In this article, we discuss the top 10 dividend stocks to buy according to Peter S. Stamos’ Stamos Capital.
Peter S. Stamos founded Stamos Capital Partners, a California-based investment management firm. It invests globally using an endowment-style method and focuses on public and private equity, fixed income, absolute return, and real assets. Established in 2002, the private management firm aims to preserve the capital by putting investors and their interests first. Currently, Peter S. Stamos is serving as the partner, CEO, and CIO of the firm.
Peter S. Stamos received his Economics and Political Science degree from Stanford University, where he was a Truman Scholar. Along with this, he also earned his JD from Harvard Law School and his Ph.D. from Oxford University. Stamos started his career at Stamos Associates and further brushed up his investment skills while working as a management consultant at McKinsey & Company. Since 2018, Stamos is serving as one of the trustees of Rhodes Trust, managing the governance and finances of the organization.
As of Q1 2022, Stamos Capital holds a 13F portfolio value of roughly $300 million, up from $215.5 million in the previous quarter. The hedge fund invested in several sectors, with technology and finance taking up the major portions of the portfolio. The firm increased its position in some of the major tech stocks, such as Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT) during the quarter. In addition to this, dividend stocks also represented a substantial section of the fund.
Photo by Austin Distel on Unsplash
Our Methodology:
In this article, we discuss the top dividend stocks in Peter S. Stamos’ portfolio. For this list, we considered data from Stamos Capital’s 13F portfolio as of Q1 2022. The stocks below are ranked according to their positions in the portfolio.
10. Johnson & Johnson (NYSE:JNJ)
Stamos Capital Partners’ Stake Value: $7,089,000
Dividend Yield as of June 14: 2.65%
Number of Hedge Fund Holders: 83
Johnson & Johnson is one of the world’s largest healthcare organizations. Recently, the company made a breakthrough in cancer treatment, as 29.2% of patients involved in its pivotal RAGNAR study with solid tumors responded to the treatment.
On April 19, Johnson & Johnson announced a 6.6% hike in its quarterly dividend to $1.13 per share. The company has been raising its dividend for the past 60 years, offering one of the longest dividend growth streaks in the market. As of June 14, the stock’s dividend yield stood at 2.65%.
Stamos Capital started investing in Johnson & Johnson during the fourth quarter of 2018, purchasing shares worth over $4 million. At the end of Q1 2022, the hedge fund owned 40,000 shares in the medical device company, valued at over $7 million. The fund reduced its stake in JNJ by 2% during the quarter. The company represented 2.36% of Peter S. Stamos’ portfolio.
In addition to JNJ, Apple Inc., Alphabet Inc., and Microsoft Corporation are also some of the major holdings of the hedge fund in Q1.
In May, SVB Leerink initiated its coverage of Johnson & Johnson with an Outperform rating and a $200 price target. The firm acknowledged the consistent earnings growth of the company and the medical device segment that helped it to generate exponential revenues during the pandemic years.
As per Insider Monkey’s Q1 2022 database, 83 hedge funds owned stakes in Johnson & Johnson, the same as in the previous quarter. These stakes hold a consolidated value of over $7.4 billion. Arrowstreet Capital was the company’s largest stakeholder in Q1, with stakes worth over $1.17 billion.
Distillate Capital, an investment firm, discussed Johnson & Johnson in its Q2 2021 investor letter. Here is what the fund said:
“The largest additions in the rebalance, Johnson & Johnson was around 50 and 40 basis points incrementally. J&J underperformed in the quarter while its normalized free cash flows held steady and so its position size was topped off to match the stable cash flows.”
9. Merck & Co., Inc. (NYSE:MRK)
Stamos Capital Partners’ Stake Value: $7,573,000
Dividend Yield as of June 14: 3.26%
Number of Hedge Fund Holders: 84
Merck & Co., Inc. manufactures pharmaceuticals for diabetes, asthma, birth control, and other rare diseases. Moreover, the company also deals with the animal health division. In Q1 2022, the company saw a 50% year-over-year growth in its revenue at $15.9 billion, mainly driven by the sales of its Covid-19 pill, which represented $3.2 billion of its gross sales. Moreover, Merck & Co., Inc. also reported a 4% growth in its Animal Health segment sales to $1.5 billion.
At the end of March 2022, 84 hedge funds tracked by Insider Monkey were bullish on Merck & Co., Inc., compared with 80 a quarter earlier. The collective value of these stakes is over $5.86 billion, up from $3.78 billion worth of stakes held by hedge funds in Q4 2021.
