is that the long sideways move has shaken out most disgruntled sellers, and the fund could be poised for a big move higher. One thing that struck us as we examined all of the holdings for the Ark funds is that Ms. Wood has bought a considerable amount of blue-chip dividend giants that are leaders in aerospace, defense, and infrastructure.

We spotted five dividend-paying large-cap blue chip stocks, all loved across Wall Street and have Buy ratings at numerous top firms. If Cathie Wood believes in them as outstanding ideas for the future, they should make sense for growth stock investors looking for significant total returns and solid passive income potential now.

Caterpillar

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This large-cap leader is one of the top infrastructure ideas across Wall Street. Caterpillar Inc. (NYSE: CAT) manufactures and sells construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide.

Caterpillar has five segments:

• Construction Industries
• Resource Industries
• Energy and Transportation
• Financial Products
• All other

Its Construction Industries segment offers:

• Asphalt pavers
• Compactors
• Road reclaimers
• Forestry machines
• Cold planers
• Material handlers
• Track-type tractors
• Excavators
• Telehandlers
• Motor graders, and pipelayers
• Compact track, wheel, track-type, backhoe, and skid steer loaders
• Related parts and tools.

The company’s Resource Industries segment provides:

• Electric rope and hydraulic shovels
• Draglines
• Rotary drills
• Hard rock vehicles
• Tractors
• Mining trucks
• Wheel loaders
• Off-highway and articulated trucks
• Wheel tractor scrapers, and dozers
• Fleet management products
• Landfill and soil compactors
• Machinery components
• Autonomous ready vehicles and solutions
• Work tools, and safety services
• Mining performance solutions, as well as related parts and services

Its Energy & Transportation segment offers reciprocating engine-powered generator sets, reciprocating engines, drivetrain, and integrated systems and solutions; turbines, centrifugal gas compressors, and related services; diesel-electric locomotives and components; and other rail-related products.

The company’s Financial Products segment provides operating and finance leases, installment sale contracts, revolving charge accounts, repair/rebuild financing services, working capital loans, wholesale financing, and insurance and risk management products and services.

Its All Other Operating segment offers filters and fluids, undercarriage, ground engaging tools, fluid transfer products, precision seals, rubber sealing and connecting components, parts distribution, logistics solutions, and distribution services, brand management and marketing strategy services, and digital investment services.

Deere

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This is another strong infrastructure idea as it manufactures and distributes various equipment worldwide and pays investors a 1.48% dividend. Deere & Company (NYSE: DE) operates through four segments:

• Production and Precision Agriculture
• Small Agriculture and Turf
• Construction and Forestry
• Financial Services

The Production and Precision Agriculture segment provides:

• Large and medium tractors
• Combines
• Cotton pickers and strippers
• Sugarcane harvesters and loaders
• Harvesting front-end equipment
• Pull-behind scrapers, tillage and seeding equipment
• Application equipment, including sprayers, nutrient management, and soil preparation machinery for grain growers.

The Small Agriculture and Turf segment offers:

• Utility tractors, and related loaders and attachments
• Turf and utility equipment, including riding lawn equipment, commercial mowing equipment
• Golf course equipment, and utility vehicles
• Implements for mowing, tilling, snow and debris handling, aerating, residential, commercial, golf, and sports turf care applications; other outdoor power products
• Hay and forage equipment

This segment also resells products from other manufacturers. It serves dairy and livestock producers, crop producers, and turf and utility customers.

The Construction and Forestry segment provides a range of backhoe loaders, crawler dozers and loaders, four-wheel-drive loaders, excavators, motor graders, articulated dump trucks, landscape and skid-steer loaders, milling machines, pavers, compactors, rollers, crushers, screens, asphalt plants, log skidders, log feller bunchers, log loaders and forwarders, log harvesters, and attachments; and roadbuilding equipment.

