In this article, we discuss the top 5 dividend stock picks of billionaire Ken Fisher. If you want to read our detailed analysis of these stocks, go directly to Billionaire Ken Fisher’s Top 10 Dividend Stock Picks.
5. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 64
Forward Dividend Yield: 1.43%
Investment advisory Berenberg recently upgraded Eli Lilly and Company (NYSE:LLY) stock to Buy from Hold and raised the price target to $270 from $240, noting that the long-term sales growth of the firm stood at 10% annual till 2030, comparing favorably against peers who averaged around 4% during the period. The firm recently won FDA approval for Verzenio, a drug for patients with breast cancer.
According to 13F filings, Fisher Asset Management owned over 6 million shares in Eli Lilly and Company (NYSE:LLY) at the end of June 2021 worth $1.3 billion, representing 0.86% of the portfolio of the fund.
Out of the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in Eli Lilly and Company (NYSE:LLY) with 1.7 million shares worth more than $391 million.
In its Q1 2020 investor letter, Amana Mutual Funds Trust highlighted a few stocks and Eli Lilly and Company (NYSE:LLY) was one of them. Here is what the fund said:
“Even so, Lilly stood out as one, among a handful, of companies that registered a positive return for the first quarter. In January, Lilly reported excellent fourth quarter results, with revenue growing at a faster clip than over the first three quarters of the year. Lilly is also financially strong with debt equivalent to only two times EBITDA3 and 12% of market capitalization. Johnson & Johnson, while trailing Lilly, shares many of the same characteristics and also outperformed.”
4. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 62
Forward Dividend Yield: 2.23%
Caterpillar Inc. (NYSE:CAT) makes and sells construction and mining equipment. Cowen analyst Matt Elkott recently initiated coverage of the stock with an Outperform rating and a price target of $241, underlining that there was an opportunity for the firm to make $35 billion in revenue over the next decade through autonomy in the sector. The stock has pulled back in recent weeks amid pressure from China, a key machinery import hub for the firm.
According to the latest data, Fisher Asset Management owned more than 6.6 million shares in Caterpillar Inc. (NYSE:CAT) at the end of the second quarter of 2021 worth $1.4 billion, representing 0.9% of the portfolio of the fund.
Out of the hedge funds being tracked by Insider Monkey, Washington-based firm Bill & Melinda Gates Foundation Trust is a leading shareholder in Caterpillar Inc. (NYSE:CAT) with 10 million shares worth more than $2.2 billion.
In its Q2 2021 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Caterpillar Inc. (NYSE:CAT) was one of them. Here is what the fund said:
“Having followed the company closely for north of a decade, Caterpillar is a name we know well. For much of its history, the operating efficiency of the company left much to be desired, but its underlying competitive position was rarely in doubt. A series of actions over the past decade (e.g., LEAN implementation, improved service mix, optimized manufacturing footprint) helped to narrow the gap between Caterpillar’s potential and its realized results, driving material margin expansion and strong share price performance. In our view, the company remains among the highest quality industrials in the market, but its underlying business is cyclical, which can translate to large swings in both performance and investor sentiment over short time periods. Our ability to focus on the long-term, sustainable earnings power of a business (rather than getting distracted by near-term fluctuations) is our most significant edge when investing in cyclical businesses. Due to the inherent volatility in Caterpillar’s end markets and operating performance, we suspect we’ll have a future opportunity to own this high-quality business at a more attractive price once the cycle turns and today’s enthusiasm wears off.”
3. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 54
Forward Dividend Yield: 0.70%
Costco Wholesale Corporation (NASDAQ:COST) is one of the retailers that have benefited from the increase in demand for goods as the economy reopens after the 2020 lows. Earlier this month, the company reported net sales of $19.5 billion for the month of September, an increase of close to 16% year-on-year. Ecommerce sales grew by more than 10% over the period, the company revealed.
Securities filings show that Fisher Asset Management owned over 3.7 million shares in Costco Wholesale Corporation (NASDAQ:COST) at the end of June 2021 worth $1.4 billion, representing 0.93% of the portfolio of the fund.
At the end of the second quarter of 2021, 54 hedge funds in the database of Insider Monkey held stakes worth $4.3 billion in Costco Wholesale Corporation (NASDAQ:COST), down from 56 in the preceding quarter worth $4 billion.