In May, Merck & Co., Inc. announced a quarterly dividend of $0.69 per share, which was the company’s 11th consecutive year of dividend growth. The stock’s dividend yield was recorded at 3.26% on June 14. Appreciating the company’s Q1 earnings beat, Barclays lifted its price target on Merck & Co., Inc. in April to $97 and kept an Overweight rating on the shares.
At the end of Q1 2022, Stamos Capital owned 92,300 MRK shares, valued at $7.5 million. The company represented 2.52% of Peter S. Stamos’ portfolio.
ClearBridge Investments mentioned Merck & Co., Inc. in its Q4 2021 investor letter. Here is what the firm has to say:
“Other pharma companies are providing solutions as well. Merck’s antiviral pill molnupiravir is less effective than Pfizer’s, but it will be a helpful alternative for patients who cannot take Pfizer’s due to drug-drug interactions. Merck is also helping to manufacture Johnson & Johnson’s COVID-19 vaccine, which has less stringent storage requirements than the mRNA vaccines do.”
8. Pfizer Inc. (NYSE:PFE)
Stamos Capital Partners’ Stake Value: $8,185,000
Dividend Yield as of June 14: 3.34%
Number of Hedge Fund Holders: 79
Pfizer Inc. (NYSE:PFE) is the world’s leading biotech company that is involved in the discovery, development, and manufacturing of healthcare products around the globe. At the end of Q1 2022, the hedge fund owned stakes worth over $8 million in the New York-based company, purchasing additional shares worth over $2.2 million during the quarter. The company accounted for 2.73% of Peter S. Stamos’ portfolio.
In Q1 2022, Pfizer Inc. reported strong revenues, driven by its Covid-related sales. The company posted vaccine revenue of $13.2 billion while its antiviral treatment revenue stood at $1.5 billion. Overall, it showed 77% year-over-year growth in its quarterly revenue at $25.7 billion. As the company innovatively used its Covid-related cash flows in its Research and Development segment, SVB Leerink initiated its coverage of Pfizer Inc. in May with a Market Perform rating and a $55 price target.
On April 28, Pfizer Inc. declared a quarterly dividend of $0.40 per share, consistent with the previous dividend. The company has paid uninterrupted dividends to shareholders for the past 334 quarters while maintaining a 12-year track record of dividend growth. As of June 14, the stock’s dividend yield came to be recorded at 3.34%.
The number of hedge funds tracked by Insider Monkey owning stakes in Pfizer Inc. stood at 79 in Q1 2022, declining from 83 in the previous quarter. The consolidated value of these stakes is over $4.1 billion. Ken Griffin, D. E. Shaw, and Cliff Asness are some of the company’s major stakeholders in the first quarter.
ClearBridge Investments mentioned Pfizer Inc. in its Q4 2021 investor letter. Here is what the firm has to say:
“While the level of general turnover abated as we progressed through 2021, it remained high in one area: post-COVID-19 recovery plays. The concept behind this investment thesis was, and still is, straightforward: with the advent of effective vaccines, the path from pandemic to endemic is just a matter of time. As this transition occurs, the estimated excess savings of over $2 trillion built up on U.S. consumer balance sheets will unlock dramatic pent-up demand for experiences, especially global travel. This investment case seemed especially compelling when the Pfizer vaccine positively surprised markets in November 2020. As a result, we made post-COVID-19 stocks (which were trading well below our estimate of recovery value) a sizable theme within the portfolio. We understood this to be a more aggressive tilt in positioning because it required a major improvement in demand to catalyze fundamentals and drive price toward higher business values. While we accepted that recovery would not be smooth and that it would take time to deploy vaccines both domestically and globally, we decided that recovery was the logical path of least resistance and we were being well compensated for these risks.
What we did not account for, however, was vaccine hesitancy and the risk of further infection waves. As a result, the first variant wave, Delta, was a negative surprise to both the market and our team. When the risk surfaced, we immediately updated our probability-driven models and debated how we should react. The resulting conclusion was that the recovery would be delayed and that we should reduce our exposure quickly, subsequently targeting the most aggressive recovery stocks such as cruise lines. We again acted swiftly and decisively to the positive surprise that Pfizer had delivered a high-efficacy antiviral COVID-19 pill. This pill should greatly reduce COVID-19 severity risks globally, increasing the probability of a global travel recovery in 2022. While this is still true, the emergence of the highly mutated Omicron variant set off another infection wave which spurred us to again act quickly and further reduce our risk exposure. This back-and-forth may sound exhausting, but it highlights our compulsion to act if we determine a surprise has a large enough impact on the probabilities that power our valuation-driven investment cases.
