In this article, we discuss 10 dividend stocks to buy according to John Allison’s Unio Capital. You can skip our detailed analysis of the hedge fund’s investment philosophy and Allison’s investment career, and go directly to read John Allison’s Unio Capital Portfolio: 5 Dividend Stocks.
John A. Allison founded Unio Capital, a New York-based hedge fund that focuses mainly on growing and protecting shareholders’ capital. Allison has been managing funds for institutional and high-net-worth clients for over 35 years while offering advisory services to individuals. He honed his investment skills while working at WP Stewart Asset Management, where he contributed to globalizing the firm and growing its assets from $5 billion to $15 billion. He also launched the firm on NYSE in 2000. In addition to this, he worked as a portfolio manager at Morgan Stanley Asset Management before founding his own hedge fund. John Allison was also one of the potential candidates for the post of Donald Trump’s bank chief in 2017.
Unio Capital has been following the same investment strategy since its inception in 2012. It protects shareholders’ capital by minimizing downside risks and understanding the international and regional macro forces that influence the market. Moreover, the hedge fund invests in solid cash-flow-producing companies globally and carries out a careful research of any company it’s investing in.
At the end of Q1 2022, Unio Capital’s 13F portfolio is valued at over $18.9 billion, down from $20.4 billion a quarter earlier. Healthcare, services, and technology sectors made up the major portion of the portfolio. The hedge fund reduced its stakes in some of the major tech companies, such as Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG) due to a recent sell-off in global technology stocks.
Photo by Clay Banks on Unsplash
Our Methodology:
In this article, we weigh up the dividend stocks to buy according to John Allison’s Unio Capital. The stocks mentioned below are taken from Unio Capital’s first quarter 2022 13F portfolio.
John Allison’s Unio Capital Portfolio: 10 Dividend Stocks
10. Booz Allen Hamilton Holding Corporation (NYSE:BAH)
Dividend Yield as of July 3: 1.85%
Unio Capital’s Stake Value: $318,000
Booz Allen Hamilton Holding Corporation (NYSE:BAH) is a Virginia-based information technology consulting company with expertise in the fields of analytics, digital, and cyber. In June, the company received its first-ever NASA Cybersecurity and Privacy Enterprise Solutions and Services contract with a $622.5 million potential value.
Booz Allen Hamilton Holding Corporation (NYSE:BAH) maintains a 10-year track record of dividend growth. The company’s quarterly payout currently stands at $0.43 per share, with a yield of 1.85%, as of July 3. In Q1 2022, the company paid over $209 million in dividends to shareholders, up from $181 million paid during the same period last year.
Booz Allen Hamilton Holding Corporation (NYSE:BAH) was the latest holding of Unio Capital. The hedge fund opened its position in the company with 27,214 shares, valued at $318,000. The company accounted for 1.68% of John Allison’s portfolio. In June, Cowen called Booz Allen Hamilton Holding Corporation (NYSE:BAH) an IT leader and well-positioned to achieve the sector’s fastest organic growth in 2023. In view of this, the firm set a $103 price target on the stock, with an Outperform rating on the shares.
As per Insider Monkey’s Q1 2022 database, 29 hedge funds owned stakes in Booz Allen Hamilton Holding Corporation (NYSE:BAH), up from 25 a quarter earlier. The collective value of these stakes is nearly $320 million. Steve Cohen’s Point72 Asset Management was the company’s leading shareholder in Q1.
Just like BAH, analysts are also positive about Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG), despite their underperformance in 2022.
9. Thermo Fisher Scientific Inc. (NYSE:TMO)
Dividend Yield as of July 3: 0.22%
Unio Capital’s Stake Value: $384,000
Thermo Fisher Scientific Inc. (NYSE:TMO) is an American corporation that manufactures products used in laboratories and clinics. The company’s products are used in the medical, industrial, and research sectors widely. In Q1 2022, the company reported solid earnings, posting an EPS of $7.25 and revenue of $11.82 billion, which beat estimates by $1.04 and $1.16 billion, respectively. Moreover, its Covid testing revenue came in at $1.68 billion.
On May 19, Thermo Fisher Scientific Inc. (NYSE:TMO) declared a quarterly dividend of $0.30 per share, in line with its previous dividend. In February, the company raised its quarterly dividend by 15% for the fifth consecutive year. The stock’s dividend yield was recorded at 0.22% on July 3. Citigroup added Thermo Fisher Scientific Inc. (NYSE:TMO) to its Focus List in June, categorizing it as a Buy-rated stock.
