In this article we discuss the 10 best cheap dividend stocks to buy according to Mario Gabelli.
Mario Gabelli, nicknamed ‘Super Mario’ for his investment exploits as the chief of New York-based GAMCO Investors, has a three-year annualized average return of 4.4% and manages more than $11 billion in assets, falling into an elite category of the top 1% of hedge fund managers with a consistently positive return history. Gabelli oversees an incredibly diverse investment portfolio with stakes in the services, consumer goods, and financial sectors, among many others. His focus is on value investing, though he owns many high growth stock options.
Some of the most high profile names that GAMCO Investors is bullish on include The Walt Disney Company (NYSE: DIS), Facebook, Inc. (NASDAQ: FB), and Bank of America Corporation (NYSE: BAC). Regulatory filings reveal that GAMCO owned 548,827 shares in The Walt Disney Company (NYSE: DIS) at the end of March, worth over $101 million. Although Gabellil has trimmed his stake in the entertainment company by 4%, it still represents 0.88% of the investment portfolio of GAMCO Investors.
Amid a broader lull in the market around technology stocks, GAMCO has also trimmed their stakes in Facebook, Inc. (NASDAQ: FB) by 12%, latest documents reveal. The hedge fund now owns 44,092 shares in the technology company worth close to $13 million, representing 0.11% of their total holdings. It is also a little surprising that there has been little activity around Bank of America Corporation (NYSE: BAC) stock by GAMCO over the past few months, since the financial services sector comprises over 16% of the total portfolio of the hedge fund.
GAMCO owned more than 1.3 million shares of Bank of America Corporation (NYSE: BAC) worth over $53 million at the end of March. Gabelli has gained importance in recent weeks amid increased interest around value stocks because of inflation worries and price volatility surrounding growth stocks. As a veteran value investor, the top holdings of Gabelli can teach a lot about the market to retail investors who have been increasingly active in the finance world as fintech companies fundamentally alter the traditional dynamics of the marketplace.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context in mind, here is our list of the 10 best cheap dividend stocks to buy according to Mario Gabelli.
Best Cheap Dividend Stocks to Buy According to Mario Gabelli
10. Grupo Televisa, S.A.B. (NYSE: TV)
Number of Hedge Fund Holders: 15
Dividend Yield: 0.68%
Grupo Televisa, S.A.B. (NYSE: TV) is a Mexico City-based media firm. It was founded in 1973 and is placed tenth on our list of 10 best cheap dividend stocks to buy according to Mario Gabelli. Grupo stock has returned more than 124% to investors over the past year. GAMCO Investors owns over 4.7 million shares in the firm that are worth more than $41 million, representing 0.36% of their investment portfolio. GAMCO has increased activity on Grupo stock by 34% since December 2020.
On May 26, Grupo Televisa, S.A.B. (NYSE: TV) declared a dividend of $0.078 per share, payable to shareholders in early June. The company has an impressive dividend history stretching back almost two decades.
At the end of the first quarter of 2021, 15 hedge funds in the database of Insider Monkey held stakes worth $752 million in Grupo Televisa, S.A.B. (NYSE: TV), down from 20 in the preceding quarter worth $692 million.
Just like The Walt Disney Company (NYSE: DIS), Facebook, Inc. (NASDAQ: FB), and Bank of America Corporation (NYSE: BAC), Grupo Televisa, S.A.B. (NYSE: TV) is one of the best stocks to buy according to Mario Gabelli.
9. CNH Industrial N.V. (NYSE: CNHI)
Number of Hedge Fund Holders: 23
Dividend Yield: 0.77%
CNH Industrial N.V. (NYSE: CNHI) is a United Kingdom-based firm that manufactures agricultural tractors and other heavy equipment. It was founded in 2012 and is ranked ninth on our list of 10 best cheap dividend stocks to buy according to Mario Gabelli. CNH stock has offered investors returns exceeding 180% over the past year. The hedge fund run by Gabelli owns over 9.9 million shares in the equipment manufacturing firm that are worth over $154 million, representing 1.35% of their portfolio.
On May 5, CNH Industrial N.V. (NYSE: CNHI) posted earnings per share of $0.32 for the first three months of 2021, beating market predictions by $0.18. The revenue over the period was over $7 billion, up more than 40% year-on-year.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Harris Associates is a leading shareholder in CNH Industrial N.V. (NYSE: CNHI) with 149 million shares worth more than $2.3 billion.