7. Exxon Mobil Corporation (NYSE:XOM)
Stamos Capital Partners’ Stake Value: $8,664,000
Dividend Yield as of June 14: 3.60%
Number of Hedge Fund Holders: 83
Exxon Mobil Corporation (NYSE:XOM) is a Texas-based multinational oil and gas corporation having investments in natural gas, coal, chemicals, and nuclear fuels. In the first quarter of 2022, the company experienced a spike in hedge fund interest, as 83 elite funds tracked by Insider Monkey owned stakes in it, up from 71 in the previous quarter. The collective value of the stakes held by hedge funds stood at over $8.5 billion.
Exxon Mobil Corporation was one of the major holdings of Stamos Capital in Q1 2022, representing 2.89% of its 13F portfolio. The hedge fund held stakes worth over $8.6 million in the company, after increasing its position by 7%.
Exxon Mobil Corporation currently offers a quarterly dividend of $0.88 per share, having raised it by 1% in October 2021. The Dividend Aristocrat has raised its payouts consecutively for the past 39 years. As of the close of June 14, the stock’s dividend yield stood at 3.60%.
In its June investors’ note, Evercore ISI presented a positive outlook on Exxon Mobil Corporation and upgraded the stock to Outperform, with a $120 price target, up from $88. The firm mentioned that the company is on the right path to doubling its earnings due to cost reductions and strong revenue.
Saturna Capital mentioned Exxon Mobil Corporation in its Q4 2021 investor letter. Here is what the firm has to say:
“Few companies maintain their position at the top for more than a decade or two. One that did was Exxon, which appeared decennially from 1980 through 2010. In 2019 it was ranked 10th, but as of writing has dropped to 39th place.”
6. Bank of America Corporation (NYSE:BAC)
Stamos Capital Partners’ Stake Value: $9,996,000
Dividend Yield as of June 14: 2.61%
Number of Hedge Fund Holders: 99
Bank of America Corporation (NYSE:BAC) is one of the largest banking and financial services companies in the US. The bank’s latest Consumer Checkpoint report mentioned that consumer spending has grown by 9% in May from a year-ago period. Moreover, the report also showed that credit card spending gained 16% year-over-year, while debit card spending surged 4%.
At the end of March 2022, 99 hedge funds tracked by Insider Monkey presented a bullish stance on Bank of America Corporation, up from 84 in the previous quarter. These stakes hold a consolidated value of over $45.4 billion. Among these hedge funds, Berkshire Hathaway owned the largest position in the North Carolina-based company, with stakes valued at over $41.6 billion.
During the first quarter of 2022, Stamos Capital increased its position in Bank of America Corporation by 35%, purchasing additional 62,300 BAC shares. This takes the firm’s total stake in the company to roughly $10 million, which constituted 3.33% of its 13F portfolio.
On April 27, Bank of America Corporation announced a quarterly dividend of $0.21 per share, in line with its previous dividend. The company has been raising its dividends consistently for the past 8 years, which makes it one of the top dividend stocks in Peter S. Stamos’ portfolio.
In its May investors’ note, Oppenheimer mentioned the banking industry is well-positioned to handle any recession because of loan growth and rising interest rates. In view of this, the firm set a $50 price target on Bank of America Corporation, with an Outperform rating on the shares.
Just like Apple Inc., Alphabet Inc., and Microsoft Corporation, Bank of America Corporation is also reporting negative returns, having lost 31.8% of its value in 2022 so far.
Miller Value Partners mentioned Bank of America Corporation in its Q1 2022 investor letter. Here is what the firm has to say:
“There are many times when volatility and beta give false signals. Banks outperformed in the post-tech bubble bear market of the early 2000s. At the market peak prior to the financial crisis (when risk was the highest in those names!), Bank of America (NYSE:BAC) had a 0.9x beta (based on the trailing 5 years) suggesting its “risk” was below the market’s. Wrong! It massively underperformed in the financial crisis. Realized beta over the 5 years from the pre-crisis’ 2006 peak measured 2.3x.
A much better indicator of actual risk, both before and after the financial crisis, was the quality of the balance sheet and risk-taking appetite. Beta is backwards looking and non-stationary. Relying on it underestimated risk going into the financial crisis and overestimated coming out of it (its beta has continued to fall over the past decade).
