In this article, we discuss 10 dividend stocks to buy according to Sean Murphy’s Game Creek Capital. You can skip our detailed analysis of Murphy’s investment strategy and his hedge fund’s past performance, and go directly to read 5 Dividend Stocks to Buy According to Sean Murphy’s Game Creek Capital.
Sean Murphy joined Game Greek Capital in 2008 when he was serving as a senior analyst at Vardon Capital Management, handling the media, consumer, and telecom sectors. He was recruited by Scott Mayo, the cofounder founder of the Boston-based firm. Both Murphy and Mayo specialized in media and entertainment companies, which eventually led to the reconstruction of the fund’s portfolio. After Mayo died in 2010, Murphy assumed the charge of the firm and is currently serving as the President and Chief Investment Officer of Game Creek.
Game Creek invests in both large and small-cap companies, using bottom-up research to understand the valuation of these organizations. Before investing, the firm carries out meticulous research of the respective company in order to get a comprehensive view of its business. The firm’s main objective is to generate strong risk-adjusted returns while protecting investors’ capital. Over the years, the hedge fund managed to generate positive returns for the shareholders, returning 3.62% in 2017. The firm’s Game Creek Fund LP delivered a return of 3.23% and 0.73% in 2015 and 2016, respectively.
As of Q1 2022, Game Creek Capital holds a 13F portfolio value of over $253 million, up from $240.9 million in the previous quarter. The hedge fund made investments in several sectors including services, technology, finance, basic materials, consumer goods, and healthcare. The hedge fund held positions in some major large-cap companies, such as Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT).
Our Methodology:
In this article, we discuss the best dividend stocks in Sean Murphy’s portfolio. The data mentioned in this article is taken from Game Creek Capital’s 13F portfolio as of Q1 2022.
10 Dividend Stocks to Buy According to Sean Murphy’s Game Creek Capital
10. The Mosaic Company (NYSE:MOS)
Number of Hedge Fund Holders: 66
Game Creek Capital’s Stake Value: $10,008,000
Dividend Yield as of May 31: 1.00%
The Mosaic Company (NYSE:MOS) is an American company that is involved in the mining of phosphate and potash. According to BofA, fertilizer producers are expected to gain in the coming months as China limits its exports to the US. In May, the firm maintained its Buy rating on The Mosaic Company (NYSE:MOS).
At the end of Q1 2022, The Mosaic Company (NYSE:MOS) was the third-largest holding of Game Creek Capital. The hedge fund owned 150,000 MOS shares, worth over $10 million. The company represented 3.95% of Sean Murphy’s portfolio. Unlike major tech stocks such as Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), which are under pressure, MOS gained 48.9% in 2022 so far.
In April, Mizuho appreciated the strong agricultural and fertilizer fundamentals of The Mosaic Company (NYSE:MOS) and lifted its price target on the stock to $89, with a Buy rating on the shares.
In May, The Mosaic Company (NYSE:MOS) declared a quarterly dividend of $0.15 per share, raising it by 33.3% from the prior dividend of $0.1125 per share. The stock’s dividend yield was recorded at 1.00% on May 31.
Insider Monkey’s Q1 2022 database shows that The Mosaic Company (NYSE:MOS) remained popular among hedge funds, as 66 hedge funds held stakes in the company at the end of March 2022, up from 46 in the previous quarter. The collective value of these stakes is over $1.5 billion. Soroban Capital Partners was the largest stakeholder of the Florida-based company in Q1 2022, owning stakes worth over $328.3 million.
Ariel Investments mentioned The Mosaic Company (NYSE:MOS) in its Q4 2021 investor letter. Here is what the firm has to say:
“We continue to believe recent aggressive fiscal and monetary policy will drive high levels of intransient (rather than transitory) inflation. Recent inflation numbers have exceeded our hawkish predictions. While we believed the Consumer Price Index might rise +4% in 2021, double the Fed target of +2%; it rose +7%, the highest level in forty years. Ariel Focus Fund has been well positioned for this environment as natural resource and material companies such as The Mosaic Company (MOS) which returned +72.15% for the year. This was one of our two largest holdings at year-end and have performed well very early into 2022.”
9. The Kroger Co. (NYSE:KR)
Number of Hedge Fund Holders: 45
Game Creek Capital’s Stake Value: $3,951,000
Dividend Yield as of May 31: 1.59%
Game Creek Capital initiated its position in The Kroger Co. (NYSE:KR) during the first quarter of 2018, purchasing shares worth over $4 million, at an average share price of $27.16. In Q1 2022, the hedge fund slashed its position in the Ohio-based retail company by 37%, owning roughly $4 million worth of KR shares. The company represented 1.56% of Sean Murphy’s portfolio.
