In this article, we discuss the 5 best dividend stocks according to David Harding’s Winton Capital Management. If you want to read our detailed analysis of the hedge fund and its performance, go directly to read 10 Best Dividend Paying Stocks According to David Harding’s Winton Capital Management.
5. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 64
Dividend Yield as of January 27: 4.73%
Winton Capital Management’s Stake Value: $2,300,000
In Q3 2021, Winton Capital Management increased its stake in Exxon Mobil Corporation (NYSE:XOM) by 73% and held a stake worth $2.3 million in the company. The American natural gas and oil company represented 0.12% of DavidHarding’s portfolio in Q3.
On October 27, 2021, Exxon Mobil Corporation (NYSE:XOM) announced a 1% increase in its quarterly dividend at $0.88 per share. The stock’s current dividend yield stands at 4.73%. Exxon Mobil Corporation (NYSE:XOM) has been paying dividends to shareholders for more than 100 years now. Moreover, the company also maintains a 39-year track record of solid dividend growth, coming through as one of the best dividend stocks in David Harding’s portfolio.
With stakes worth over $4.6 billion, 64 hedge funds tracked by Insider Monkey held positions in Exxon Mobil Corporation (NYSE:XOM) in Q3. In comparison, 68 hedge funds held stakes in the company in the previous quarter, worth $3.69 billion.
Goehring & Rozencwajg Associates mentioned Exxon Mobil Corporation (NYSE:XOM) in its recently published Q3 2021 investor letter. Here is what the firm has to say:
“After successfully replacing 25% of Exxon’s board of directors despite owning just 0.02% of the outstanding equity, Engine No. 1, the climate-focused activist hedge fund, met with Chevron’s management late last summer. In discussions that were later described as “cordial,” Chevron executives shared their plan to reduce carbon emissions. Subsequently, Chevron announced new plans to further reduce carbon output, along with their intention to appoint a new director with “environmental expertise.” Although it remains unclear exactly what Engine No. 1 is planning, rumors suggest the fund has contacted other investors, strongly suggesting they intend to launch a second campaign in the not-too-distant future.
What should Chevron expect?
It was recently reported by The Wall Street Journal that Exxon was considering abandoning two massive natural gas projects: the 75 trillion cubic foot (tcf ) Rovuma LNG project (capital cost $30 bn) and the 5 tcf Ca Voi Xanh offshore-Vietnam gas project (capital cost $10 bn). Exxon board members (most likely including the three supported by Engine No. 1) have publically expressed concerns about both projects.
According to internal reports, these projects are among the highest CO2 producers in Exxon’s pipeline; it is no surprise these projects have been called into question. However, we find the plight of both fields to be perplexing since production would almost certainly be used to displace coal in electricity generation, cutting CO2 emissions by nearly 50%. This fact seems to be lost on the new Exxon board members.”
4. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 48
Dividend Yield as of January 27: 4.88%
Winton Capital Management’s Stake Value: $10,545,000
A Swiss-American tobacco manufacturing company, Philip Morris International Inc. (NYSE:PM) saw an increase in the number of hedge funds having stakes in it in Q3. 48 hedge funds tracked by Insider Monkey held positions in the company, compared with 46 in the previous quarter. These stakes hold a consolidated value of roughly $6 billion.
Philip Morris International Inc. (NYSE:PM) has increased its annual dividend since its inception in 2008. Since then, the company’s compound annual dividend growth rate stands at 8%. Philip Morris International Inc. (NYSE:PM) increased its dividend by 4.2% in 2021 and now pays a quarterly dividend of $1.25 per share, with a dividend yield of 4.88%. This January, Morgan Stanley raised its price target on Philip Morris International Inc. (NYSE:PM) to $115, while maintaining an Overweight rating on the shares.
In Q3 2021, Winton Capital Management held a stake worth over $10.5 million in Philip Morris International Inc. (NYSE:PM), which represented 0.59% of its 13F portfolio.
3. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 41
Dividend Yield as of January 27: 4.90%
Winton Capital Management’s Stake Value: $8,716,000
International Business Machines Corporation (NYSE:IBM), an American multinational tech company, was lauded at BMO Capital in January due to its fiscal Q4 earnings beat. The firm lifted its price target on the stock to $155, while keeping a Market Perform rating on the shares.
The number of hedge funds tracked by Insider Monkey having stakes in International Business Machines Corporation (NYSE:IBM) stood at 41 in Q3, the same as in the previous quarter. These stakes are valued at over $1.4 billion. Arrowstreet Capital was among the company’s largest shareholders in Q3, owning shares worth roughly $399 million.
In Q3 2021, Winton Capital Management increased its stake in International Business Machines Corporation (NYSE:IBM) by 17%, holding a stake worth over $8.7 million. The company constituted 0.48% of David Harding’s portfolio. International Business Machines Corporation (NYSE:IBM) currently pays a quarterly dividend of $1.64 per share, with a dividend yield of 4.90%. The company has been paying dividends since 1916 while increasing its dividend consistently for the past 26 years. Moreover, the dividend payout is around $6 billion a year.