We care greatly about risk. We spend a significant amount of time thinking about the risks to our investments. We measure risk as permanent impairment of capital, which means the prices and values don’t bounce back. Business fundamentals determine risk.”
5. JPMorgan Chase & Co. (NYSE:JPM)
Stamos Capital Partners’ Stake Value: $10,473,000
Dividend Yield as of June 14: 3.46%
Number of Hedge Fund Holders: 110
JPMorgan Chase & Co. is a global financial services firm with over $2.6 trillion in assets, recorded in May. The firm has evolved its operations over time, deploying blockchain for collateral settlements to expand tech usage in the trading of traditional financial assets.
In April, Societe Generale upgraded JPMorgan Chase & Co. to Buy while lifting its price target on the stock to $150. The firm appreciated the company’s guidance on net interest income, credit quality, and its trading revenues.
Stamos Capital started building its position in JPMorgan Chase & Co. during the fourth quarter of 2018, buying shares worth $5 million, at an average share price of $106.5. During the first quarter of 2022, the hedge fund increased its position in the company by 35%, owning a $10.4 million worth of stake. The New York-based company made up 3.49% of Peter S. Stamos’ portfolio.
On May 16, JPMorgan Chase & Co. declared a quarterly dividend of $1.00 per share, with a dividend yield of 3.46%, as of the close of June 14. The company maintains a 12-year streak of consistent dividend growth.
JPMorgan Chase & Co. was the 14th most famous company among elite funds at the end of March 2022, as 110 hedge funds tracked by Insider Monkey reported owning stakes in the company, up from 107 in the previous quarter. Ken Fisher’s Fisher Asset Management was the company’s leading shareholder in Q1, owning over 7.7 million shares, worth $1.05 billion.
ClearBridge Investments mentioned JPMorgan Chase & Co. in its Q4 2021 investor letter. Here is what the firm has to say:
“Our energy and financials holdings kept pace in the 2021 rally. In financials, JPMorgan benefited from strong economic growth, a rise in Treasury yields, and a benign credit environment.”
4. Intel Corporation (NASDAQ:INTC)
Stamos Capital Partners’ Stake Value: $10,591,000
Dividend Yield as of June 14: 3.87%
Number of Hedge Fund Holders: 76
Intel Corporation (NASDAQ:INTC) manufactures semiconductor chips and microprocessors and also provides PC solutions to its consumers. Due to the rising inflation, the chip manufacturers are expected to see a decline in consumer spending, putting INTC in a fragile position as the stock hit its 52-week-low on June 10.
In the first quarter of 2022, Intel Corporation reported solid results, posting an EPS of $0.87, which beat estimates by $0.08. The company generated revenue of $18.4 billion, which also exceeded market consensus by $80 million. In June, Citigroup noted that Intel Corporation’s operations deteriorated in Q1 due to the reduced inventory level and kept a $45 price target on the stock, with a Neutral rating on the shares.
Intel Corporation is a Dividend Challenger, raising its dividend consecutively for the past 7 years. Currently, it offers a quarterly payout of $0.365 per share, raising it by 5% in January. As of June 14’s close, the stock’s dividend yield stood at 3.87%.
As per Insider Monkey’s Q1 2022 database, 76 hedge funds were bullish on Intel Corporation, compared with 72 a quarter earlier. The consolidated value of stakes held by hedge funds stood at over $3.1 billion.
Stamos Capital started reinvesting in Intel Corporation during the third quarter of 2021, after dumping off its entire stake in the company a quarter earlier. During Q1 2022, the hedge fund piled up on additional INTC shares worth roughly $5 million, taking its total stake to nearly $10.6 million, which accounted for 3.53% of Peter S. Stamos’ portfolio.
3. Chevron Corporation (NYSE:CVX)
Stamos Capital Partners’ Stake Value: $10,714,000
Dividend Yield as of June 14: 3.36%
Number of Hedge Fund Holders: 53
Chevron Corporation (NYSE:CVX) is an American energy company that specializes in the exploration of oil and natural gas and aims to use clean energy in its operations. On June 13, the company completed its acquisition of Renewable Energy Group in a deal worth over $3.15 billion. With this acquisition, CVX becomes one of the leading US renewable fuel companies.
Chevron Corporation has been paying consistent dividends to shareholders for the past 35 years, with its 5-year dividend CAGR standing at 5.07%. The company currently gives a quarterly dividend of $1.42 per share, with a dividend yield of 3.36%, as of the close of June 14. Credit Suisse mentioned in its investors’ note that Chevron Corporation has no refining capacity in Europe and is not influenced by European Union’s ban on Russian oil imports. Given this, the firm lifted its price target on the stock to $202, with an Outperform rating on the shares.
