In this article, we will discuss value investor Joel Greenblatt’s top 12 dividend picks. You can skip our detailed analysis of Greenblatt’s investment philosophy and his hedge fund’s performance over the years, and go directly to read Value Investor Joel Greenblatt’s Top 5 Dividend Picks.
Joe Greenblatt is one of Wall Street’s most famous value investors. He founded Gotham Capital in 1985, which delivered an annualized return of 50% from 1985 to 1994. In 2008, Greenblatt created Gotham Asset Management as the successor to his previous fund. He is currently serving as the Managing Principle and Co-Chief Investment Officer of the firm.
Greenblatt is mainly known for his ‘Magic Formula’ investing technique, which he introduced in his book ‘The Little Book that Still Beats the Market’. This technique takes its inspiration from Buffett/Graham’s value approach. According to this strategy, investors should focus on high-quality companies with cheap valuations and strong fundamentals. The strategy further elaborates that through return on capital employed (ROCE) and earnings yield investors can find a great combination of quality and cheap value stocks.
Over the years, Joel Greenblatt’s investment technique has resulted in his hedge fund delivering solid returns to shareholders. Over the past three years, Gotham Large Value Fund (GVALX) has gained 10.6%, compared with a 9.88% return of the S&P 500.
As of the close of Q4 2022, Gotham Asset Management holds a 13F portfolio value of over $3.5 billion, compared with $3.3 billion in the previous quarter. The fund has investments in several sectors, with technology, services, healthcare, and finance dominating the portfolio. The hedge fund has also invested widely in dividend stocks. Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL) are some of the prominent holdings of Greenblatt in Q4. In this article, we will focus on Joel Greenblatt’s top 12 dividend picks.
Joel Greenblatt of Gotham Asset Management
Our Methodology:
For this list, we selected top dividend stocks from Gotham Asset Management’s 13F portfolio, as of Q4 2022. The stocks are ranked in ascending order of their stake value in the portfolio.
Value Investor Joel Greenblatt’s Top 12 Dividend Picks
12. Walmart Inc. (NYSE:WMT)
Gotham Asset Management’s Stake Value: $13.6 million
Dividend Yield as of February 15: 1.54%
Walmart Inc. (NYSE:WMT) is an Arkansas-based multinational retail corporation that operates chains of hypermarkets and grocery stores. Gotham Asset Management has been investing in the company since the fourth quarter of 2011 and currently owns stakes worth over $13.6 million. The company represented 0.38% of value investor Joel Greenblatt’s portfolio. It is one of the most important holdings of the fund alongside Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL).
Walmart Inc. (NYSE:WMT) currently pays a quarterly dividend of $0.56 per share and has a dividend yield of 1.54%, as of February 15. The company has been rewarding shareholders with increased dividends for the past 49 years.
In February, Gordon Haskett upgraded Walmart Inc. (NYSE:WMT) to Accumulate with a $155 price target. The firm mentioned that the company is well-positioned to benefit from its improving margin flow.
As of the end of Q3 2022, 68 hedge funds tracked by Insider Monkey were bullish on Walmart Inc. (NYSE:WMT), compared with 67 in the previous quarter. The collective value of stakes owned by these hedge funds is over $4.08 billion.
Leaven Partners mentioned Walmart Inc. (NYSE:WMT) in its Q3 2022 investor letter. Here is what the firm has to say:
“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Walmart (NYSE:WMT), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6%[2] from 7.2% in early August and slashing full-year profit growth to 4.5%.”
11. Chevron Corporation (NYSE:CVX)
Gotham Asset Management’s Stake Value: $13.7 million
Dividend Yield as of February 15: 3.58%
Chevron Corporation (NYSE:CVX) is an American multinational energy company that specializes in petroleum refineries. The company pays a quarterly dividend of $1.51 per share, having raised it by 6.3% in January. This was the company’s 36th consecutive year of dividend growth. As of February 15, the stock has a dividend yield of 3.58%.
Chevron Corporation (NYSE:CVX) has been a part of Gotham Asset Management’s portfolio since the fourth quarter of 2011. In Q4 2022, the firm owned CVX stakes worth over $13.7 million, which made up 0.38% of value investor Joel Greenblatt’s portfolio.
Truist raised its price target on Chevron Corporation (NYSE:CVX) in January to $179 with a Hold rating on the shares, appreciating the company’s recently announced share repurchase program.
