5 Best Dividend Stocks According to Tom Russo’s Gardner Russo & Gardner

1. Altria Group, Inc. (NYSE:MO)

Number of Hedge Fund Holders: 47
Dividend Yield as of May 30: 6.61%
Gardner Russo & Gardner’s Stake Value: $17,323,000

Altria Group, Inc. (NYSE:MO) is an American manufacturing company, that produces tobacco, cigarettes, and other related products. Gardner Russo & Gardner increased its position in the company by 1% during the first quarter of 2022, owning shares worth $17.3 million. The company constituted 0.16% of Tom Russo’s portfolio.

In May, Altria Group, Inc. (NYSE:MO) declared a quarterly dividend of $0.90 per share, in line with its previous dividend. The company has raised its dividend 56 times in the past 52 years. As of May 30, the stock’s dividend yield stood at 6.61%.

In Q1 2022, Altria Group, Inc. (NYSE:MO) reported stable earnings, posting an EPS of $1.12, which beat the market estimates by $0.03. However, the company’s revenue of $4.82 billion missed the expectations by $60 million. Following its quarterly results, in April, Deutsche Bank lifted its price target on Altria Group, Inc. (NYSE:MO) to $60, while maintaining a Buy rating on the shares.

At the end of March 2022, 47 hedge funds tracked by Insider Monkey reported owning stakes in Altria Group, Inc. (NYSE:MO), up from 39 in the previous quarter. The collective value of these stakes is roughly $2 billion, compared with over $1.05 billion worth of stakes held by hedge funds in Q4 2021.

Broyhill Asset Management also mentioned Altria Group, Inc. (NYSE:MO) in its Q2 2021 investor letter. Here is what the firm had 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 15 Best Undervalued Stocks to Buy Now and 10 Best Mid-Cap Stocks To Buy Now

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