At the end of Q1 2022, Stamos Capital owned 65,800 shares in Chevron Corporation, valued at over $10.7 million. The hedge fund increased its stake in the company by 11% during the quarter. The company constituted 3.57% of Peter S.Stamos’ portfolio.
According to Insider Monkey’s Q1 2022 database, 53 hedge funds were bullish on Chevron Corporation, the same as in the previous quarter. The consolidated value of the stakes held by hedge funds stood at roughly $28 billion. With stakes valued at $26 billion, Warren Buffett’s Berkshire Hathaway held the largest position in the California-based company in Q1.
ClearBridge Investments mentioned Chevron Corporation in its Q1 2022 investor letter. Here is what the firm has to say:
“The energy sector, which led a strong market in 2021, generated even more dramatic relative performance in the quarter, advancing 39% and leading the benchmark Russell 1000 Value Index. Years of restrained investment in the energy sector, combined with a strong post-pandemic recovery, contributed to the higher commodity prices. The upward pressure escalated with the Russian invasion of Ukraine. Our energy holding Chevron (NYSE:CVX) benefited from higher commodity prices and was among the top contributors to first-quarter performance.”
2. Verizon Communications Inc. (NYSE:VZ)
Stamos Capital Partners’ Stake Value: $13,744,000
Dividend Yield as of June 14: 5.22%
Number of Hedge Fund Holders: 69
Verizon Communications Inc. (NYSE:VZ) is a New York-based telecommunications company that offers data and video services on its networks and platforms. The company’s Q1 results came in line with Street estimates, with its EPS and revenue standing at $1.35 and $33.6 billion, respectively. Moreover, the company reported a 9.5% year-over-year growth in its total wireless service revenue at $18.3 billion.
On May 31, Verizon Communications Inc. announced a quarterly dividend of $0.35 per share, in line with its previous dividend. The company maintains a 14-year track record of consistent dividend growth. As of June 14, the stock’s dividend yield came to be recorded at 5.22%.
At the end of Q1 2022, Stamos Capital owned stakes worth over $13.7 million in Verizon Communications Inc., purchasing additional 96,000 VZ shares during the quarter. The company accounted for 4.58% of Peter S. Stamos’ portfolio. In May, Wolfe Research set a $50 price target on Verizon Communications Inc., with a Peer Perform rating on the shares, appreciating the company’s media, cable, and telecom sectors.
At the end of March 2022, 69 hedge funds tracked by Insider Monkey owned a $4.12 billion worth of stake in Verizon Communications Inc.. In comparison, 63 hedge funds held positions in the company in the previous quarter, with stakes valued at over $10.8 billion.
Weitz Investment Management mentioned Verizon Communications Inc. in its Q4 2021 investor letter. Here is what the firm had to say:
“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”
1. AT&T Inc. (NYSE:T)
Stamos Capital Partners’ Stake Value: $21,139,000
Dividend Yield as of June 14: 5.74%
Number of Hedge Fund Holders: 74
AT&T Inc. is the largest provider of mobile telephone services in the US and also offers media and communications services to its customers. On June 8, Morgan Stanley noted that the company’s strong balance sheet, free cash flow, and capital return could bring the stock a 20% upside in 2022. The firm lifted its price target on AT&T Inc. to $27.
In March 2022, AT&T Inc. announced a quarterly dividend of $0.28 per share, with an annual dividend of $1.11 per share, in line with the company’s previously declared dividend.
At the end of Q1 2022, AT&T Inc. was the largest holding of Stamos Capital as the hedge fund held 894,600 shares in the company, valued at over $21.1 million. The hedge fund has increased its position in the company by 58% during the quarter. AT&T Inc. accounted for 7.05% of Peter S. Stamos’ portfolio.
With stakes worth over $4 billion, 74 hedge funds tracked by Insider Monkey held positions in AT&T Inc. at the end of March 2022. In the previous quarter, 70 hedge funds held stakes in the Texas-based company, valued at roughly $5 billion. Arrowstreet Capital was the company’s largest shareholder in Q1 2022, with stakes worth over $678.5 million.
Weitz Investment Management mentioned AT&T Inc. in its Q4 2021 investor letter. Here is what the firm has to say:
“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”
You can also take a look at 10 Stocks to Buy According to James Mitarotonda’s Barington Capital and 10 Best Affordable Dividend Stocks to Buy
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This article is originally published at Insider Monkey.
