In this article, we discuss 10 best dividend stocks to buy according to John Rogers’ Ariel Investments. You can skip our detailed analysis of the hedge fund’s past performance and Rogers’ investment strategies, and go directly to read 5 Best Dividend Stocks to Buy According to John Rogers’ Ariel Investments.
Famous American investor and hedge fund manager John W. Rogers last year gave a skeptical stance about cryptocurrency, calling it a ‘hot dot’ of the moment. According to Rogers, investors should always consider markets through which they can reap long-term benefits, and cryptocurrencies do not meet these conditions. Rogers’ comments proved to be prescient as cryptocurrencies are going through a bloodbath in 2022.
In 1983, John Rogers founded Ariel Investments, a global value-based asset management firm. He is currently serving as the Co-CEO, Chairman, and CIO of the firm. Following the strategy of value investing, Ariel Investments invests in small and mid-cap undervalued companies, exhibiting strong growth potential. While investing, the fund’s main focus remains on strong cash flows, low debt, and strong business fundamentals.
Ariel Investments’ flagship Ariel Fund returned 14.9% annually from 2000 to 2010, compared with an 11.6% per year gain of the Russell 2500 index, as reported by Forbes. In 2021, the Ariel Fund gained 2.38%, while its 5-year returns came in at 6.52%. Moreover, since its inception in 2011, Ariel International Fund delivered a return of 4.93%.
Some of the hedge fund’s major holdings in Q1 included Microsoft Corporation (NASDAQ:MSFT), Johnson & Johnson (NYSE:JNJ), and The Goldman Sachs Group, Inc. (NYSE:GS).
John Rogers of Ariel Investments
Our Methodology:
In this article, we discuss the best dividend stocks in John Rogers’ portfolio. The data mentioned in this list is taken from Ariel Investments’ Q1 2022 13F portfolio.
10 Best Dividend Stocks to Buy According to John Rogers’ Ariel Investments
10. KKR & Co. Inc. (NYSE:KKR)
Number of Hedge Fund Holders: 54
Dividend Yield as of May 26: 1.23%
Ariel Investments’ Stake Value: $187,477,000
KKR & Co. Inc. (NYSE:KKR) is an American global investment company that manages multiple asset classes through its strategic partners.
On May 12, KKR & Co. Inc. (NYSE:KKR) announced a 6.9% hike in its quarterly dividend to $0.155 per share, which takes its annual dividend to $0.62 per share. The stock’s dividend yield was recorded at 1.23% on May 26. In its May investors’ note, Deutsche Bank mentioned that it sees a buying opportunity in KKR & Co. Inc. (NYSE:KKR) and set a $79 price target on the stock, with a Buy rating on the shares.
Ariel Investments initiated its position in KKR & Co. Inc. (NYSE:KKR) during the third quarter of 2018, investing roughly $161 million. During Q1 2022, the hedge fund increased its position in the company by 11%. Along with KKR, Microsoft Corporation (NASDAQ:MSFT), Johnson & Johnson (NYSE:JNJ), and The Goldman Sachs Group, Inc. (NYSE:GS) are some other major holdings of Ariel Investments in Q1 2022.
At the end of Q1 2022, 54 hedge funds tracked by Insider Monkey held stakes in KKR & Co. Inc. (NYSE:KKR), down from 55 in the previous quarter. These stakes hold a collective value of over $4.04 billion. ValueAct Capital held the largest stake in the company in Q1 2022, worth over $1.3 billion.
Vulcan Value Partners mentioned KKR & Co. Inc. (NYSE:KKR) in its Q1 2022 investor letter. Here is what the firm has to say:
“KKR & Co. Inc. is a global investment firm that manages multiple alternative asset classes. The company’s operating profits grew approximately 45% during the fourth quarter of 2021 and roughly 55% for the year. In contrast, its stock price declined over 20% during the quarter. KKR generates robust free cash flow, and its value growth has been strong throughout the last year. It is unclear to us why KKR’s stock price has declined. However, we feel the company is positioned for long-term success and are pleased to own it with a discount to our estimate of its intrinsic value.”
9. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Dividend Yield as of May 26: 2.52%
Ariel Investments’ Stake Value: $136,834,000
Johnson & Johnson (NYSE:JNJ) is an American multinational corporation that deals in medical devices and consumer health goods. In its Q1 2022 results, the company reported a 5% year-over-year growth in its total sales, with operational growth of 7.7%. The company’s EPS of $2.67 beat the estimates by $0.10.
The number of hedge funds in Insider Monkey’s database holding stakes in Johnson & Johnson (NYSE:JNJ) stood at 83 in Q1 2022, the same as in the previous quarter. The consolidated value of these stakes is over $7.4 billion, showing modest growth from $7.3 billion worth of stakes held by hedge funds in Q4 2021.
In April, Johnson & Johnson (NYSE:JNJ) declared a quarterly dividend of $1.13 per share, up 6.6% from its previous dividend. This marked the company’s 60th consecutive year of dividend growth. The stock’s dividend yield came to be recorded at 2.52%, as of May 26. Appreciating the consistent earnings growth of Johnson & Johnson (NYSE:JNJ), in May, SVB Leerink assumed its coverage on the stock with an Outperform rating and a $200 price target. The firm further added that it sees growth in the company’s medical devices sales.