In its Q1 2021 investor letter, Ensemble Capital, an asset management firm, highlighted a few stocks and Costco Wholesale Corporation (NASDAQ:COST) was one of them. Here is what the fund said:
“We saw these dynamics at play in the Fund. Some of the worst-performing stocks this quarter were among our best performers in Q1 2020. Another example was the market’s reaction to Costco Wholesale (1.5% weight in the Fund) during the quarter. From December 31, 2020 to March 8th, Costco shares declined 17% and dropped below their pre-pandemic high. The common rationale offered by sell-side analysts was that Costco would face difficult one-year “comps” (i.e. same-store sales, which compare sales from stores open for at least a year). Because so many consumers rushed to Costco ahead of shelter-in-place and subsequent quarantines, it will be harder for Costco to meaningfully beat those results when compared year-over-year. That may indeed be true, but we struggle to understand how Costco could be “less valuable” than it was a year earlier when it concurrently increased its membership base by over 7%, or 3.9 million members. With membership renewal rates around 90%, the vast majority of the new customers Costco brought in last year will be around for years to come.
Analysts also complained about Costco raising its already industry-leading minimum wage to $16/hour, with an average “effective” pay of $23-$24/hour when you include overtime and bonuses. Costco paying its employees “too much” has been a common gripe of Wall Street analysts for at least two decades. While the extra pay does indeed impact short-term profit margins, it also serves to make Costco more durable, as its flywheel (i.e. a virtuous value cycle) starts with happy employees. A 20-year chart of Costco stock price is evidence that this strategy works and we’re confident that it will continue to work.”
2. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 71
Forward Dividend Yield: 1.57%
Walmart Inc. (NYSE:WMT) was recently named among one of the top ecommerce stocks for the holiday season by Bank of America alongside competitors like Amazon and JD.com. With ecommerce stocks set to register a 15% year-on-year growth this year, the Arkansas-based retailer is slated to be one of the top beneficiaries of this growth. The company recently raised hourly pay by $1 for 560,000 staff members.
Regulatory filings reveal that Fisher Asset Management owned over 12.6 million shares in Walmart Inc. (NYSE:WMT) worth more than $1.7 billion at the end of the second quarter of 2021, representing 1.11% of the portfolio of the fund.
Out of the hedge funds being tracked by Insider Monkey, Washington-based firm Bill & Melinda Gates Foundation Trust is a leading shareholder in Walmart Inc. (NYSE:WMT) with 7.6 million shares worth more than $1 billion.
1. The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 64
Forward Dividend Yield: 1.88%
The Home Depot, Inc. (NYSE:HD) is placed first on our list of top 10 dividend stock picks of billionaire Ken Fisher. The company operates as a home improvement retailer. It recently teamed up with retail giant Walmart to enhance local delivery capabilities. Last month, Wells Fargo analyst Zachary Fadem raised the price target on the stock to $365 from $360 and kept an Overweight rating.
Fisher Asset Management owned more than 7.2 million shares in The Home Depot, Inc. (NYSE:HD) worth $2.3 billion at the end of June 2021, representing 1.46% of the portfolio of the fund.
Out of the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm AQR Capital Management is a leading shareholder in The Home Depot, Inc. (NYSE:HD) with 1.1 million shares worth more than $360 million.
In its Q1 2021 investor letter, Ensemble Capital, an asset management firm, highlighted a few stocks and The Home Depot, Inc. (NYSE:HD) was one of them. Here is what the fund said:
“Notable contributors to the Fund’s returns this quarter (included) Home Depot. Home Depot (8.9% weight in the Fund) continued to benefit from a red-hot housing and home improvement market, delivering record financial performance in 2020. As a high return on invested capital business, any step-up in growth results in considerable shareholder value creation. While 2021 comparable sales may not yield impressive headline results, we believe there are several secular tailwinds supporting continued housing investment, including millennials entering prime household formation/peak earnings years, relatively low interest rates, and government policies.
Home Depot (8.9% weight in the Fund): The big orange sign of Home Depot is a familiar sight for homeowners across the country. Despite the rise of Amazon, Home Depot has generated outstanding results for shareholders during the rise of eCommerce, even as Home Depot’s end market in housing suffered the worst collapse in a century. Over the last fifteen years, a period which began at the peak of the housing bubble, Home Depot’s stock has generated annual returns of 17% a year, outperforming the S&P 500 by approximately 7% a year.
But while homeowners can attest to their continued shopping at Home Depot, they may not be aware that only about half the company is dedicated to serving Do It Yourself homeowners, with the other half acting as a key supplier to small contractors – which the company calls Pros – who depend on Home Depot as a mission critical business partner.
While the company does not report on their contractor business separately from their homeowner business, they have regularly offered comments indicating that contractors make up just 4% of their customer base, but about 45% of revenue. Basic math implies…”[read the entire letter here]
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