In this article, we discuss the 10 best dividend stocks according to Bill Miller’s Miller Value Partners. You can skip our detailed analysis of the hedge fund’s past performance and investment strategies, and go directly to read 5 Best Dividend Stocks According to Bill Miller’s Miller Value Partners.
Bill Miller founded Miller Value Partners, a Baltimore-based investment management firm, in 1999. The hedge fund focuses on the strategy of buying and holding undervalued stocks. While making investments in the companies, the hedge fund considers the management’s role in organizing their shareholders’ capital. Along with this, the fund meticulously studies the market data to observe the cyclic change and to deliver high long-term returns to shareholders. For this particular purpose, the hedge fund launched the Opportunity Equity Strategy in December 1999, providing investment strategies to investors. Currently, Bill Miller is serving as the Chairman, CIO, and co-portfolio manager of the fund’s Opportunity Equity and Income Strategy.
Miller Value’s strategy of value investment generated positive returns for shareholders over the years. According to the hedge fund’s Q4 2021 investor letter, the fund’s Deep Value Strategy fund gained 57.8% in 2021, compared with the S&P 500’s gain of 28.7%. This marked the fund’s third consecutive year of generating investment returns greater than 50%. Moreover, Miller Value’s Opportunity Equity fund delivered an annualized return of 18.27% in the past ten years, with an average annual return of 8.56% in the past five years.
Bill Miller, in a recent interview, said that nearly 50% of his personal wealth is invested in bitcoin and other cryptocurrencies, as reported by Business Insider.
As of Q4 2021, Miller Value Partners holds a 13F portfolio value of over $3.6 billion, down from $4.3 billion in the previous quarter. The hedge fund made major investments in the services, technology, financial, and healthcare sectors. Some of the hedge fund’s major holdings include Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Meta Platforms, Inc. (NASDAQ:FB).
Our Methodology:
In this article, we discuss the best dividend stocks in Bill Miller’s portfolio. For this list, we considered Miller Value Partners’ 13F portfolio as of Q4 2021.
10 Best Dividend Stocks According to Bill Miller’s Miller Value Partners
10. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 84
Miller Value Partners’ Stake Value: $61,874,000
Dividend Yield as of February 27: 1.87%
Bank of America Corporation (NYSE:BAC), an American investment bank, increased its quarterly dividend by 17% in 2021 at $0.21 per share. The stock’s dividend yield stood at 1.87%, as recorded on February 27.
In February, JPMorgan presented a positive outlook on Bank of America Corporation (NYSE:BAC) and said that the bank can benefit from increased consumer spending after the pandemic. The firm lifted its price target on the stock to $53.50, while maintaining an Overweight rating on the shares. In Q4 2021, Miller Value Partners held roughly 1.4 million shares in Bank of America Corporation (NYSE:BAC), valued at $61.9 million. The company represented 1.69% of Bill Miller’s portfolio. Along with this, some other major holdings of the hedge fund include Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Meta Platforms, Inc. (NASDAQ:FB).
By the end of Q4 2021, 84 hedge funds tracked by Insider Monkey reported owning stakes in Bank of America Corporation (NYSE:BAC), showing growth from 72 hedge funds holding positions in the company in Q3. The total value of the stakes held by 84 hedge funds is over $47.8 billion. Warren Buffett’s Berkshire Hathaway held a major stake in the company, worth roughly $45 billion.
Oakmark Funds mentioned Bank of America Corporation (NYSE:BAC) in its Q3 2021 investor letter. Here is what the firm has to say:
“Earlier this year, one of our holdings, Bank of America, announced that it was raising its minimum hourly wage from $15 to $20 and would increase it to $25 by 2025. The company received great press for placing the well-being of its employees above profits. But was it really either/or? Bank of America Corporation (NYSE:BAC)’s chief human resources officer spoke to the bigger picture: “A core tenet of responsible growth is our commitment to being a great place to work…that includes providing strong pay and competitive benefits to help them and their families, so that we continue to attract and retain the best talent.” Bank of America Corporation (NYSE:BAC) understood that engaged, high-caliber employees are more productive, less prone to turnover and, therefore, less expensive in the long run. Increasing the pay for employees wasn’t elevating employees above shareholders; it was the right thing to do for employees and for shareholders.
If an increase to $20 was good, why stop there? Why not $50 per hour? Because the benefits the business receives at $50 don’t justify the expense. The bank would no longer be able to price its products competitively and would lose business. The employees would “win” in the short term, but eventually the lost business would lead to job cuts, meaning both employees and shareholders would lose. The negative effects of stakeholder overreach are no different than when CEOs overreach to inflate short-term profits. Both hurt shareholders and stakeholders.”
9. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 107
Miller Value Partners’ Stake Value: $64,164,000
Dividend Yield as of February 27: 2.70%
JPMorgan Chase & Co. (NYSE:JPM) is an American investment bank and financial services company. In Q4 2021, Miller Value Partners slashed its position in the company by 11%, holding shares worth over $64 million. The company accounted for 1.75% of Bill Miller’s portfolio.
The number of hedge funds tracked by Insider Monkey holding stakes in JPMorgan Chase & Co. (NYSE:JPM) grew to 107 in Q4, from 101 in the previous quarter. The total value of these stakes is roughly $6.6 billion.
JPMorgan Chase & Co. (NYSE:JPM) currently pays a quarterly dividend of $1.00 per share, having raised it by 11.1% in 2021. The stock’s dividend yield, as of February 27, stood at 2.70%. JPMorgan Chase & Co. (NYSE:JPM) maintains an 11-year streak of consistent dividend growth. In January, UBS set a $197 price target on JPMorgan Chase & Co. (NYSE:JPM), while keeping a Buy rating on the shares.
Giverny Capital mentioned JPMorgan Chase & Co. (NYSE:JPM) in its Q4 2021 investor letter. Here is what the firm has to say:
“I sold some of our JP Morgan Chase in the fourth quarter, redeploying the proceeds and a bit of available cash into M&T Bank. JP Morgan is the nation’s best giant bank and I am optimistic about its future. GCAM still owns some. But M&T has a multi-decade record of excellent results, a strong balance sheet and conservative loan loss reserves. Importantly, it is extremely sensitive to rising interest rates.
JPMorgan Chase & Co. (NYSE:JPM) generates income from traditional bank lending, but also from trading, investment banking and wealth management. It is the nation’s largest credit card issuer and also does business with about 80% of the Fortune 500. M&T is more oriented to commercial real estate lending and could be a major beneficiary of higher interest rates, as it has a lot of excess cash on its balance sheet and a stable core deposit base. As rates rise, it will have plenty of ability to make loans. Alternatively, M&T could buy back a lot of stock with that surplus cash.”
8. Pitney Bowes Inc. (NYSE:PBI)
Number of Hedge Fund Holders: 21
Miller Value Partners’ Stake Value: $10,386,000
Dividend Yield as of February 27: 4.07%
In Q4 2021, Pitney Bowes Inc. (NYSE:PBI), an American tech company, saw a slight decline in the number of hedge funds holding stakes in it. 21 hedge funds tracked by Insider Monkey held positions in the company, down from 23 in the previous quarter. The total worth of these stakes is roughly $130 million. Among these hedge funds, Millennium Management was the company’s largest shareholder, holding shares worth over $23.8 million.
Pitney Bowes Inc. (NYSE:PBI) pays a quarterly dividend of $0.05 per share, with a dividend yield of 4.07%, recorded on February 27. Though the company couldn’t increase its dividend over the years, it has been paying dividends to the shareholders consistently for the past 32 years. Highlighting the company’s Presort Services segment, in February, Maxim set a $7 price target on Pitney Bowes Inc. (NYSE:PBI), while maintaining a Buy rating on the shares.
Miller Value Partners started investing in Pitney Bowes Inc. (NYSE:PBI) during the first quarter of 2019. In Q4 2021, the hedge fund increased its stake in the company by 13% and held shares worth over $10.3 million. Pitney Bowes Inc. (NYSE:PBI) represented 0.28% of Bill Miller’s portfolio.