The number of hedge funds tracked by Insider Monkey owning stakes in Chevron Corporation (NYSE:CVX) grew to 66 in Q3 2022, from 59 in the previous quarter. These stakes have a total value of over $27 billion. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q3.
Diamond Hill Capital mentioned Chevron Corporation (NYSE:CVX) in its Q1 2022 investor letter. Here is what the firm had to say:
“Other top contributors in Q1 included multinational energy company Chevron Corp. (NYSE:CVX). The company benefited from increased energy demand as COVID-related economic restrictions eased in tandem with concerns regarding supply interruptions related to Russia’s invasion of Ukraine.”
10. Pfizer Inc. (NYSE:PFE)
Gotham Asset Management’s Stake Value: $13.7 million
Dividend Yield as of February 15: 3.78%
Pfizer Inc. (NYSE:PFE) is a New York-based multinational pharmaceutical industry company that specializes in the production of various drugs. In February, Daiwa upgraded the stock to Outperform with a $51 price target, appreciating the company’s overall performance.
On December 9, Pfizer Inc. (NYSE:PFE) declared a 2.5% hike in its quarterly dividend to $0.41 per share. This marked the company’s 13th consecutive year of dividend growth. The stock’s dividend yield on February 15 came in at 3.78%.
In the fourth quarter of 2022, Gotham Asset Management owned 268,688 PFE shares, with a value of over $13.7 million. The company made up 0.38% of Joel Greenblatt’s portfolio.
The number of hedge funds tracked by Insider Monkey owning stakes in Pfizer Inc. (NYSE:PFE) stood at 77 in Q3 2022, compared with 70 in the previous quarter. The consolidated value of these stakes is over $2.4 billion.
Diamond Hill Capital mentioned Pfizer Inc. (NYSE:PFE) in its Q3 2022 investor letter. Here is what the firm has to say:
“Also among our bottom contributors were health care products manufacturer Abbott Labs, global pharmaceutical company Pfizer Inc. (NYSE:PFE), media and technology giant Alphabet, and insurance company American International Group (AIG). Although Pfizer continues to report strong performance of its core drugs, sales of its COVID vaccine and treatment have likely peaked and sales are expected to decline going forward. We remain optimistic about the company long term as we believe management is taking the company in the right direction, focusing R&D, and making strategic acquisitions with profits generated from COVID vaccine sales.”
9. QUALCOMM Incorporated (NASDAQ:QCOM)
Gotham Asset Management’s Stake Value: $14.8 million
Dividend Yield as of February 15: 2.30%
QUALCOMM Incorporated (NASDAQ:QCOM) is an American multinational semiconductor company, based in California. In Q4 2022, Gotham Asset Management boosted its position in the company by 28%, which took its total stake in the company to over $14.8 million. The company accounted for 0.41% of value investor Joel Greenblatt’s portfolio.
QUALCOMM Incorporated (NASDAQ:QCOM) currently pays a quarterly dividend of $0.75 per share and has a dividend yield of 2.30%, as of February 15. The company has been paying regular dividends to shareholders since 2003.
In February, Citigroup lifted its price target on QUALCOMM Incorporated (NASDAQ:QCOM) to $132 with a Neutral rating on the shares. The firm expects the company to profit through its handset and IOT business.
As of the close of Q3 2022, 80 hedge funds tracked by Insider Monkey owned stakes in QUALCOMM Incorporated (NASDAQ:QCOM), up from 71 a quarter earlier. These stakes are valued at over $2.5 billion collectively.
Madison Investment Management mentioned QUALCOMM Incorporated (NASDAQ:QCOM) in its Q4 2022 investor letter. Here is what the firm has to say:
“QUALCOMM Incorporated (NASDAQ:QCOM) continues to be challenged by headwinds in the smartphone supply chain with an expected decline in units for 2022. Despite solid gains in the Internet of Things and Auto segments, Qualcomm’s dominant business remains the smartphone market. We expect to see stabilization of the smartphone market in 2023, including a recovery in China.”
8. Lockheed Martin Corporation (NYSE:LMT)
Gotham Asset Management’s Stake Value: $15.4 million
Dividend Yield as of February 15: 2.51%
Lockheed Martin Corporation (NYSE:LMT) is a Maryland-based aerospace company that specializes in arms, defense, and information security. Credit Suisse upgraded the stock to Outperform in February with a $510 price target. The firm showed confidence in the company’s growth inflection.