At the end of Q1 2022, Ariel Investments held shares worth roughly $137 million in Johnson & Johnson (NYSE:JNJ), which represented 1.21% of John Rogers’ portfolio.
Distillate Capital mentioned Johnson & Johnson (NYSE:JNJ) in its Q2 2021 investor letter. Here is what the firm has to say:
“The largest additions in the rebalance, Johnson & Johnson was around 50 and 40 basis points incrementally. J&J underperformed in the quarter while its normalized free cash flows held steady and so its position size was topped off to match the stable cash flows.”
8. Northern Trust Corporation (NASDAQ:NTRS)
Number of Hedge Fund Holders: 25
Dividend Yield as of May 26: 2.60%
Ariel Investments’ Stake Value: $241,153,000
Northern Trust Corporation (NASDAQ:NTRS) has been a part of Ariel Investments’ portfolio since 2010. The hedge fund initiated its position in the company with shares worth over $74.2 million. At the end of Q1 2022, the fund held a $241 million worth of stake in Northern Trust Corporation (NASDAQ:NTRS), which accounted for 2.13% of John Rogers’ portfolio.
In Q1 2022, Northern Trust Corporation (NASDAQ:NTRS) posted a GAAP EPS of $1.77, which beat the market estimates by $0.13. The company generated revenue of $1.72 billion, presenting an 8.2% growth from the same period last year. In May, Deutsche Bank affiliated the company’s strong quarterly results with the rising interest rates and a set a $116 price target on Northern Trust Corporation (NASDAQ:NTRS), with a Buy rating on the shares.
On April 26, Northern Trust Corporation (NASDAQ:NTRS) announced a quarterly dividend of $0.70 per share, in line with its previous dividend. As of May 26, the stock’s dividend yield stood at 2.60%.
As per Insider Monkey’s database for Q1 2022, 25 hedge funds held stakes in Northern Trust Corporation (NASDAQ:NTRS), down from 37 in the previous quarter. These stakes hold a total value of roughly $580 million.
7. The J. M. Smucker Company (NYSE:SJM)
Number of Hedge Fund Holders: 29
Dividend Yield as of May 26: 3.11%
Ariel Investments’ Stake Value: $172,769,000
The J. M. Smucker Company (NYSE:SJM) is an American manufacturer of food products that deals in consumer foods, pet foods, and coffee. The company currently pays a quarterly dividend of $0.99 per share, having raised it by 10% in 2021. This was the company’s 20th consecutive year of a dividend hike. Moreover, from 2016 to 2020, The J. M. Smucker Company (NYSE:SJM) has raised its dividend at a CAGR of 7%.
At the end of Q1 2022, Ariel Investments held over 1.2 million shares in The J. M. Smucker Company (NYSE:SJM), worth over $172.7 million. The company constituted 1.53% of John Rogers’ portfolio. This April, Credit Suisse set a $130 price target on The J. M. Smucker Company (NYSE:SJM), with a Neutral rating on the shares, as the company lowered its fiscal 2022 sales guide.
According to Insider Monkey’s Q1 2022 database, 29 hedge funds held stakes in The J. M. Smucker Company (NYSE:SJM), worth roughly $670 million. In comparison, 32 hedge funds held positions in the Ohio-based company in the previous quarter, with stakes valued at over $678 million. Along with Ariel Investments, Renaissance Technologies was also one of the major shareholders of the company, with shares worth over $129 million.
6. First American Financial Corporation (NYSE:FAF)
Number of Hedge Fund Holders: 31
Dividend Yield as of May 26: 3.43%
Ariel Investments’ Stake Value: $265,875,000
First American Financial Corporation (NYSE:FAF) is an American insurance company that provides comprehensive title insurance protection and professional settlement services to consumers.
Ariel Investments has been investing in the company since the first quarter of 2011, initiating a position with shares worth over $70.8 million. At the end of Q1 2022, the hedge fund held over 4 million shares in the company, worth roughly $266 million. The company represented 2.35% of the hedge fund’s 13F portfolio. Microsoft Corporation (NASDAQ:MSFT), Johnson & Johnson (NYSE:JNJ), and The Goldman Sachs Group, Inc. (NYSE:GS) also made up considerable portions of John Rogers’ portfolio in Q1 2022.
First American Financial Corporation (NYSE:FAF) hiked its quarterly dividend by 11% in 2021 to $0.51 per share. As of May 26, the stock’s dividend yield stood at 3.43%. This April, BTIG set an $86 price target on First American Financial Corporation (NYSE:FAF), with a Buy rating on the shares, and noted that the company could suffer due to the declining mortgage volumes in the first half of the year.
At the end of Q1 2022, 31 hedge funds tracked by Insider Monkey were bullish on First American Financial Corporation (NYSE:FAF), up from 30 in the previous quarter. The consolidated value of these stakes is over $1.45 billion.
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Disclosure. None. 10 Best Dividend Stocks to Buy According to John Rogers’ Ariel Investments is originally published on Insider Monkey.
