In this article, we discuss 10 dividend stocks to buy according to Bernard Horn’s Polaris Capital Management. You can skip our analysis of Horn’s hedge fund and its performance, and go directly to read 5 Best Dividend Stocks to Buy According to Bernard Horn’s Polaris Capital Management.
Polaris Capital Management is a Boston-based global and international value equity firm. Bernard Horn founded the firm in 1995, focusing on global value investing. The firm aims to build portfolios that can exceed benchmark returns while keeping a check on market risks. As of March 2022, the firm’s portfolio contains nearly 69% international investments.
Polaris Capital’s globally-diversified strategy involves investing in undervalued companies that have strong fundamentals. While investing, the firm also focuses on important industry factors and global market fluctuations. According to the fund’s management, global markets deliver efficient returns over time, especially during market volatility. In the first quarter of 2022, Polaris Global Equity Composite beat the benchmark in seven out of eleven sectors, including finance, industrial, real estate, and communication services. However, the fund underperformed in the consumer discretionary sector. In the past year, the fund returned 1.07%, while its 3-year returns came in at 10.45%.
As of the end of Q1 2022, Polaris Capital holds a 13F portfolio valued at over $3.14 billion, slightly up from $3.10 billion in the previous quarter. The hedge fund invested in a wide range of sectors, with finance, healthcare, and consumer goods dominating the portfolio In Q1. Some of the firm’s prominent holdings include Intel Corporation (NASDAQ:INTC), JPMorgan Chase & Co. (NYSE:JPM), and AbbVie Inc. (NYSE:ABBV).
Bernard Horn of Polaris Capital Management
Our Methodology:
We picked these dividend stocks from the first quarter portfolio of Polaris Capital Management.
10. FedEx Corporation (NYSE:FDX)
Dividend Yield as of June 29: 2.00%
Polaris Capital Management’s Stake Value: $49,032,000
FedEx Corporation (NYSE:FDX) is an American multinational company that specializes in transportation, e-commerce, and related services. On June 29, the company gained 1.01% as it posted its FY25 guidance, expecting to achieve a consolidated operating income improvement of $3 billion to $4.5 billion, compared with FY22. Moreover, the company also expects its EPS to grow at a CAGR of 14% to 19% through 2025.
On June 14, FedEx Corporation (NYSE:FDX) announced its quarterly dividend of $1.15 per share, up 53% from the previous dividend. The company did not raise its dividends in 2020 due to the pandemic but besides that, it has grown dividends for 20 years. The stock’s dividend yield came in at 2.00% on June 29. In its FY25 guidance, the company also targets an adjusted dividend payout ratio of at least 25%.
At the end of Q1 2022, Polaris Capital owned 211,900 FDX shares, valued at roughly $50 million. The hedge fund reduced its stake by 5% in FedEx Corporation (NYSE:FDX) during the quarter. The company accounted for 1.76% of Bernard Horn’s portfolio. In June, BMO Capital raised its price target on FedEx Corporation (NYSE:FDX) to $270 with an Outperform rating on the shares, appreciating the company’s long-term guidance and improving revenue. In addition to this, analysts are also positive about Intel Corporation (NASDAQ:INTC), JPMorgan Chase & Co. (NYSE:JPM), and AbbVie Inc. (NYSE:ABBV).
As per Insider Monkey’s Q1 2022 database, 52 hedge funds owned stakes in FedEx Corporation (NYSE:FDX), down from 64 in the previous quarter. The collective value of these stakes is over $1.78 billion. Citadel Investment Group was the company’s largest shareholder in Q1.
Artisan Partners mentioned FedEx Corporation (NYSE:FDX) in its Q3 2021 investor letter. Here is what the firm has to say:
“Our weakest Q3 performers included FedEx. Shares of FedEx, a global shipping and logistics firm, were held back by disappointing business results as labor cost headwinds and air network disruptions overshadowed solid top-line trends. We think the company should be able to overcome these near-term issues. Importantly, FedEx has strong pricing power as it operates in a consolidated global shipping industry. In September, the company announced it would increase its shipping rates by an average of 5.9% across most of its services, which is the first time in several years that its annual increase would exceed 5.0%. The industry’s renewed pricing discipline is a welcome change, reflecting a broader commitment to earn better returns on invested capital. FedEx is also closer to fully integrating TNT, a European-focused parcel company it acquired in 2016. The market is beginning to incorporate a higher probability FedEx will fully integrate TNT, which will provide a significant boost to profits. The stock now trades at a near-trough multiple of less than 12X 2022 earnings, so we added to our position on weakness.”
