In this article we discuss the 5 best dividend stocks to buy according to Terry Smith. If you want to read our detailed analysis of Smith’s history and hedge fund performance, go directly to the 10 Best Dividend Stocks to Buy Now According to Terry Smith.
5. Colgate-Palmolive Company (NYSE: CL)
Smith’s Stake Value: $9,462,000
Percentage of Terry Smith’s 13F Portfolio: 0.03%
Dividend Yield: 2.21%
Number of Hedge Fund Holders: 48
Colgate-Palmolive Company (NYSE: CL) produces and trades consumer products globally. It was founded in 1806 and is ranked fifth on the list of 10 best dividend stocks to buy according to Terry Smith. Colgate currently has a $68.91 billion market capitalization and was able to deliver an 11.55% return in the past 12 months.
On June 23, Peter Grom, an analyst at UBS, initiated coverage on Colgate-Palmolive, rating the stock as “Buy,” with a price target of $95.00. Colgate has also paid consistent dividends over the last several years. On June 10, the company declared a quarterly dividend of $0.45 per share, in line with the previous. On April 30, Colgate-Palmolive Company (NYSE: CL) posted earnings for the first quarter of 2021. Its earnings per share was $0.80, beating market predictions by $0.01.
Fundsmith LLP owns 120,029 shares in the company worth $9.46 million. Hedge fund sentiment increased for Parker in the third quarter. Insider Monkey’s data shows that 48 elite hedge funds held stakes in the company in the first quarter of 2021, up from 46 funds a quarter earlier.
First Eagle Investment Management, in their first quarter 2021investor letter, mentioned Colgate-Palmolive Company (NYSE: CL). Here is what the fund said:
“The leading detractors in the quarter (included) Colgate-Palmolive Company. After a strong 2020 fueled in part by lockdown-driven demand, consumer staples stocks generally cooled during the first quarter as investors shifted attention to the more economically sensitive areas of the market likely to benefit from re-openings and improved discretionary spending. The effects of this rotation could be seen in the share price underperformance of names like Colgate-Palmolive.”
4. The Procter & Gamble Company (NYSE: PG)
Smith’s Stake Value: $11,452,000
Percentage of Terry Smith’s 13F Portfolio: 0.03%
Dividend Yield: 2.58%
Number of Hedge Fund Holders: 70
The Procter & Gamble Company (NYSE: PG) supplies branded consumer packaged goods to consumers. The company was founded in 1837 and stands fourth on the list of 10 best dividend stocks to buy according to Terry Smith. The Procter & Gamble shares have gained 13.17% over the last 12 months.
On June 23, the stock was upgraded at UBS with a “Neutral” rating and a price target of $138. On April 20, Procter & Gamble posted revenue for the third quarter of 2021. The revenue was $18.11 billion, up 5.2% YoY, beating the estimates by $150 million. On April 13, Procter & Gamble (NYSE: PG) announced a quarterly dividend of $0.8698 per share, which was 10% increase from its prior dividend of $0.7907.
Fundsmith LLP holds 84,563 shares in the company worth over $11 million. Smith’s hedge fund increased its stake in the company by 122% in the first quarter. Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Trian Partners is the biggest stakeholder of the company with 8.88 million shares, worth $1.20 billion.
3. Johnson & Johnson (NYSE: JNJ)
Smith’s Stake Value: $1,091,423,000
Percentage of Terry Smith’s 13F Portfolio: 3.47%
Dividend Yield: 2.58%
Number of Hedge Fund Holders: 81
Johnson & Johnson (NYSE: JNJ) experiments, develops, produces, and sells health care products globally. It was founded in 1886 is placed third on the list of 10 best dividend stocks to buy according to Terry Smith. Johnson & Johnson stock has returned 16.63% to investors over the course of the past 12 months.
