In this article, we discuss the 10 best dividend stocks to buy according to Joel Greenblatt’s Gotham Asset Management. You can skip our detailed analysis of Greenblatt’s hedge fund and its returns over the years, and go directly to read 5 Dividend Stocks to Buy According to Joel Greenblatt’s Gotham Asset Management.
Joel Greenblatt is a famous value investor who founded Gotham Capital, an investment firm, in 1985. He is currently serving as the Managing Principal and Co-Chief Investment Officer of the firm’s successor, Gotham Asset Management.
Greenblatt’s ‘Magic Formula’ investing is one of the simplest strategies put forward by him in his book ‘The Little Book that Still Beats the Market’. The strategy revolves around investing in high-quality companies with stable fundamentals and cheap valuations. Through this strategy, Greenblatt was able to set up one of the greatest 10-year records, as his hedge fund averaged 50% in returns per year from 1985-1994. Also, from 1988 to 2004, underpinned by the Magic Formula, the hedge fund returned an annualized 30.8%, compared with a 12.4% return of S&P 500 during the same time period.
As of Q3 2021, Joel Greenblatt’s portfolio has a value of over $2.4 billion. His hedge fund invests heavily in technology, consumer goods, finance, and healthcare, among other sectors. Some of the famous holdings of Gotham Asset Management as of Q3 are Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Meta Platforms, Inc. (NASDAQ:FB).
However, in this article, we will focus on dividend stocks in Joel Greenblatt’s 13F portfolio in Q3.
Joel Greenblatt of Gotham Asset Management
Our Methodology:
In this article, we will focus on dividend stocks in Gotham Asset Management’s 13F portfolio as of Q3. We considered the stocks with maximum years of dividend growth for the list. Along with this, analysts’ ratings and business fundamentals were considered while choosing the stocks. The hedge fund sentiment for each stock was measured by using Insider Monkey’s data of the 867 hedge funds for Q3.
Dividend Stocks to Buy According to Joel Greenblatt’s Gotham Asset Management
10. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 81
Dividend Yield: 3.99%
AbbVie Inc. (NYSE:ABBV) is an American biopharmaceutical company. Gotham Asset Management started investing in the company during the first quarter of 2013. In Q3 2021, the hedge fund held a stake worth $11 million in AbbVie Inc. (NYSE:ABBV), which represents 0.46% of Joel Greenblatt’s portfolio.
On October 29, AbbVie Inc. (NYSE:ABBV) increased its dividend by 9% to $1.41 per share. The stock’s current dividend yield stands at 3.99%, which is higher than the biopharmaceutical industry’s average yield of 2.99%.
At the end of Q3, 81 hedge funds tracked by Insider Monkey reported owning stakes in AbbVie Inc. (NYSE:ABBV), down from 82 in the preceding quarter. These stakes are valued at over $4.14 billion. Warren Buffett’s hedge fund, Berkshire Hathaway, was the company’s largest shareholder in Q3, holding shares worth $1.5 billion.
Like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Meta Platforms, Inc. (NASDAQ:FB), AbbVie Inc. (NYSE:ABBV) is also becoming famous among investors.
Artisan Partners mentioned AbbVie Inc. (NYSE:ABBV) in its Q3 2021 investor letter. Here is what the firm has to say:
“Our sales included Abbvie, a biopharmaceutical company. Abbvie was a smaller position in the portfolio. We had concerns about its capital allocation and a stretched balance sheet, so we chose to move on.”
9. The Coca-Cola Company (NYSE:KO)
Dividend Yield: 2.89%
Number of Hedge Fund Holders: 61
The Coca-Cola Company (NYSE:KO)’s EPS for the third quarter beat analysts’ expectations by $0.07 at $0.06. Moreover, unit case volume grew by 6% globally. As the sales at The Coca-Cola Company (NYSE:KO) have taken off due to the reopening of businesses, recently, JPMorgan upgraded the shares to Overweight, with a $63 price target, up from $59.
In Q3 2021, Gotham Asset Management increased its stake in The Coca-Cola Company (NYSE:KO) by 77%, which represented 0.46% of the hedge fund’s 13F portfolio. The company has a 59-year track record of consistent dividend growth and offers an industry-leading dividend yield of 2.89%, which makes it one of the best dividend stocks to buy according to Joel Greenblatt’s Gotham Asset Management.
As of Q3, 61 hedge funds tracked by Insider Monkey were bullish on The Coca-Cola Company (NYSE:KO), compared with 62 in the previous quarter. These stakes hold a consolidated value of $25.1 billion, up from $24.9 billion in Q2.
8. Merck & Co., Inc. (NYSE:MRK)
Dividend Yield: 3.64%
Number of Hedge Fund Holders: 77
Merck & Co., Inc. (NYSE:MRK) is an American pharmaceutical company that also offers health solutions through its medicines. On November 30, the company announced a 6% growth in its dividend at $0.69 per share, with a dividend yield of 3.64%. Also, Merck & Co., Inc. (NYSE:MRK) has been growing its dividend for the past 11 years consistently, which places it in the list of the best dividend stocks to buy according to Joel Greenblatt’s Gotham Asset Management.
