In this article, we discuss 10 high-yield dividend stocks to buy according to John A. Levin’s Levin Capital. You can skip our detailed analysis of Levin’s hedge fund and its past performance, and go directly to read 5 High-Yield Dividend Stocks to Buy According to John A. Levin’s Levin Capital.
John A. Levin is one of the most experienced Wall Street investors, with a career spanning over 66 years. He founded John A. Levin & Co. in 1982, which he sold to a company headed by a former Goldman Sachs & Co. executive in 1996. After that, Levin started operating two small, fast-trading hedge funds and an arbitrage fund that specialized in takeover stocks. In 2005, he founded Levin Capital Strategies, a New York-based investment management firm. Levin is currently serving as the Chairman and CEO of the firm.
Over the years, Mr. Levin built his reputation as a fast-money trader. His hedge fund follows fundamental bottom-up research with the main aim of generating profits and preserving shareholders’ capital through all market conditions. Pursuing this approach, the fund managed to maintain a long-term track record of stable, risk-adjusted returns for shareholders.
In 2019, a New York-based asset management firm, Easterly, bought a 65% stake in Levin Capital’s institutional investment business. However, John A. Levin was given the advisory tasks of the new firm.
As of the end of Q1 2022, Levin Capital’s 13F portfolio value stands at over $1.03 billion, falling slightly from $1.07 billion in the previous quarter. Technology and finance sectors take up major chunk of the portfolio, with Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG) holding prominent positions in the hedge fund’s portfolio.
Our Methodology:
In this article, we discuss 10 high-yield dividend stocks in John A. Levin’s portfolio. The companies mentioned below are taken from Levin Capital’s 13F portfolio as of Q1 2022.
10. The AES Corporation (NYSE:AES)
Dividend Yield as of June 20: 3.28%
Number of Hedge Fund Holders: 37
Levin Capital Strategies’ Stake Value: $8,357,000
The AES Corporation (NYSE:AES) is a Virginia-based electric power distribution company that generates electricity through power plants. In May, the company signed a 20-year agreement with Microsoft to provide renewable energy to its data centers in California. Moreover, the company was also awarded 1,087 MW of renewables and energy storage under long-term Power Purchase Agreements in Q1 2022.
Levin Capital resumed its position in The AES Corporation (NYSE:AES) during the fourth quarter of 2020, after selling its entire stake in the company in 2016. At the end of Q1 2022, the hedge fund purchased additional 30,000 AES shares, taking its total stake in the company to over $8.35 million. The company accounted for 0.8% of John A. Levin’s portfolio.
The AES Corporation (NYSE:AES) holds a stable history of dividend payments and currently offers a quarterly payout of $0.158 per share. The company raised its quarterly dividend by 5% in December 2021. As of June 20, the stock’s dividend yield was recorded at 3.28%. In May, Susquehanna appreciated the company’s investments in its solar projects and the development of its other renewable energy agreements but showed concerns about its Q1 results. The firm lowered its price target on The AES Corporation (NYSE:AES) to $30, with a Positive rating on the shares.
As per Insider Monkey’s Q1 2022 database, 37 hedge funds owned stakes in The AES Corporation (NYSE:AES), down from 41 in the previous quarter. The consolidated value of these stakes is roughly $1.5 billion. Orbis Investment Management held the largest position in the company, with stakes worth over $437.3 million.
Just like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG), The AES Corporation (NYSE:AES) is also down for 2022 amid market volatility.
9. The Bank of New York Mellon Corporation (NYSE:BK)
Dividend Yield as of June 20: 3.31%
Number of Hedge Fund Holders: 54
Levin Capital Strategies’ Stake Value: $23,742,000
The Bank of New York Mellon Corporation (NYSE:BK) is an American custodian bank and securities services company, which provides financial and banking services to its consumers. In Q1 2022, the company’s assets under management reached over $2.3 trillion, showing a 2% growth from the same period last year.