In its Q1 2021 investor letter, Longleaf Partners Fund, an asset management firm, highlighted a few stocks and CNH Industrial N.V. (NYSE: CNHI) was one of them. Here is what the fund said:
“CNH Industrial (CNH) (23%, 1.19%), one of the world’s largest agriculture machinery manufacturers, was another top contributor. CNH reported strong fourth quarter results, beating the consensus on every metric. The Agricultural Equipment (Ag) business, which represents the majority of our value, posted strong top-line growth of 19% YoY thanks to rising commodity prices, growing trade with China and the replacement of aging machinery fleets. Visibility for the first half of 2021 is strong, given solid Ag order growth across most key end markets, and we expect to see operational turnarounds in CNH’s other businesses. The company is also guiding 8-12% industrial sales growth for 2021, which is better than our initial expectation. The most positive surprise for the quarter was the company’s strong cash generation. CNH generated approximately $2.4bn FCF in the fourth quarter alone, driven by working capital release leading to a strong net cash position for the industrial segment. Due to the recent stock price appreciation, the price-to-value gap has narrowed, but we continue to have a positive view given a more favorable market outlook, the company’s strong execution capability and management’s continued commitments to value accretive transactions, including the planned splitting of the business and potentially other strategic asset sales.”
8. Sirius XM Holdings Inc. (NASDAQ: SIRI)
Number of Hedge Fund Holders: 24
Dividend Yield: 0.94%
Sirius XM Holdings Inc. (NASDAQ: SIRI) is a New York-based radio broadcasting firm founded in 2008. It is placed eighth on our list of 10 best cheap dividend stocks to buy according to Mario Gabelli. The company stock has returned over 7.3% to investors in the past year. GAMCO Investors owns over 1.1 million shares in the firm that are worth more than $7.1 million, representing 0.06% of their portfolio. GAMCO has trimmed their holdings in the broadcasting firm by 8% since December 2020.
Sirius XM Holdings Inc. (NASDAQ: SIRI), on April 20, declared a quarterly dividend of $0.0146 per share, in line with previous. The earnings per share for the company in the first quarter of 2021 was $0.07, beating market estimates by $0.01.
Out of the hedge funds being tracked by Insider Monkey, Nebraska-based investment firm Berkshire Hathaway is a leading shareholder in Sirius XM Holdings Inc. (NASDAQ: SIRI) with 43 million shares worth more than $265 million.
Just like The Walt Disney Company (NYSE: DIS), Facebook, Inc. (NASDAQ: FB), and Bank of America Corporation (NYSE: BAC), Sirius XM Holdings Inc. (NASDAQ: SIRI) is one of the best stocks to buy according to Mario Gabelli.
7. Mueller Water Products, Inc. (NYSE: MWA)
Number of Hedge Fund Holders: 20
Dividend Yield: 1.52%
Mueller Water Products, Inc. (NYSE: MWA) is a Atlanta-based infrastructure firm founded in 1857. It is placed seventh on our list of 10 best cheap dividend stocks to buy according to Mario Gabelli. The company stock has returned over 53% to investors over the past twelve months. GAMCO Investors owns over 4.1 million shares in the firm worth over $57 million, representing 0.5% of their investment portfolio. The company primarily markets water-related products like hydrants and gate valves.
Mueller Water Products, Inc. (NYSE: MWA) has an impressive dividend history, offering shareholders healthy and regular payouts. On April 23, the firm declared a quarterly dividend of $0.055 per share, in line with previous.
At the end of the first quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $288 million in Mueller Water Products, Inc. (NYSE: MWA), the same as in the preceding quarter worth $270 million.
6. TEGNA Inc. (NYSE: TGNA)
Number of Hedge Fund Holders: 20
Dividend Yield: 1.96%
TEGNA Inc. (NYSE: TGNA) is a Virginia-based media firm concentrating on the digital medium. It was founded in 2017 and is ranked sixth on our list of 10 best cheap dividend stocks to buy according to Mario Gabelli. The stock has returned more than 65% to investors in the past year. GAMCO Investors owns 549,300 shares in the firm that are worth over $10.3 million, representing 0.09% of their portfolio. GAMCO stake in the Virginian firm has been trimmed by 43% since last year.