Unio Capital started investing in Thermo Fisher Scientific Inc. (NYSE:TMO) during the third quarter of 2018, purchasing shares worth $227,000. During Q1 2022, the hedge fund did not change its position in the company and owned 1,290 TMO shares, valued at $384,000. The company represented 2.03% of John Allison’s portfolio.
As per Insider Monkey’s data for Q1 2022, Thermo Fisher Scientific Inc. (NYSE:TMO) remained one of the popular stocks among elite funds, with 101 hedge fund positions, up from 95 in the previous quarter. The stakes held by these hedge funds hold a collective value of nearly $8 billion.
ClearBridge Investments mentioned Thermo Fisher Scientific Inc. (NYSE:TMO) in its Q1 2022 investor letter. Here is what the firm has to say:
“Improving health remains a key impact theme for the portfolio, and over the past year or so we have increased our exposure to the health care sector, through the addition of Thermo Fisher Scientific, a leading health care tools company, a leading provider of fertility benefit management services to self-insured employers that offers a rare win-win-win for employers, employees, health systems, and doctors, with clear savings and quality improvements.”
8. Gilead Sciences, Inc. (NASDAQ:GILD)
Dividend Yield as of July 3: 4.68%
Unio Capital’s Stake Value: $610,000
Gilead Sciences, Inc. (NASDAQ:GILD) is an American biotech company that specializes in developing and researching antiviral drugs used in serious ailments. The company’s final data from the Phase 3 study revealed that its antibody-drug conjugate reduced the risk of breast cancer progression and improved survival by as much as 59%, versus chemotherapy.
Gilead Sciences, Inc. (NASDAQ:GILD) initiated its dividend program in 2015 and has increased its dividend every year since then. In the past five years, its dividend CAGR stood at 9.07%. Currently, the company pays a quarterly dividend of $0.73 per share, with a yield of 4.68%, as of July 3. Appreciating the company’s HIV franchise, SVB Leerink initiated its coverage on Gilead Sciences, Inc. (NASDAQ:GILD) in May with a Market Perform rating and a $68 price target.
At the end of Q1 2022, Unio Capital owned 135,823 shares in Gilead Sciences, Inc. (NASDAQ:GILD), valued at $610,000. The company made up 3.23% of John Allison’s portfolio.
At the end of March 2022, 68 hedge funds owned stakes in Gilead Sciences, Inc. (NASDAQ:GILD), up from 54 in the previous quarter, as tracked by Insider Monkey. The collective value of these stakes is over $4.1 billion, compared with $2.3 billion worth of stakes owned by hedge funds in Q4 2021. Arrowstreet Capital was the company’s largest shareholder in Q1, owning over 18 million shares, worth $1.07 billion.
ClearBridge Investments mentioned Gilead Sciences, Inc. (NASDAQ:GILD) in its Q4 2021 investor letter. Here is what the firm has to say:
“Other pharma companies are providing solutions as well. Biopharmaceutical company Gilead Sciences’ remdesivir, sold under the brand name Veklury, is a broad-spectrum antiviral medication administered by intravenous infusion; it can shorten the time to recovery in hospitalized patients and reduce the risk of hospitalization and death in non-hospitalized patients.”
7. Blackstone Inc. (NYSE:BX)
Dividend Yield as of July 3: 5.80%
Unio Capital’s Stake Value: $655,000
Blackstone Inc. (NYSE:BX) is an American alternative investment management company that provides services in mergers and acquisitions, private equity funds, as well as hedge fund management. On May 26, the stock gained 5% as the management announced the purchase of 9,326 company shares, valued at over $1 million. However, the stock is down 26.6% year-to-date, as of the close of July 3.
Unio Capital first invested in Blackstone Inc. (NYSE:BX) during the third quarter of 2019, purchasing shares worth nearly $10 million. At the end of Q1 2022, the hedge fund owned 111,895 shares in the company, valued at $655,000. The company represented 3.46% of John Allison’s portfolio.
In April, BMO Capital appreciated the first-quarter investment performance of Blackstone Inc. (NYSE:BX) and highlighted the company’s credit businesses. The firm raised its price target on the stock to $142, with a Market Perform rating on the shares. Blackstone Inc. (NYSE:BX) currently pays a quarterly dividend of $1.32 per share. The stock’s dividend yield came in at 5.80, as of July 3.