Levin Capital opened its position in The Bank of New York Mellon Corporation (NYSE:BK) during the fourth quarter of 2010, with shares worth over $13.8 million. At the end of Q1 2022, the hedge fund owned 478,376 BK shares, valued at over $23.7 million. The company represented 2.28% of John A. Levin’s portfolio.
On April 18, The Bank of New York Mellon Corporation (NYSE:BK) declared a quarterly dividend of $0.34 per share. The stock’s dividend yield came in at 3.31% on June 20. In April, JPMorgan mentioned the bank’s sensitivity to higher interest rates and lowered its price target on The Bank of New York Mellon Corporation (NYSE:BK) to $51.50, with a Neutral rating on the shares.
At the end of Q1 2022, 54 hedge funds tracked by Insider Monkey were bullish on The Bank of New York Mellon Corporation (NYSE:BK), up from 49 in the previous quarter. The collective value of these stakes is over $4.5 billion. Warren Buffett’s Berkshire Hathaway held the largest stake in the company in Q1, worth $3.6 billion.
Ariel Investments mentioned The Bank of New York Mellon Corporation (NYSE:BK) in its Q4 2021 investor letter. Here is what the firm has to say:
“Rising interest rates, after a surprisingly long period of low absolute rates and negative “real” rates, will create a headwind. While there has been much debate about the cause of these low rates, we believe the most important factor has been the $120 billion in monthly federal reserve open market bond purchases and the accumulation of an $8 trillion balance sheet. The former will end, and the latter will shrink. It is not just the Fed that has aggressively purchased bonds, bidding up prices and lowering yields. Bond traders and hedge fund managers have added to positions, confident that being on the same side as the Fed was the wise place to be. Now as the Fed is about to become a seller of bonds rather than a buyer, Wall Street’s “smart money” is likely to follow suit. Against this backdrop, fixed income securities and bond substitutes such as high dividend paying utilities and absolute return hedge funds are substantially overpriced and are not likely to produce attractive returns going forward.
This expectation of a reversion to the mean for interest rates helped 2021 performance, though not as much as we had hoped. The yield on the U.S. 10-year Treasury did indeed increase from +0.92% at the beginning of the year to +1.52% at year-end. An underreported story was the poor performance of bonds last year. The Barclays Aggregate Index declined -1.67% for the year ending December compared to a return of +28.71% for equities as measured by the S&P 500. Interest rates have continued to climb in 2022 with the 10-year Treasury at +1.79% as we go to print. This move higher in rates has contributed to our good, early start to 2022. Smaller positions in The Bank of New York Mellon Corporation (BK) also benefited from higher rates, principally with their ability to invest customer cash.”
8. AvalonBay Communities, Inc. (NYSE:AVB)
Dividend Yield as of June 20: 3.33%
Number of Hedge Fund Holders: 29
Levin Capital Strategies’ Stake Value: $702,000
AvalonBay Communities, Inc. (NYSE:AVB) is a Virginia-based real estate investment trust that invests in apartments. In May, the company posted a 96.5% growth in residential economic occupancy, from 96.4% in April. Moreover, the company saw a combined growth of 13% in May and April in its same-store sales from the same period last year.
During Q1 2022, Levin Capital did not change its position in AvalonBay Communities, Inc. (NYSE:AVB) and owned 2,826 shares worth $702,000. The company represented 0.06% of John A. Levin’s portfolio. As coastal rents have shown improvement in April this year, Scotiabank set a $238 price target on AvalonBay Communities, Inc. (NYSE:AVB), with a Sector Perform rating on the shares.
AvalonBay Communities, Inc. (NYSE:AVB) hasn’t been able to raise its dividend since 2019 due to the pandemic, however, the company has paid uninterrupted dividends to shareholders since its inception in 1994. Currently, its quarterly payout stands at $1.59 per share, with a dividend yield of 3.33%, as of June 20.
According to Insider Monkey’s database, 29 hedge funds owned stakes in AvalonBay Communities, Inc. (NYSE:AVB), valued at over $401.8 million. In comparison, 36 hedge funds owned positions in the company, with stakes valued at roughly $700 million.
