Honeywell International Inc. (NYSE:HON)
– Shares Owned by GAMCO Investors (as of December 31): 2.05 Million
– Value of GAMCO’s Holding (as of December 31): $212.05 Million
– Dividend Yield: 2.30%
The fund trimmed its holding in Honeywell International Inc. (NYSE:HON) by a mere 33,905 shares during the October-December period, ending the year with a stake of 2.05 million shares. Earlier this week, the diversified technology and manufacturing company confirmed its intentions to merge with competitor United Technologies Corporation (NYSE:UTX), saying that the two parties have engaged in discussions about a possible business combination in the past several months. However, officials at United Technologies believe that a possible merger of the two biggest players in the aerospace and commercial-building equipment businesses would definitely face significant regulatory obstacles. On the other side of the table, Honeywell officials consider that a potential merger would generate $3.5 billion in annualized cost synergies. In the meantime, Honeywell International’s stock offers a dividend yield of 2.30%, so the $2.38 annual dividend payment is a strong reason for investing in the company. It should also be mentioned that Honeywell shares currently trade at approximately 14 times expected fiscal 2017 earnings, below the multiple of 15.4 for the Industrial Machinery industry. Ken Griffin’s Citadel Advisors owns 4.53 million shares of Honeywell International Inc. (NYSE:HON) as of December 31.
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Wells Fargo & Co (NYSE:WFC)
– Shares Owned by GAMCO Investors (as of December 31): 3.60 Million
– Value of GAMCO’s Holding (as of December 31): $195.88 Million
– Dividend Yield: 3.12%
GAMCO reduced its stake in Wells Fargo & Co (NYSE:WFC) by 63,465 shares during the final quarter of 2015, remaining with 3.60 million shares valued at $195.88 million at the end of the year. The financial services company has seen its shares decline by 12% since the beginning of 2016, which has made the company’s valuation and dividend yield more attractive to investors. Wells Fargo pays out an annualized dividend of $1.50 per share of common stock, which denotes a dividend yield of 3.12%. At the same time, Wells Fargo’s shares are currently trading around 10.0 times forward earnings, below the average forward P/E ratio of 12.1 for the Financials sector. It is also important to note that Wells Fargo’s return on equity has been significantly above the average ROE for the banking industry in the past several years, which means that the company’s management has been successful in putting shareholders’ equity to good use. The company’s ROE equals 13% as of the beginning of 2016, substantially above the ROE of 7.8% for the banking industry. A total of 85 smart money investors from our database were invested in Wells Fargo at the end of 2015, accumulating 11.70% of its outstanding stock. Warren Buffett’s Berkshire Hathaway upped its position in Wells Fargo & Co (NYSE:WFC) by 9.41 million shares during the December quarter to 479.70 million shares.