As per Insider Monkey’s Q1 2022 database, 45 hedge funds were bullish on The Kroger Co. (NYSE:KR), owning stakes worth over $5.1 billion. In the previous quarter, 41 hedge funds held stakes in the company, valued at over $4.1 billion.
The Kroger Co. (NYSE:KR) currently pays a quarterly dividend of $0.21 per share, having raised it by 17% in June 2021. The company has been raising its dividends consecutively for the past 15 years, at an average of 13% each year. The stock’s dividend yield, as of May 31, came to be recorded at 1.59%.
In its April investors’ note, BofA presented a positive outlook on the retailers, noting the consumers’ inclination toward retailers due to inflation. Given this, the firm lifted its price target on The Kroger Co. (NYSE:KR) to $75, while upgrading the stock to Buy.
8. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 73
Game Creek Capital’s Stake Value: $3,973,000
Dividend Yield as of May 31: 2.15%
QUALCOMM Incorporated (NASDAQ:QCOM) is an American multinational company that produces semiconductors, software, and services related to wireless technology.
In fiscal Q2 2022, the company reported revenue of $11.2 billion, presenting a 41% year-over-year growth. Moreover, the company posted an EPS of $3.21, beating the consensus by $0.29. Due to its strong earnings in the second quarter, QUALCOMM Incorporated (NASDAQ:QCOM) expects its revenue for Q3 to be in between $10.5 billion-$11.3 billion versus the estimates of $9.99 billion.
During Q1 2022, Game Creek Capital purchased additional 8,250 shares of QUALCOMM Incorporated (NASDAQ:QCOM), increasing its position in the company by 47%. The hedge fund held 26,000 QCOM shares at the end of Q1, valued at roughly $4 million. The company constituted 1.56% of Sean Murphy’s portfolio.
QUALCOMM Incorporated (NASDAQ:QCOM) currently pays a quarterly dividend of $0.75, in line with its previous dividend. The company has been a dividend payer since 2003 and raised its dividend at a CAGR of about 6% in the past five years. In May, Tigress Financial appreciated the company’s strong communication business and edge computing and lifted its price target on QUALCOMM Incorporated (NASDAQ:QCOM) to $238 while maintaining a Buy rating on the shares.
At the end of Q1 2022, 73 hedge funds tracked by Insider Monkey reported owning stakes in QUALCOMM Incorporated (NASDAQ:QCOM), down from 75 in the previous quarter. The consolidated value of these stakes is over $3.5 billion. With a $626.7 million worth of stake, Alkeon Capital Management held the largest position in the California-based company in Q1 2022.
ClearBridge Investments mentioned QUALCOMM Incorporated (NASDAQ:QCOM) in its Q4 2021 investor letter. Here is what the firm has to say:
“Market strength continued in the fourth quarter, with only the communication services sector down in the Russell 1000 Value Index. Portfolio returns benefited from the strong performance of semiconductor maker Qualcomm, which has executed exceptionally well in pursuing the transition to 5G, growing both content and share due to its leadership position in cellular technology. The chipmaker recently outlined a number of peripheral growth opportunities outside of mobile markets, including automotive (where it hopes to leverage its strong presence in the automotive infotainment space into advanced driver assistance systems), Internet of Things (including opportunities in the PC market, VR/AR market, and factory automation) and radio frequency (where mmWave adoption globally, including China, would drive substantial upside).”
7. Medtronic plc (NYSE:MDT)
Number of Hedge Fund Holders: 54
Game Creek Capital’s Stake Value: $2,982,000
Dividend Yield as of May 31: 2.75%
Medtronic plc (NYSE:MDT) is an American medical device company, headquartered in Ireland. At the end of Q1 2022, Game Creek Capital owned a stake worth roughly $3 million in the company, which accounted for 1.17% of Sean Murphy’s portfolio. The hedge fund has been investing in the company since 2018.
The number of hedge funds tracked by Insider Monkey owning stakes in Medtronic plc (NYSE:MDT) fell to 54 from 55 in the previous quarter. The collective value of these stakes stands at roughly $2 billion. Diamond Hill Capital was the leading shareholder of the company in Q1 2022, owning a stake worth over $456 million.