St. James Investment Company mentioned International Business Machines Corporation (NYSE:IBM) in its Q4 2021 investor letter. Here is what the firm has to say:
“IBM was not the first company to build computers. The distinction belongs to Sperry-Rand’s subsidiary UNIVAC, which introduced the first commercially successful computers in the early 1950s. In this era, IBM did possess the largest research and development department of the business machines industry and quickly caught up, introducing cost-competitive computers a few years after UNIVAC. By the late 1950s, IBM held the dominant market share in computers. IBM also touted a vastly superior sales organization, which used a sales tactic called “paper machines” (the equivalent of today’s “vaporware”). If a competitor’s product was selling well in a market segment that IBM had yet to penetrate, the company would announce a competing product and start taking orders for the “paper machine” long before it was available.
One cannot overstate how powerful IBM was in the computer industry in the 1950s and 1960s. Every competitor rightly worried that if their product worked too well for too long, it was only a matter of
time before an army of IBM salesforce representatives mobilized. In their easily recognizable uniforms of starched white shirts, red ties and blue suits, IBM marketers marched on their customers and offered a more expensive, but much more defensible, choice. “Nobody gets fired for buying IBM” was a common phrase. Even competitors acknowledged that the company excelled at sales. As a UNIVAC executive once complained, ‘It doesn’t do much good to build a better mousetrap if the other guy selling mousetraps has five times as many salesmen.’” (Click here to see the full text)
2. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 57
Dividend Yield as of January 27: 4.91%
Winton Capital Management’s Stake Value: $3,458,000
Verizon Communications Inc. (NYSE:VZ) is an American multinational telecommunications company. On September 2, 2021, the company increased its quarterly dividend by 2% to $0.64 per share, with a dividend yield of 4.91%. This marked the company’s 15th consecutive dividend growth, making it one of the best dividend stocks in David Harding’s portfolio. Moreover, in the first half of 2021, Verizon Communications Inc. (NYSE:VZ) paid approximately $5.2 billion in cash dividends.
Winton Capital Management held a stake worth over $3.4 million in Verizon Communications Inc. (NYSE:VZ) in Q3, which made up 0.19% of its 13F portfolio. According to Ivan Feinseth, an analyst at Tigress Financial, the growing momentum in wireless and broadband will benefit the company in the future. The analyst, in January, lifted its price target on Verizon Communications Inc. (NYSE:VZ) to $68, while reiterating a Buy rating on the shares.
In Q3 2021, 57 hedge funds tracked by Insider Monkey held stakes in Verizon Communications Inc. (NYSE:VZ), down from 63 in the previous quarter. The consolidated value of these stakes is over $10.3 billion. Among these hedge funds, Berkshire Hathaway held a stake worth $8.5 billion in the Delaware-based company, becoming its largest shareholder in Q3.
Miller/Howard Investments mentioned Verizon Communications Inc. (NYSE:VZ) in its Q1 2021 investor letter. Here is what the firm has to say:
“We sold Verizon (VZ) based on concerns over how much they might spend in ongoing spectrum auctions. Management may legitimately view spending billions of dollars to expand their spectrum holdings as necessary, but we believe the payoff will be slow and will make it challenging to grow the dividend at a good pace.”
1. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 45
Dividend Yield as of January 27: 7.17%
Winton Capital Management’s Stake Value: $10,713,000
Altria Group, Inc. (NYSE:MO) is one of the world’s largest manufacturers of tobacco and related products. Winton Capital Management held shares worth over $10.7 million in the company, increasing its stake by 6% in Q3. Altria Group, Inc. (NYSE:MO) accounted for 0.6% of the hedge fund’s 13F portfolio.
In 2021, Altria Group, Inc. (NYSE:MO) reported a 5% hike in its quarterly dividend at $0.90 per share. The stock’s dividend yield stands at 7.17%. Altria Group, Inc. (NYSE:MO) has increased its dividend 56 times in the past 52 years. In its note to investors, the company announced a targeted payout ratio of 80%, allocating a significant amount of cash flow to shareholders. In January, Morgan Stanley lifted its price target on Altria Group, Inc. (NYSE:MO) to $51, with an Equal Weight rating on the shares.
At the end of Q3 2021, 45 hedge funds tracked by Insider Monkey reported owning stakes in Altria Group, Inc. (NYSE:MO), down from 47 in the preceding quarter. These stakes are valued at over $829.7 million.
Broyhill Asset Management mentioned Altria Group, Inc. (NYSE:MO) in its Q2 2021 investor letter. Here is what the firm has to say:
“Altria (MO) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 20%. We shared our thoughts on these regulations during the quarter, which are available here.
MO Valuation. MO is up ~ 18% YTD (even accounting for the recent sell-off). We expect MO to generate close to $5 in annual FCF per share over the next few years, putting the stock at ~ 10x, which is less than half the market’s multiple today. Over the last decade, shares have traded at an average multiple of 15x and within a range of ~ 10x – 20x (+/-1 standard deviation). The stock yields 7.2% at the current price, close to a 6% premium to treasuries. Historically, shares have traded closer to a 3% premium to the 10Y, which would imply a ~ $75 share price.”
You can also take a look at 10 Best Healthcare Dividend Stocks and 10 Best Finance Stocks To Buy Now