Gotham Asset Management started its position in Lockheed Martin Corporation (NYSE:LMT) in the fourth quarter of 2010 with shares worth $701,000. In Q4 2022, the firm raised its stake in the company by 22% to $15.4 million. The company represented 0.43% of value investor Joel Greenblatt’s portfolio.
Lockheed Martin Corporation (NYSE:LMT) has been raising its dividends consistently for the past 20 years. The company pays a quarterly dividend of $3 per share and has a dividend yield of 2.51%, as of February 15.
At the end of Q3 2022, 53 hedge funds in Insider Monkey’s database owned stakes in Lockheed Martin Corporation (NYSE:LMT), down from 55 in the previous quarter. The collective value of these stakes is nearly $1.7 billion. With over 1.6 million shares, GQG Partners was the company’s leading stakeholder in Q3.
Vltava Fund mentioned Lockheed Martin Corporation (NYSE:LMT) in its Q3 2022 investor letter. Here is what the firm has to say:
“LMT is one of the world’s largest aerospace and defence companies. The war in Ukraine has reminded investors and the wider public just how important these companies are. The aerospace and defence industry in the USA is an established oligopoly. This means that a few large firms play a dominant role. While collectively they comprise an oligopoly, individually they often have monopoly positions in particular narrower segments. Their main counterparty is the US government, a key customer in what is known as a monopsonist position. This is a rather unusual situation, but one that is very advantageous for companies such as LMT. (Click here to see the full text)
7. Exxon Mobil Corporation (NYSE:XOM)
Gotham Asset Management’s Stake Value: $15.5 million
Dividend Yield as of February 15: 3.16%
Exxon Mobil Corporation (NYSE:XOM) is another top dividend stock in value investor Joel Greenblatt’s portfolio. The American energy company currently pays a quarterly dividend of $0.91 per share for a dividend yield of 3.16%, as of February 15. It has grown its payouts for 40 years in a row.
Gotham Asset Management has been investing in Exxon Mobil Corporation (NYSE:XOM) since Q4 2011. In the most recent quarter, the hedge fund owned XOM stakes worth over $15.5 million, which made up 0.43% of its 13F portfolio.
Argus expects Exxon Mobil Corporation (NYSE:XOM) to increase its production in 2023 due to higher oil prices. In view of this, the firm raised its price target on the stock to $133 in February and maintained a Buy rating on the shares.
As of the close of Q3 2022, 75 hedge funds tracked by Insider Monkey owned stakes in Exxon Mobil Corporation (NYSE:XOM), up from 72 in the previous quarter. The collective value of these stakes is $5.5 billion. GQG Partners owned the largest stake in the company, worth nearly $3 billion.
6. Johnson & Johnson (NYSE:JNJ)
Gotham Asset Management’s Stake Value: $16.1 million
Dividend Yield as of February 15: 2.81%
Johnson & Johnson (NYSE:JNJ) is a New Jersey-based pharmaceutical company that also deals in a wide range of consumer products. In December, Citigroup raised its price target on the stock to $205 and maintained a Buy rating on the shares.
In Q4 2022, Gotham Asset Management owned 91,201 shares in Johnson & Johnson (NYSE:JNJ), with a total value of over $16.1 million. The firm reduced its position in the company by 6% during the quarter. The company constituted 0.45% of value investor Joel Greenblatt’s portfolio and is one of his important holdings in addition to Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL).
Johnson & Johnson (NYSE:JNJ) has a dividend yield of 2.81%, as of February 15. The company has six decades of consecutive dividend increases under its belt.
At the end of Q3 2022, 85 hedge funds in Insider Monkey’s database owned stakes in Johnson & Johnson (NYSE:JNJ), up from 83 in the previous quarter. The collective value of these stakes is over $5.4 billion. Among these hedge funds, Fisher Asset Management was the company’s leading stakeholder in Q3.
Here’s what Distillate Capital Partners LLC said about Johnson & Johnson (NYSE:JNJ) in its Q2 2022 investor letter:
“Johnson & Johnson was among the 2 largest trims at around 1% each. Each stock was up 1% in the quarter compared to the 16% price decline for the S&P 500 and the positions were reduced as the valuations became somewhat less appealing, though still attractive enough to warrant inclusion.”
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Disclosure. None. Value Investor Joel Greenblatt’s Top 12 Dividend Picks is originally published on Insider Monkey.