On May 26, Medtronic plc (NYSE:MDT) announced a quarterly dividend of $0.68 per share, increasing it by 8% from a previous dividend of $0.63 per share. This was the company’s 45th consecutive year of a dividend hike. The stock’s dividend yield stood at 2.75%, as of the close of May 31. As the company’s fiscal Q4 2022 earnings fell short of expectations, in May, RBC Capital lowered its price target on Medtronic plc (NYSE:MDT) to $122, but kept an Outperform rating on the shares.
Polen Capital mentioned Medtronic plc (NYSE:MDT) in its Q4 2021 investor letter. Here is what the firm has to say:
“The top absolute detractors during the quarter (includes) Medtronic. Shares of Medtronic underperformed during the quarter on what we see as short-term setbacks in its Renal Denervation technology and HUGO robotic surgery platform. Both are pipeline prospects that could be sources of revenue growth if Medtronic can successfully commercialize them. However, they are not generating meaningful sales today. Looking ahead, we believe Medtronic’s management is handling this world-leading tech business well and that its growth prospects remain compelling.”
6. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 79
Game Creek Capital’s Stake Value: $9,251,000
Dividend Yield as of May 31: 2.97%
Pfizer Inc. (NYSE:PFE) currently pays a quarterly dividend of $0.40 per share. The company raised its quarterly dividend by 2.6% in December 2021, which marked its 12th consecutive year of dividend growth. Moreover, the company has paid dividends to shareholders for 334 quarters consistently. The stock’s dividend yield, as of May 31, stood at 2.97%.
Pfizer Inc. (NYSE:PFE) was the fifth-largest holding of Game Creek Capital in Q1 2022. The hedge fund slashed its position in the company by 35% during the quarter, owning 178,700 PFE shares, worth over $9.2 million. The company made up 3.65% of Sean Murphy’s portfolio. Along with PFE, Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT) are some other blue-chip companies in the hedge fund’s portfolio.
In 2021, Pfizer Inc. (NYSE:PFE) generated $37 billion in Covid vaccine revenues, which the company is currently using for its Research and Development segment. This was noted by SVB Leerink’s analyst David Risinger in May, who initiated coverage of the stock with a Market Perform rating and a $55 price target. The analyst further appreciated the company’s innovative initiatives to advance its business model.
According to Insider Monkey’s Q1 2022 database, 79 hedge funds owned stakes in Pfizer Inc. (NYSE:PFE), worth over $4.1 billion. In the previous quarter, 83 hedge funds held positions in the New York-based company, with stakes valued at over $5.09 billion.
ClearBridge Investments mentioned Pfizer Inc. (NYSE:PFE) in its Q4 2021 investor letter. Here is what the firm has to say:
“While the level of general turnover abated as we progressed through 2021, it remained high in one area: post-COVID-19 recovery plays. The concept behind this investment thesis was, and still is, straightforward: with the advent of effective vaccines, the path from pandemic to endemic is just a matter of time. As this transition occurs, the estimated excess savings of over $2 trillion built up on U.S. consumer balance sheets will unlock dramatic pent-up demand for experiences, especially global travel. This investment case seemed especially compelling when the Pfizer vaccine positively surprised markets in November 2020. As a result, we made post-COVID-19 stocks (which were trading well below our estimate of recovery value) a sizable theme within the portfolio. We understood this to be a more aggressive tilt in positioning because it required a major improvement in demand to catalyze fundamentals and drive price toward higher business values. While we accepted that recovery would not be smooth and that it would take time to deploy vaccines both domestically and globally, we decided that recovery was the logical path of least resistance and we were being well compensated for these risks.
What we did not account for, however, was vaccine hesitancy and the risk of further infection waves. As a result, the first variant wave, Delta, was a negative surprise to both the market and our team. When the risk surfaced, we immediately updated our probability-driven models and debated how we should react. The resulting conclusion was that the recovery would be delayed and that we should reduce our exposure quickly, subsequently targeting the most aggressive recovery stocks such as cruise lines. We again acted swiftly and decisively to the positive surprise that Pfizer had delivered a high-efficacy antiviral COVID-19 pill. This pill should greatly reduce COVID-19 severity risks globally, increasing the probability of a global travel recovery in 2022. While this is still true, the emergence of the highly mutated Omicron variant set off another infection wave which spurred us to again act quickly and further reduce our risk exposure. This back-and-forth may sound exhausting, but it highlights our compulsion to act if we determine a surprise has a large enough impact on the probabilities that power our valuation-driven investment cases.
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Disclosure. None. 10 Dividend Stocks to Buy According to Sean Murphy’s Game Creek Capital is originally published on Insider Monkey.