7. Pfizer Inc. (NYSE:PFE)
Dividend Yield as of June 20: 3.44%
Number of Hedge Fund Holders: 79
Levin Capital Strategies’ Stake Value: $18,569,000
Pfizer Inc. (NYSE:PFE) discovers, manufactures, and commercializes biopharmaceuticals and also offers various products to treat rare diseases. Recently, the company announced buying an 8.1% stake in French vaccine maker, Valneva, to develop a vaccine against Lyme disease. The development of this vaccine will begin in Q3 2022.
Levin Capital has been investing in Pfizer Inc. (NYSE:PFE) for over a decade now. During Q1 2022, the hedge fund sold off 16,254 PFE shares, trimming its position by 5%. The fund’s stake in the company stood at $18.56 million in Q1, which accounted for 1.79% of John A. Levin’s portfolio.
On April 28, Pfizer Inc. (NYSE:PFE) declared a quarterly dividend of $0.40 per share, consistent with its previous dividend. The company holds a 12-year streak of dividend growth under its belt and has paid consistent payouts to shareholders for the past 334 quarters. As of June 20, the stock’s dividend yield came in at 3.44%. In May, SVB Leerink initiated its coverage on Pfizer Inc. (NYSE:PFE) with a Market Perform rating and a $55 price target.
As per Insider Monkey’s Q1 2022 data, Pfizer Inc. (NYSE:PFE) was a part of 79 hedge fund portfolios, down from 83 a quarter earlier. These stakes hold a consolidated value of over $4 billion. Cliff Asness, Ken Griffin, and Ric Dillon were some of the company’s major stakeholders in Q1 2022.
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.
6. Exxon Mobil Corporation (NYSE:XOM)
Dividend Yield as of June 20: 4.09%
Number of Hedge Fund Holders: 83
Levin Capital Strategies’ Stake Value: $2,408,000
Exxon Mobil Corporation (NYSE:XOM) is an integrated oil and gas company that explores and produces crude oil, natural gas, and natural gas liquids. The stock performed remarkably since the start of 2022, but the interest rates hike from major global central banks has sparked concerns about energy stocks, with XOM falling 4.7% on June 17. The stock is up 35.5% year-to-date.
Exxon Mobil Corporation (NYSE:XOM) has been a part of Levin Capital’s portfolio since 2010 when the fund started building its position in the company with stakes worth over $14 million. At the end of Q1 2022, the hedge fund owned roughly 30,000 XOM shares, valued at over $2.4 million. The company represented 0.23% of John A. Levin’s portfolio.
As per Insider Monkey’s database for Q1, Exxon Mobil Corporation (NYSE:XOM) experienced growth in hedge fund positions, as 83 elite funds owned stakes in the company, up from 71 in the previous quarter. The consolidated value of these stakes is over $8.5 billion. Rajiv Jain’s GQG Partners owned a stake worth over $4.2 billion in the Texas-based company, becoming its largest shareholder in Q1.
Exxon Mobil Corporation (NYSE:XOM) currently offers a quarterly payout of $0.88 per share, with a dividend yield of 4.09%, as of June 20. The company maintains a 39-year track record of consistent dividend growth, falling into the category of Dividend Aristocrat. In June, JPMorgan raised its price target on Exxon Mobil Corporation (NYSE:XOM) to $108, with an Overweight rating on the shares, highlighting the company’s position to return more capital to shareholders due to its strong balance sheet.
In addition to XOM, analysts and investors are also optimistic about blue-chip tech stocks, such as Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG), despite their underperformance in 2022.
Saturna Capital mentioned Exxon Mobil Corporation (NYSE:XOM) in its Q4 2021 investor letter. Here is what the firm has to say:
“Few companies maintain their position at the top for more than a decade or two. One that did was Exxon, which appeared decennially from 1980 through 2010. In 2019 it was ranked 10th, but as of writing has dropped to 39th place.”
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Disclosure. None. 10 High-Yield Dividend Stocks to Buy According to John A. Levin’s Levin Capital is originally published on Insider Monkey.
