3. Johnson Controls International plc (NYSE:JCI)
Number of Hedge Fund Holders: 39
Dividend Yield as of July 23: 2.16%
Johnson Controls International plc (NYSE:JCI) is a multinational conglomerate company that specializes in building technologies and solutions and also offers energy storage solutions. The company has faced pressures recently as activist investors Elliott Investment Management and Soroban Capital Partners each amassed stakes worth over $1 billion in the company. In response, it decided in June to sell its air distribution technologies business to private equity firm Truelink Capital. In addition, the company announced plans to establish a new unit to capitalize on the growing demand for data center solutions. Since the start of 2024, the stock has gained over 21%.
In one of the recent developments, Robert Bosch GmbH intends to purchase Johnson Controls International plc (NYSE:JCI)’s heating and ventilation assets for $8 billion, marking its largest acquisition to date as it shifts focus from automotive supplies. As part of the transaction, Bosch will acquire the company’s air-conditioning joint venture with Hitachi, including Hitachi’s 40% stake. All parties have signed binding agreements, and the deal is expected to be finalized within 12 months, pending regulatory approval. Through this transaction, Johnson Controls International plc (NYSE:JCI) will significantly streamline its portfolio, sharpening its strategic focus to align with its goal of becoming a dedicated provider of comprehensive solutions for commercial buildings.
Analysts have expressed concern about the stock’s performance over the past 12 months. Nevertheless, they remain positive about its future prospects and valuation, noting that it is currently trading at an attractive forward P/E ratio of 16.8. Diamond Hill Capital also highlighted Johnson Controls International plc (NYSE:JCI)’s valuation in its Q1 2024 investor letter. Here is what the firm has to say:
“Though valuations have increased, we continue identifying high-quality companies we believe the market is overlooking. We accordingly initiated four new positions in Q1: Generac Holdings, Diamondback Energy (FANG), Johnson Controls International plc (NYSE:JCI) and Humana. We initiated a position in Johnson Controls (JCI), a leading provider of HVAC, security and fire detection/suppression and building management systems as we believe the company is well-positioned to benefit from the secular trend toward smart buildings and a shift to high-margin services. While JCI has not executed particularly well recently, we believe the market has overreacted to these issues while also underappreciating the potential magnitude of the aforementioned secular tailwinds. We accordingly capitalized on the opportunity to establish a position at a steep discount to JCI’s HVAC peers and our estimate of intrinsic value.”
On June 12, Johnson Controls International plc (NYSE:JCI) declared a quarterly dividend of $0.37 per share, which was consistent with its previous dividend. The company has never missed a single dividend since 1887, which makes JCI one of the best dividend stocks of all time. The stock’s dividend yield on July 23 came in at 2.16%.
As of the end of the March quarter of 2024, 39 hedge funds owned stakes in Johnson Controls International plc (NYSE:JCI), as per Insider Monkey’s database. These stakes have a consolidated value of over $2.1 billion.