On April 16, TEGNA Inc. (NYSE: TGNA) stock was given an Overweight rating by investment bank Wells Fargo with a price target of $23, implying an upside potential of 7.4% following solid preliminary earnings figures posted by the firm for the first quarter of 2021.
At the end of the first quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $334 million in TEGNA Inc. (NYSE: TGNA), down from 34 in the preceding quarter worth $286 million.
Just like The Walt Disney Company (NYSE: DIS), Facebook, Inc. (NASDAQ: FB), and Bank of America Corporation (NYSE: BAC), TEGNA Inc. (NYSE: TGNA) is one of the best stocks to buy according to Mario Gabelli.
5. NortonLifeLock Inc. (NASDAQ: NLOK)
Number of Hedge Fund Holders: 32
Dividend Yield: 2.31%
NortonLifeLock Inc. (NASDAQ: NLOK) is an Arizona-based software company founded in 1982. It is ranked fifth on our list of 10 best cheap dividend stocks to buy according to Mario Gabelli. Norton stock has returned more than 41% to investors over the course of the past twelve months. GAMCO Investors owns 232,700 shares in the firm that are worth close to $5 million, representing 0.04% of their portfolio. GAMCO activity on Norton stock has increased by 178% over the past months.
In February, NortonLifeLock Inc. (NASDAQ: NLOK) declared a quarterly dividend of $0.125 per share, in line with previous. In earnings results for the first quarter, the company posted earnings per share of $0.40, beating market predictions by $0.10.
At the end of the first quarter of 2021, 32 hedge funds in the database of Insider Monkey held stakes worth $1.02 billion in NortonLifeLock Inc. (NASDAQ: NLOK), up from 29 in the preceding quarter worth $1 billion.
4. Park Aerospace Corp. (NYSE: PKE)
Number of Hedge Fund Holders: 8
Dividend Yield: 2.59%
Park Aerospace Corp. (NYSE: PKE) is a Melville-based company that makes and sells advanced composite materials. It was founded in 1954 and is placed fourth on our list of 10 best cheap dividend stocks to buy according to Mario Gabelli. PKE stock has offered investors returns exceeding 27% in the past year. GAMCO Investors has trimmed their stakes in the firm by 13% since December 2020 and now own 693,000 shares in the company worth over $9.1 million, representing 0.08% of their portfolio.
Park Aerospace Corp. (NYSE: PKE) pays a healthy and regular dividend to shareholders despite being moderately priced. In March, the firm declared a quarterly dividend of $0.10 per share, in line with previous.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Park Aerospace Corp. (NYSE: PKE) with 1.4 million shares worth more than $18 million.
In its Q1 2020 investor letter, Huffman Prairie Holdings, an asset management firm, highlighted a few stocks and Park Aerospace Corp. (NYSE: PKE) was one of them. Here is what the fund said:
“We purchased shares in Park Aerospace Corp. (NYSE:PKE) in the second half of 2019. PKE is a growing aerospace business that manufactures advanced composite materials used in jet engines, commercial aircraft, military aircraft, business jets, space vehicles, and other specialized aerospace applications. PKE is a high-quality company run by a talented and well-aligned management team. Customers sign long-term, sole-source contracts with PKE to buy its proprietary composite materials. There was a clear line of sight to healthy growth in the business as contracted customers ramped production.
Fast forward a few months, this thesis clearly didn’t age well. The problem being that about 55% of PKE’s revenue comes from customers building new commercial airplanes. Suffice it to say that airlines will not be purchasing many new planes anytime soon. While PKE’s primary program – the Airbus A320 – may be somewhat insulated, PKE will undoubtedly experience substantial revenue declines in this line of business.
I have had the great fortune to work for some of the smartest small-cap investors operating today. Learning from them helped shape Huffman Prairie and in particular one key aspect of our risk management discipline. We will not invest in companies that combine considerable operational and financial risk. It is typically the ones that combine excessive amounts of both that cannot make it to the other side unscathed.
The aerospace and airline industries are prone to cycles of low (i.e., after 9/11) and high (i.e., the 2010s) demand. As a manufacturer, PKE invests ahead of demand and carries fixed capacity regardless of demand. If demand falls, PKE is left paying for underutilized facilities, machinery, and tooling. The performance and cash flows from operations will suffer and perhaps turn sharply negative.