The Financial Services segment finances sales and leases of agriculture, turf, construction, and forestry equipment. It also offers wholesale financing to dealers of the foregoing equipment and extended equipment warranties, as well as finances retail revolving charge accounts.

Honeywell International

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If global growth picks back up, this top industrial sector stock could be poised for a solid 2024 and pays a 2.20% dividend . Honeywell International Inc. (NYSE: HON) engages in aerospace technologies, building automation, energy and sustainable solutions, and industrial automation businesses in the United States, Europe, and internationally.

The company’s Aerospace segment offers:

• Auxiliary power units
• Propulsion engines
• Integrated avionics
• Environmental control and electric power systems
• Engine controls
• Light safety, communications, navigation hardware
• Data, and software applications,
• Radar and surveillance systems
• Aircraft lighting
• Advanced systems and instruments
• Satellite and space components
• Aircraft wheels and brakes
• Spare parts; repair, overhaul, and maintenance services
• Thermal systems, as well as wireless connectivity services

Its Honeywell Building Technologies segment provides software applications for building control and optimization, sensors, switches, control systems, and instruments for energy management, access control, video surveillance, fire products, and system installation, maintenance, and upgrades.

The company’s Performance Materials and Technologies segment offers automation control, instrumentation, and software and related services; catalysts and adsorbents, equipment, and consulting; and materials to manufacture end products, such as bullet-resistant armor, nylon, computer chips, and pharmaceutical packaging, as well as provide materials based on hydrofluoric-olefin technology.

Its Safety and Productivity Solutions segment provides personal protective equipment, apparel, gear, and footwear; gas detection technology; custom-engineered sensors, switches, and controls for sensing and productivity solutions; cloud-based notification and emergency messaging; mobile devices and software; custom-engineered sensors, switches, and controls; and data and asset management productivity solutions.

L3 Harris Technologies

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This off-the-radar giant may be the best total return candidate of all of the top companies Cathie Woods owns and pays a 2.29% dividend. L3 Harris Technologies (NYSE: LHX) provides mission-critical solutions worldwide for government and commercial customers.

The company’s Integrated Mission Systems segment provides intelligence, surveillance, and reconnaissance (ISR) systems, passive sensing and targeting, electronic attack, autonomy, power and communications, networks and sensors, and advanced combat systems for air, land, and sea sectors.

Its Space and Airborne Systems segment offers space payloads, sensors, and full-mission solutions; classified intelligence and cyber; mission avionics; electronic warfare systems; and mission networks systems for air traffic management operations.

The company’s Communication Systems segment provides:

• Broadband communications
• Tactical radios
• Software
• Satellite terminals
• End-to-end battlefield systems for the U.S. Department of Defense, international, federal, and state agency customers
• Integrated vision solutions, including helmet-mounted integrated night vision goggles with leading-edge image intensifier tubes and weapon-mounted sights, aiming lasers, and range finders; and public safety radios, and system applications and equipment

Its Aerojet Rocketdyne segment provides propulsion technologies and armament systems for strategic defense, missile defense, hypersonic and tactical systems, and space propulsion and power systems for national security and space and exploration missions.

Lockheed Martin

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This company is one of the top aerospace and defense stocks to buy, has backed up nicely from the highs, and pays a dependable 2.80% dividend. Lockheed Martin Corporation (NYSE: LMT) researches, designs, develops, manufactures, integrates, operates, and sustains advanced technology systems, products and services.

The Company operates in five principal business segments:

• Aeronautics
• Missiles and Fire Control
• Mission Systems and Training
• Space Systems
• Information Systems and global Solutions (IS&GS).

It also provides a wide range of defense electronics products and IT services.

As the Pentagon’s prime contractor, Lockheed Martin plays a crucial role in national defense, offering a diverse portfolio of global aerospace, defense, security and advanced technologies. Its leveraged presence in the Army, Air Force, Navy and IT programs guarantees a steady inflow of follow-on orders, not only from the U.S. government but also from a large number of foreign allies of the nation.