D E Shaw was the largest shareholder of Blackstone Inc. (NYSE:BX) in Q1, owning nearly 3 million shares, valued at over $371 million. Overall, 61 hedge funds tracked by Insider Monkey owned stakes in the company in Q1, down from 62 a quarter earlier. The consolidated value of these stakes is over $2.84 billion.
Aristotle Capital Management mentioned Blackstone Inc. (NYSE:BX) in its Q1 2022 investor letter. Here is what the firm has to say:
“Founded by its current CEO Stephen Schwarzman and Pete Peterson in 1985, Blackstone is one of the largest alternative asset managers in the world, with more than $880 billion of assets under management (AUM). The firm creates and manages investment vehicles that span asset classes globally and serve both institutional clients as well as high-net-worth individuals. Its core business segments include Real Estate (34% of fee-earning AUM), Credit and Insurance (31%), Private Equity (24%), and Hedge Fund Solutions (11%).
Blackstone has leveraged its broad product portfolio and enviable investment performance to not only raise substantial amounts of capital but also maintain its reputation as a one-stop shop for investors looking to gain exposure to alternative assets. In contrast to traditional asset managers that rely on investor inaction to keep redemption rates low, the products offered by alternative asset managers typically have lockup periods that prevent redemptions for a substantial amount of time (often 10+ years).
High-Quality Business
Some of the quality characteristics we have identified for Blackstone include:
-Reputable management team that has produced an admirable track record of investment performance and demonstrated its ability to raise capital (the firm is now 9x larger since its 2007 IPO);
-Stable client base and sticky asset base with 73% of its capital locked up for over 10 years; and
-Significant scale and strong brand that provides a myriad of advantages, including for distribution and new product launches.
Attractive Valuation
Based on our estimates of normalized earnings, we believe shares of Blackstone are offered at a discount relative to our estimate of intrinsic value. (See the full text here)
6. Analog Devices, Inc. (NASDAQ:ADI)
Dividend Yield as of July 3: 2.13%
Unio Capital’s Stake Value: $780,000
Analog Devices, Inc. (NASDAQ:ADI) manufactures semiconductors and also specializes in data conversion, signal processing, and power management technology. In Q1 2022, the company’s revenue of $2.97 billion saw a 78.8% year-over-year growth, and its free cash flow of $3.20 billion represented 33% of its revenue, on a trailing twelve-month basis.
Analog Devices, Inc. (NASDAQ:ADI) has raised its dividend 19 times in the past 18 years. The company’s quarterly dividend is $0.76 per share, with a dividend yield of 2.13%, as recorded on July 3. Due to the ongoing geopolitical tensions, BofA sees pressure on chip demand in the second half of 2022 and 2023. Given this, the firm lowered its price target on Analog Devices, Inc. (NASDAQ:ADI) to $190 but kept a Buy rating on the shares.
During Q1 2022, Unio Capital sold off its $804 million worth of stake in Analog Devices, Inc. (NASDAQ:ADI), leaving behind 42,412 ADI shares, valued at $780,000. The company accounted for 4.12% of John Allison’s portfolio. In addition to this, the hedge fund also reduced its positions in Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG).
As per Insider Monkey’s Q1 database, 67 hedge funds owned stakes in Analog Devices, Inc. (NASDAQ:ADI), worth over $4.8 billion. In comparison, 72 hedge funds held positions in the company in Q4 2021, with stakes valued at over $4.7 billion.
Madison Funds mentioned Analog Devices, Inc. (NASDAQ:ADI) in its Q3 2021 investor letter. Here is what the firm has to say:
“At its 2017 investor day, Analog Device’s VP of Automotive, Mark Gill, described how the company’s content on well-equipped electric vehicles was $600 per car compared to $250 per car for the traditional 2017 internal combustion engine car. Since then, Analog has highlighted the success of its EV battery management systems (BMS) product nearly every quarter. The BMS product is hardware and software that manages the power into and out of the battery systems. It’s the brains of the operation. Analog says it’s on its fifth generation BMS product, that it has the no. 1 market share in high voltage products, and that it is on 5 of the top 10 selling EVs. While we think that the BMS product is just 1 to 1.5% of Analog Devices, Inc. (NASDAQ:ADI)’s product mix, we think that it could add nearly a point of revenue growth per year to the company’s top-line given the expected ramp in EV production. This is a material amount of growth atop an already nicely growing company revenue line.”
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Disclosure. None. John Allison’s Unio Capital Portfolio: 10 Dividend Stocks is originally published on Insider Monkey.