Miller Value Partners also mentioned Pitney Bowes Inc. (NYSE:PBI) in its Q3 2021 investor letter. Here is what the firm has to say:
“Pitney Bowes (PBI) was also a recent laggard off nearly 20% during the quarter. The company has been building out an E-commerce business for the past 10 years that is approaching $2B in revenue and growing revenues longer-term at a double digit pace. With the E-commerce segment approaching scale, management has significant new initiatives underway to help improve the segment’s profitability to normalized levels (8-12% EBIT margins) over the next couple of years. Success on achieving normalized profitability for the segment would dramatically enhance Pitney Bowes earnings (>$1 in EPS) and annual free cash flow generation (>$250M). Last quarter we highlighted, the digital service business within Pitney’s E-commerce segment and the significant embedded value that was suggested by recent acquisition of a direct competitor Stamps.com at 8x revenue. However, another recent market transaction suggests the E-commerce business has even greater embedded value. At the end of the second quarter, Global-e (GLBE), a UK company that focuses on cross-border business came public at $25/share or approx. $4B market capitalization. The initial IPO price suggested, 2021 Enterprise value to Revenue >20x. Since the IPO, GLBE has climbed to greater than $50/share. Within Pitney Bowes’s E-commerce segment there is a much larger cross border business representing approximately $500M in revenue. The current valuation of Global-e suggests Pitney’s cross border business is worth significantly more than the company’s current market cap. With the marketplace valuing many businesses in excess of 10x revenue, we believe that Pitney Bowes shares remain significantly mispriced at only .35x of revenue and >30% normalized earnings and free cash flow yield. In our opinion, the shares are becoming increasing attractive as their E-commerce segment appears to be significantly undervalued and has the potential to unlock significant equity value over the next couple of years.”
7. H&R Block, Inc. (NYSE:HRB)
Number of Hedge Fund Holders: 29
Miller Value Partners’ Stake Value: $9,660,000
Dividend Yield as of February 27: 4.41%
In Q4 2021, Miller Value Partners increased its stake in H&R Block, Inc. (NYSE:HRB) by 6%. The hedge fund held shares worth roughly $10 million in the company, which accounted for 0.26% of Bill Miller’s portfolio.
At the end of Q4 2021, 29 hedge funds tracked by Insider Monkey held stakes in H&R Block, Inc. (NYSE:HRB), up from 26 in the previous quarter. The total value of these stakes is roughly $200 million.
In 2021, H&R Block, Inc. (NYSE:HRB) hiked its quarterly dividend by 4% at $0.27 per share. The stock’s dividend yield stood at a solid 4.41%, as of February 27. The company has been paying dividends to shareholders since it went public in 1962. In addition to this, over the past 5 years, H&R Block, Inc. (NYSE:HRB) has increased its dividend by 35%.
6. Energy Transfer LP (NYSE:ET)
Number of Hedge Fund Holders: 36
Miller Value Partners’ Stake Value: $46,920,000
Dividend Yield as of February 27: 7.15%
Energy Transfer LP (NYSE:ET) is an American company that is engaged in the pipeline transport of propane and natural gas. On January 25, the company raised its quarterly dividend by 15% to $0.175 per share. As of February 27, the stock’s dividend yield was recorded to be at 7.15%.
Miller Value Partners started building its position in Energy Transfer LP (NYSE:ET) sometime during the fourth quarter of 2018. In Q4 2021, the hedge fund held shares worth nearly $47 million in the company, which made up 1.28% of Bill Miller’s portfolio. Acknowledging the company’s growth potential, recently, Mizuho lifted its price target on Energy Transfer LP (NYSE:ET) to $14, while keeping a Buy rating on the shares.
Of 924 hedge funds tracked by Insider Monkey in Q4, 36 hedge funds were bullish on Energy Transfer LP (NYSE:ET), holding stakes worth $635.6 million. In comparison, 29 hedge funds held a $727.7 million worth of stake in the company in the preceding quarter. Among these hedge funds, Abrams Capital Management was the largest stakeholder of Energy Transfer LP (NYSE:ET) in Q4, holding shares worth over $182 million.
Along with this, Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Meta Platforms, Inc. (NASDAQ:FB) are some blue-chip companies that Miller Value invested in Q4 2021.
Miller Value Partners mentioned Energy Transfer LP (NYSE:ET) in its Q2 2021 investor letter. Here is what the firm has to say:
“Energy Transfer LP (ET)rose over the period along with the price of oil climbing 40.59% over the period. The company received positive news that the Dakota Access Pipeline project would not be shut down while the Environmental Impact Statement by the US Army Core of Engineers is drawn up. Energy Transfer reported strong 1Q results with revenue of $17B surpassing expectations for $11.8B with adjusted earnings before income, taxes, depreciation and amortization (EBITDA) hitting $5.04B ahead of consensus of $2.77B. The company raised full year adjusted EBITDA guidance to $12.9-13.3B from $10.6-11.0B previously, with the increase largely related to the benefits realized from Winter Storm Uri. The company paid down $3.7B in debt during the quarter, using strong cash f low to reduce leverage. The company also announced the issuance of $900M in 6.5% Series H perpetual preferreds with the company using the proceeds to repay debt and for general purposes.”
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Disclosure. None. 10 Best Dividend Stocks According to Bill Miller’s Miller Value Partners is originally published on Insider Monkey.
