In this article, we discuss the 10 dividend stocks to buy according to Donald Yacktman’s hedge fund. You can skip our detailed analysis of Yacktman’s investment career and his hedge fund, and go directly to read the 5 Dividend Stocks to Buy According to Donald Yacktman’s Hedge Fund.
Donald Yacktman’s investment career spans over 30 years. He founded Yacktman Asset Management in 1992 and is currently serving as the partner and portfolio manager of the firm. Before founding his hedge fund, Yacktman served as the portfolio manager of Selected Financial Services, Inc.
Yacktman Asset Management invests in growth companies, especially those that dominate their respective industries. According to Yacktman, his investment strategy combines the features of growth and value investing as his fund also invests in companies with low purchase prices. Through this investment strategy, the hedge fund aims to achieve absolute rates of return over a full market cycle, with a strict valuation.
According to a report published by Fortune, these unique investment strategies allowed Yacktman’s flagship, Yacktman Fund, to generate an average return of 10.5% from 2000-2010, outperforming the S&P 500. Moreover, during the financial crisis of 2008, the meticulously studied investments of the firm led it to surge 99%, surpassing 98% of its peers and the broader market as well.
As of Q3, Yacktman Asset Management’s 13F portfolio holds a value of over $10.3 billion. The fund invests in services, technology, basic material, finance, and healthcare, among other sectors. In this article, we will focus on the dividend stocks with the highest yields in Yacktman’s 13F portfolio. In this regard, some of the notable stocks are The Coca-Cola Company (NYSE:KO), Exxon Mobil Corporation (NYSE:XOM), Philip Morris International Inc. (NYSE:PM), and U.S. Bancorp (NYSE:USB).
Our Methodology:
Let’s analyze our list of the best dividend stocks to buy according to Donald Yacktman’s hedge fund. For this list, we have considered Yacktman Asset Management’s 13F portfolio as of Q3. The stocks mentioned below are ranked according to their dividend yields.
Donald Yacktman of Yacktman Asset Management
Dividend Stocks to Buy According to Donald Yacktman’s Hedge Fund
10. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 63
Dividend Yield: 2.78%
Cisco Systems, Inc. (NASDAQ:CSCO) is an American multinational technology company. The company makes it to our list of the best dividend stocks to buy according to Donald Yacktman’s hedge fund, as it has a track record of 10 years of consistent dividend growth. Cisco Systems, Inc. (NASDAQ:CSCO) pays an annual dividend of $1.48 per share. The stock’s current dividend yield stands at 2.78%.
On November 17, Cisco Systems, Inc. (NASDAQ:CSCO) announced its fiscal Q1 2022 results and posted an EPS of $0.82, beating the estimates by $0.02. After the company’s strong results, Morgan Stanley lifted its price target on the stock to $59, while keeping an Equal Weight rating on the shares. The firm’s analyst appreciated the company’s performance as it managed to beat expectations. Cisco Systems, Inc. (NASDAQ:CSCO) delivered a 21.1% return to shareholders in 2021, while its 12-month returns came in at 27.8%.
At the end of Q3, 63 hedge funds tracked by Insider Monkey reported owning stakes in Cisco Systems, Inc. (NASDAQ:CSCO), up from 60 in the previous quarter. The total value of these stakes is over $3.93billion.
Like The Coca-Cola Company (NYSE:KO), Exxon Mobil Corporation (NYSE:XOM), Philip Morris International Inc. (NYSE:PM), and U.S. Bancorp (NYSE:USB), Cisco Systems, Inc. (NASDAQ:CSCO) is gaining ground among investors in 2021.
ClearBridge Investments mentioned Cisco Systems, Inc. (NASDAQ:CSCO) in its Q1 2021 investor letter. Here is what the firm has to say:
“Also in IT, we added Cisco Systems, which provides IT and networking services in the form of network security, software development and cloud computing. Cisco continues to derive over 50% of its sales from on-premise deployments of its products of enterprise and small and midsize customers, while recurring revenues from software are becoming a larger part of the mix. Return-to-office enterprise spending should offer upside to its core campus business. Cisco was an early technology leader in sustainability over two decades ago, through its Internet-connecting capabilities which supported live concerts in partnership with the United Nations Development Program to raise awareness and funds to fight poverty. Cisco has very strong environmental standards (including driving lower energy consumption in IT departments through new product innovations and a longstanding goal to reduce emissions and reliance on non-renewable energy sources). Its data privacy and supply chain management policies are best in class.”
9. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 51
Dividend Yield: 3.05%
Lockheed Martin Corporation (NYSE:LMT) is an American aerospace company that specializes in arms, defense, information security, and technology. In its recently announced Q3 results, the company posted an EPS of $6.93, beating the estimates by $0.13.