On June 26, Johnson & Johnson (NYSE: JNJ) reached a 230 million-dollar settlement with New York state to stop selling opioid medications across the country. On April 20, the company declared a quarterly dividend of $1.06 per share, in line with the previous. The forward yield is 2.58%. Johnson & Johnson also posted earnings for the first quarter of 2021. It reported earnings per share of $2.59, beating market predictions by $0.24. The revenue for the first three months of 2021 was $22.32 billion, beating the estimates by $280 million.
Terry Smith’s hedge fund owns 6.64 million shares of the company, worth $1.09 billion. Out of the hedge funds being tracked by Insider Monkey, Arrowstreet Capital is a leading shareholder in Johnson & Johnson (NYSE: JNJ), with over 9 million shares worth $1.48 billion.
2. PepsiCo, Inc. (NASDAQ: PEP)
Smith’s Stake Value: $1,419,177,000
Percentage of Terry Smith’s 13F Portfolio: 4.51%
Dividend Yield: 2.94%
Number of Hedge Fund Holders: 61
PepsiCo, Inc. (NASDAQ: PEP) functions as a food and beverage company. The company was incorporated in 1898 is ranked second on the list of 10 best dividend stocks to buy according to Terry Smith. PepsiCo currently has a $202.28 billion market capitalization. It delivered a 12.18% return in the past 12 months.
PepsiCo is also a decent dividend-paying stock and has been paying dividend since 1973. On May 4, the company declared a quarterly dividend of $1.075 per share, which was a 5.1% increase from its prior dividend of $1.0225. On April 15, the company declared its earnings per share for the first quarter of 2021. It declared earnings of $1.21 per share, beating the market predictions by $0.09.
Fundsmith LLP owns 10.03 million shares of PepsiCo, worth $1.42 billion, making it the biggest stakeholder of the company. Smith’s hedge fund increased its stake in the company by 4% in the first quarter. The company is also getting attention of the smart money, as 61 hedge funds tracked by Insider Monkey reported owning stakes in the company in the first quarter of 2021, up from 56 funds a quarter earlier.
1. Philip Morris International Inc. (NYSE: PM)
Smith’s Stake Value: $1,720,542,000
Percentage of Terry Smith’s 13F Portfolio: 5.47%
Dividend Yield: 4.85%
Number of Hedge Fund Holders: 48
Philip Morris International Inc. (NYSE: PM), through its subsidiaries, produces and trades cigarettes. It was founded in 1987 and is placed first on the list of 10 best dividend stocks to buy according to Terry Smith. Shares of the company rallied 39.94% in the last 12 months, resulting in a $154.36 billion market capitalization.
On June 11, the board of Philip Morris International sanctioned a new share repurchase program of up to $7 billion, with a target of spending $5 billion to $7 billion over three years. The new buyback program is anticipated to begin after the company’s second quarter earnings call. The company also declared a $1.20 per share dividend for the first quarter of 2021, payable on July 12, 2021. On April 9, JPMorgan initiated coverage on Philip Morris, rating the stock as “Overweight,” with a price target of $105.
Fundsmith LLP is a leading shareholder in Philip Morris International Inc. (NYSE: PM), with 19.39 million shares worth $1.72 billion, representing 5.47% of its portfolio.
Fundsmith LLP, in its fourth quarter of 2020 investor letter, mentioned Philip Morris. Here is what the fund has to say about Philip Morris in its letter:
“We are impressed with Philip Morris’s development of Reduced Risk Products or RRPs, most notably its heat not burn system iQOS. It seems we are not the only ones to view it this way as it was recently included in the Dow Jones Sustainability North America Index for the first time. For the moment the shares are weighed down by COVID related disruption to some of its markets and simple prejudice which seems to prevent some commentators from weighing the benefits the RRPs bring against the obvious fact that it is a tobacco company.”
You can also take a peek at 10 Extreme Dividend Stocks with Huge Upside and 10 Blue Chip Dividend Stocks Hedge Funds Are Buying.