9. Allison Transmission Holdings, Inc. (NYSE:ALSN)
Dividend Yield as of June 29: 2.19%
Polaris Capital Management’s Stake Value: $56,460,000
Allison Transmission Holdings, Inc. (NYSE:ALSN) designs and manufactures vehicle propulsion solutions for commercial and defense vehicles. In Q1 2022, the company posted a GAAP EPS of $1.30, which beat estimates by $0.16. The company’s revenue of $677 million saw a 15.1% year-over-year growth and also surpassed consensus by $34.8 million.
Allison Transmission Holdings, Inc. (NYSE:ALSN) currently offers a quarterly payout of $0.21 per share. The stock raised its quarterly dividend for the third consecutive year in February. The stock’s dividend yield was recorded at 2.19% on June 29.
Polaris Capital initiated its position in Allison Transmission Holdings, Inc. (NYSE:ALSN) during the fourth quarter of 2021, purchasing over 1.5 million shares. During Q1 2022, the hedge fund trimmed its position in the company by 5%, taking its total stake to over $1.43 million. The company accounted for 2.03% of Bernard Horn’s portfolio.
At the end of March 2022, 29 hedge funds tracked by Insider Monkey reported owning $393.1 million worth of stakes in Allison Transmission Holdings, Inc. (NYSE:ALSN). In comparison, 28 funds held positions in the company in Q4 2021, with stakes valued at over $406 million.
8. UnitedHealth Group Incorporated (NYSE:UNH)
Dividend Yield as of June 29: 1.29%
Polaris Capital Management’s Stake Value: $57,298,000
UnitedHealth Group Incorporated (NYSE:UNH) is a Minnesota-based managed healthcare and insurance company. It offers healthcare products and insurance services to consumers. Recently, the company launched a lab management solution that would help health plans reduce unnecessary lab testing and can save $12-$36 per member or over $3 billion annually.
As per Insider Monkey’s Q1 2022 data, UnitedHealth Group Incorporated (NYSE:UNH) was a popular stock among elite funds, as 103 hedge funds owned stakes in the company, up from 96 in the previous quarter. The collective value of these stakes is nearly $13 billion. With 3 million shares worth $1.48 billion, Eagle Capital Management was the company’s largest stakeholder in Q1.
On June 8, UnitedHealth Group Incorporated (NYSE:UNH) declared a 14% hike in its quarterly dividend to $1.65 per share. This was the company’s 12th consecutive year of dividend growth and raised its dividend by 130% in the past five years. The company’s payout ratio stands at 30.22% and its yield came in at 1.29%, as of the close of June 29. In June, Loop Capital initiated its coverage of UnitedHealth Group Incorporated (NYSE:UNH) with a Buy rating and a $575 price target.
At the end of Q1 2022, UnitedHealth Group Incorporated (NYSE:UNH) represented 2.06% of Bernard Horn’s portfolio. His hedge fund owned 112,356 shares in the company, valued at over $57.2 million.
Baron Funds mentioned UnitedHealth Group Incorporated (NYSE:UNH) in its Q1 2022 investor letter. Here is what the firm has to say:
“UnitedHealth Group Incorporated is a leading diversified health and well- being company whose divisions include insurance arm United Healthcare and Optum, which offers care delivery and other services. Shares increased on a fourth quarter beat and a reaffirmation of what is likely conservative guidance for 2022. We believe UnitedHealth leads the health care industry in innovation and execution, as evidenced by its strong value proposition leading to Medicare Advantage share gains, strong cost controls, and its leadership position in the shift to value-based care.”