Of the 867 hedge funds tracked by Insider Monkey, 51 hedge funds held positions in Lockheed Martin Corporation (NYSE:LMT), down from 58 in the previous quarter. The total value of these stakes is over $1.28 billion.
As of Q3, Yacktman Asset Management holds $122.9 million worth of stake in Lockheed Martin Corporation (NYSE:LMT). The company has a track record of 19 years of dividend growth, making it one of the best dividend stocks to buy according to Donald Yacktman’s hedge fund. Currently, Lockheed Martin Corporation (NYSE:LMT) pays an annual dividend of $10.40 per share. The stock’s dividend yield stands at 3.05%. Recently, Morgan Stanley set a $430 price target on Lockheed Martin Corporation (NYSE:LMT), while keeping an Overweight rating on the shares.
8. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 61
Dividend Yield: 3.05%
Recently, Credit Suisse listed The Coca-Cola Company (NYSE:KO) as its top pick after the company’s Q3 earnings topped pre-pandemic level. In Q3, the company posted an EPS of $0.65, beating the estimates by $0.07. Moreover, The Coca-Cola Company (NYSE:KO) also reported a 6% year-over-year growth in its global case unit volume.
The Coca-Cola Company (NYSE:KO) has a track record of 59 years of consistent dividend growth. With a 3.05% yield, the company remains one of the best dividend stocks to buy according to Donald Yacktman’s hedge fund. Yacktman Asset Management owns over 6.3 million shares in The Coca-Cola Company (NYSE:KO) in Q3, worth roughly $334 million. In November, Morgan Stanley raised its price target on The Coca-Cola Company (NYSE:KO) to $65, while keeping an Overweight rating on the shares.
As of Q3, 61 hedge funds held stakes in this Atlanta-based beverage company, compared with 62 in the previous quarter. These stakes are valued at $25.1 billion. Warren Buffett’s Berkshire Hathaway was the largest shareholder of The Coca-Cola Company (NYSE:KO) in Q3, holding stakes worth $21 billion.
7. U.S. Bancorp (NYSE:USB)
Number of Hedge Fund Holders: 42
Dividend Yield: 3.19%
U.S. Bancorp (NYSE:USB), an American bank holding company, pays an annual dividend of $1.84 per share. The stock’s current dividend yield stands at 3.19%.
As of Q3, Donald Yacktman’s hedge fund holds over 4.7 million shares in U.S. Bancorp (NYSE:USB), valued at roughly $280 million. The company represents 2.68% of the hedge fund’s 13F portfolio. In its Q3 earnings, U.S. Bancorp (NYSE:USB) reported revenue of $5.8 billion, beating the estimates by $130 million. This October, RBC Capital lifted its price target on U.S. Bancorp (NYSE:USB) to $66, with an Outperform rating on the shares, after the company reported recovery in its core businesses.
As of Q3, 42 hedge funds tracked in Insider Monkey’s database reported owning stakes in the company, up from 41 in the previous quarter. The total value of these stakes is roughly $8.4 billion.
6. The Cato Corporation (NYSE:CATO)
Number of Hedge Fund Holders: 11
Dividend Yield: 4.47%
The Cato Corporation (NYSE:CATO) is an American retailer of women’s fashion and accessories. On November 19, the company announced its quarterly dividend of $0.17 per share. The stock’s current dividend yield stands at 4.47%.
Jim Simons’ Renaissance Technologies was the leading shareholder of The Cato Corporation (NYSE:CATO) in Q3, holding shares worth roughly $12 million. Overall, 11 hedge funds tracked by Insider Monkey reported owning stakes in the company, valued at $24.8 million. In the previous quarter, 13 hedge funds held stakes in The Cato Corporation (NYSE:CATO), with a total value of $26.4 million.
As of Q3, The Cato Corporation (NYSE:CATO) represents 0.02% of Yacktman Asset Management’s 13F portfolio. The company’s revenue for the third quarter saw a 14.2% year-over-year growth at $172.2 million. In the past year, The Cato Corporation (NYSE:CATO) delivered an 80.4% return to shareholders, while its year-to-date gains stood at 67.5%.
Like The Coca-Cola Company (NYSE:KO), Exxon Mobil Corporation (NYSE:XOM), Philip Morris International Inc. (NYSE:PM), and U.S. Bancorp (NYSE:USB), The Cato Corporation (NYSE:CATO) is also one of the notable dividend stocks to buy.
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Disclosure. None. 10 Dividend Stocks to Buy According to Donald Yacktman’s Hedge Fund is originally published on Insider Monkey.