At the end of September quarter 2021, 77 hedge funds tracked by Insider Monkey reported owning stakes in Merck & Co., Inc. (NYSE:MRK), down from 79 in the previous quarter. The consolidated value of these stakes is over $4.55 billion. Fisher Asset Management held the largest stake in Merck & Co., Inc. (NYSE:MRK) in Q3, worth $798.6 million.
Gotham Asset Management made its first investment in Merck & Co., Inc. (NYSE:MRK) during the first quarter of 2011, worth $617,000. In Q3 2021, the fund owns shares worth over $12 million in the company, which represented 0.48% of the hedge fund’s 13F portfolio.
Artisan Partners mentioned Merck & Co., Inc. (NYSE:MRK) in its Q1 2021 investor letter. Here is what the firm has to say:
“In Q1, we initiated a position in Merck, a provider of health care solutions including prescription medicines, vaccines, biologic therapies, animal health and consumer care products. We purchased Merck when the stock came under pressure in part on concerns that the newly minted Biden administration could implement regulatory changes and lower drug costs in the pharmaceutical industry. Recent, but anticipated changes to Merck’s management team have also weighed on shares, as have concerns over the company’s heavy reliance on immunotherapy treatment Keytruda. Notably, Merck is not getting much credit from investors for the 60+ programs it has in clinical development, despite having several solid and large new product opportunities. Additionally, the company’s strong balance sheet and robust free cash flow provide it multiple options for future partnerships and acquisitions. While Merck is undergoing a period of transition, we think the company’s fundamentals are strong and believe changes to management should be a catalyst for improvement.”
7. Exxon Mobil Corporation (NYSE:XOM)
Dividend Yield: 5.86%
Number of Hedge Fund Holders: 64
Exxon Mobil Corporation (NYSE:XOM) is an American gas and oil company that also specializes in sustainable energy solutions for its consumers. In Q3 2021, Gotham Asset Management increased its stake in the company significantly by 129% and now owns shares worth $12.4 million.
Currently, Exxon Mobil Corporation (NYSE:XOM) pays an annual dividend of $3.52 per share, with a dividend yield of 5.86%. The company is one of the best dividend stocks in Joel Greenblatt’s portfolio as it holds a 37-year track record of consistent dividend growth. Recently, JPMorgan presented a positive outlook on Exxon Mobil Corporation (NYSE:XOM) due to the expected free cash flow growth in the coming years. The firm lifted its price target on the stock to $83, while maintaining an Overweight rating on the shares.
The number of hedge funds tracked by Insider Monkey having stakes in Exxon Mobil Corporation (NYSE:XOM) declined to 64 in Q3 2021, from 68 in the preceding quarter. These stakes hold a consolidated value of over $4.6 billion, up from $3.69 billion in Q2.
First Eagle Investment Management mentioned Exxon Mobil Corporation (NYSE:XOM) in its Q2 2021 investor letter. Here is what the firm has to say:
“Leading contributors in the First Eagle Global Fund this quarter included Exxon Mobil Corporation. The continued recovery in oil prices as economies reopen helped fuel another strong performance across the energy complex, including shares of Exxon Mobil. Exxon Mobil recently lost a proxy fight with an activist investor that took three of the company’s 12 board seats. While the press was focused on the investor’s concerns over Exxon Mobil’s long-term energy transformation strategy, other factors fundamental to shareholder returns—like capital discipline and balance sheet management—were also at play.”
6. PPL Corporation (NYSE:PPL)
Dividend Yield: 5.62%
Number of Hedge Fund Holders: 20
An American energy company, PPL Corporation (NYSE:PPL) is one of the newest acquisitions of Gotham Asset Management in Q3 2021. The hedge fund held positions in the company previously as well but sold its entire stake by the fourth quarter of 2020. In Q3 2021, PPL Corporation (NYSE:PPL) represented 0.53% of Joel Greenblatt’s portfolio.
As of Q3 2021, 20 hedge funds tracked by Insider Monkey held stakes in PPL Corporation (NYSE:PPL), down from 23 in the previous quarter. The total value of these stakes is over $140.7 million. With over 1.1 million shares, Renaissance Technologies was the largest stakeholder of the company in Q3 2021.
On November 19, PPL Corporation (NYSE:PPL) announced a quarterly dividend of $0.415 per share, with a dividend yield of 5.62%. Recently, Wells Fargo upgraded the shares to Overweight, with a $34 price target. In Q3, PPL Corporation (NYSE:PPL) reported revenue of $1.51 billion, presenting a 7.9% year-over-year growth. In the past year, the stock returned 9.68%, as of the close of December 16.
PPL Corporation (NYSE:PPL) is one of the notable stocks in Greenblatt’s portfolio, like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Meta Platforms, Inc. (NASDAQ:FB).
Miller/Howard Investments mentioned PPL Corporation (NYSE:PPL) in its Q1 2021 investor letter. Here is what the firm has to say:
“PPL Corp. (PPL) announced the sale of its UK utility business to National Grid (NGG). In a separate transaction, PPL acquired NGG’s Rhode Island utility business. Once the dust settles, we expect PPL to rerate toward US peers.”
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Disclosure. None. 10 Dividend Stocks to Buy According to Joel Greenblatt’s Gotham Asset Management is originally published on Insider Monkey.