7. JPMorgan Chase & Co. (NYSE:JPM)
Dividend Yield as of June 29: 3.47%
Polaris Capital Management’s Stake Value: $57,616,000
JPMorgan Chase & Co. (NYSE:JPM) is a New York-based financial services company. In May, the company reported over half a million customers in its UK consumer banking business. The company also reported over $10 billion in deposits, with payment transactions recorded at $20 million.
JPMorgan Chase & Co. (NYSE:JPM) pays a quarterly dividend of $1.00 per share. The company holds a 12-year track record of consistent dividend growth while growing its dividend at a CAGR of 14% in the past five years. The stock’s dividend yield was recorded at 3.47%, as of June 29. In May, BMO Capital called JPMorgan Chase & Co. (NYSE:JPM) a long-term market share winner among global banks. The firm raised its price target on the stock to $156, with a Market Perform rating on the shares.
Polaris Capital opened its position in JPMorgan Chase & Co. (NYSE:JPM) during the third quarter of 2016, purchasing shares worth over $23 million. At the end of Q1 2022, the hedge fund owned 422,751 JPM shares, valued at over $57.6 million. The company represented 2.07% of Bernard Horn’s portfolio.
As of the quarter ended in March, JPMorgan Chase & Co. (NYSE:JPM) was a part of 110 hedge fund portfolios, as tracked by Insider Monkey. These stakes hold a consolidated value of over $5 billion. Among these hedge funds, Fisher Asset Management owned the largest stake in the company in Q1, worth over $1 billion.
ClearBridge Investments mentioned JPMorgan Chase & Co. (NYSE:JPM) in its Q4 2021 investor letter. Here is what the firm has to say:
“Our energy and financials holdings kept pace in the 2021 rally. In financials, JPMorgan benefited from strong economic growth, a rise in Treasury yields, and a benign credit environment.”
6. Capital One Financial Corporation (NYSE:COF)
Dividend Yield as of June 29: 2.26%
Polaris Capital Management’s Stake Value: $59,659,000
Capital One Financial Corporation (NYSE:COF) is a Virginia-based bank holding company that specializes in auto loans, banking, credit cards, and saving accounts. In May, the company reported a 2.22% growth in its credit card delinquency rates, up from 2.18% in April. Moreover, average loans in its credit card portfolio reached $109.8 billion in May, up from $107.6 billion recorded in April.
The company currently pays a quarterly dividend of $0.60 per share, with a yield of 2.26%, as of June 29. Baird upgraded Capital One Financial Corporation (NYSE:COF) to Outperform in June, with a $145 price target.
During Q1 2022, Polaris Capital sold off its stake worth nearly $1 million in Capital One Financial Corporation (NYSE:COF), trimming its position by 5%. The hedge fund owned stakes worth nearly $60 million at the end of March 31.
Like Intel Corporation (NASDAQ:INTC), JPMorgan Chase & Co. (NYSE:JPM), and AbbVie Inc. (NYSE:ABBV), Capital One Financial Corporation (NYSE:COF) is also one of the prominent shareholders of Polaris Capital.
Davis Funds mentioned Capital One Financial Corporation (NYSE:COF) in its Q1 2022 investor letter. Here is what the firm has to say:
“The absolute level of revenues and profits generated by such companies is in fact so large that most of the major financial holdings in the portfolio produce enough annual operating income individually that a number of them could, in theory, purchase several entire businesses among hundreds of choices within the S&P 1500 Index, using just a year’s cash earnings without dipping into capital. This is theoretical, as financial companies would not be in the business of buying healthcare or technology companies, for example, but we point out these facts to illustrate the sheer scale of the economics produced by single financial companies in a given year, which is often a multiple of the cash earnings yielded by companies in a host of other industries.
Given this cash-generation power, we are naturally drawn to what we believe are strong and profitable financial institutions when the price is right. Presently, we believe the valuations of our financial holdings are not only reasonable, but extremely compelling, and our portfolio composition reflects this view. Representative financial holdings in the Fund includes Capital One Financial.”
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Disclosure. None. 10 Best Dividend Stocks to Buy According to Bernard Horn’s Polaris Capital Management is originally published on Insider Monkey.