We were well aware of the operational risk factors above late last year. PKE was deemed to have operational risk but that did not make it unsuitable for investment. PKE counterbalanced its operational risk by carrying almost zero financial risk. At year-end 2019, PKE had no debt and $144 million of cash on its balance sheet – an extraordinary position for a company worth $334 million as a whole at the time. With a Fort Knox balance sheet, PKE mitigates the risk of permanent capital loss and ensures that it will make it to the other side. Instead of facing an existential risk similar to many of its peers, shareholders in PKE can instead look through the nearterm haze and value expected cash flows in the years ahead.
Shares of PKE were down -17.5% in 1Q202 . Reporting such performance is typically not the fodder of investor letters but is noteworthy in this case compared to an average loss of -58.6% for other small cap aerospace OEM suppliers3 . Risk management is an often-overlooked component of running a concentrated fund. We would much rather talk about the companies with 50% or 100% upside! But we remain mindful that the substantial losers matter too and are what often derails the powerful math of compounded returns.”
3. Hewlett Packard Enterprise Company (NYSE: HPE)
Number of Hedge Fund Holders: 27
Dividend Yield: 2.94%
Hewlett Packard Enterprise Company (NYSE: HPE) is a Houston-based firm with interests in a wide range of technological sectors. It was founded in 1939 and is placed third on our list of 10 best cheap dividend stocks to buy according to Mario Gabelli. HPE stock has offered investors returns exceeding 64% in the past twelve months. The hedge fund managed by Gabelli owns more than 1.4 million shares in Hewlett that are worth over $23 million, representing 0.2% of their portfolio. GAMCO stake in the company has been trimmed by 10% in the past months.
Hewlett Packard Enterprise Company (NYSE: HPE) is another dependable option for income investors looking for tips from Gabelli. On May 9, the firm declared a quarterly dividend of $0.12 per share, in line with previous.
At the end of the first quarter of 2021, 27 hedge funds in the database of Insider Monkey held stakes worth $1 billion in Hewlett Packard Enterprise Company (NYSE: HPE), down from 30 in the previous quarter worth $923 million.
2. Tredegar Corporation (NYSE: TG)
Number of Hedge Fund Holders: 9
Dividend Yield: 3.15%
Tredegar Corporation (NYSE: TG) is a Richmond-based company that makes plastic films and aluminum extrusions. It was founded in 1955 and is ranked second on our list of 10 best cheap dividend stocks to buy according to Mario Gabelli. Tredegar stock has returned more than 4% to investors in the past month. The hedge fund run by Gabelli owns more than 2.7 million shares in the company worth over $41 million, representing 0.36% of their portfolio. GAMCO activity on Tredegar stock has fallen by 5% since December 2020.
Tredegar Corporation (NYSE: TG) declared a quarterly dividend of $0.12 per share on May 6, in line with previous. The revenue of the company over the first quarter of 2021 was over $178 million, down 3.6% year-on-year.
Out of the hedge funds being tracked by Insider Monkey, Boston-based firm Arrowstreet Capital is a leading shareholder in Tredegar Corporation (NYSE: TG) with 304,805 shares worth more than $4.5 million.
1. The Gabelli Multimedia Trust Inc. (NYSE: GGT)
Number of Hedge Fund Holders: 2
Dividend Yield: 8.56%
The Gabelli Multimedia Trust Inc. (NYSE: GGT) is a New York-based equity mutual fund founded in 1994. It is ranked first on our list of 10 best cheap dividend stocks to buy according to Mario Gabelli. The fund concentrates on investments related to stocks, convertible securities, and preferred stock options in industries such as entertainment and telecommunications. GAMCO Investors owns 901,964 shares in the fund that are worth over $8.6 million, representing 0.07% of their investment portfolio.
The Gabelli Multimedia Trust Inc. (NYSE: GGT) is one of the best dividend options in the GAMCO portfolio, with a high dividend yield and an annual dividend of $0.88 per share. On March 16, the company declared a quarterly dividend of $0.22 per share, in line with previous.
Out of the hedge funds being tracked by Insider Monkey, Texas-based investment firm Brasada Capital Management is a leading shareholder in The Gabelli Multimedia Trust Inc. (NYSE: GGT) with 12,114 shares worth more than $116,000.
You can also take a peek at 10 Blue Chip Dividend Stocks Hedge Funds Are Buying and 14 Best European Dividend Stocks To Buy.
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Disclosure: None. 10 Best Cheap Dividend Stocks to Buy According to Mario Gabelli is originally published on Insider Monkey.
