In this article, we discuss the 10 best dividend stocks to buy according to Kahn Brothers.
Kahn Brothers Group, an investment management firm, was founded by Irving Kahn, Thomas Graham Kahn, and Alan Kahn in 1978. Irving Kahn, who passed away in 2015, started his investment career after the stock market crash of 1929.
Kahn Brothers provides investment management and brokerage services to its clients, especially those who have been associated with the fund for a long period. Over the years, Kahn Brothers evolved its investment strategy from traditional value investing to shifting focus on the margin of safety for long-term investments. Through this shift, the hedge fund aimed to generate superior returns for shareholders, while limiting the risks attached to it.
As of Q4 2021, Kahn Brothers’ 13F portfolio value increased to $741 million, from $710 million in the previous quarter. The hedge fund invests heavily in the healthcare, finance, and basic materials sector. The fund’s portfolio was concentrated in just 43 stocks, with the top five companies representing 45% of the portfolio. Some of the fund’s major holdings include Berkshire Hathaway Inc. (NYSE:BRK-A), PepsiCo, Inc. (NASDAQ:PEP), and Pfizer Inc. (NYSE:PFE).
Our Methodology:
In this article, we discuss the best dividend stocks in Kahn Brothers’ portfolio. For this list, we considered Kahn Brothers’ 13F portfolio as of Q4.
Best Dividend Stocks to Buy According to Kahn Brothers
10. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 60
Kahn Brothers’ Stake Value: $330,000
Dividend Yield as of February 22: 2.56%
On February 10, PepsiCo, Inc. (NASDAQ:PEP) announced a 7% increase in its annualized dividend at $4.60 per share. The stock’s dividend yield stands at 2.56%, as of February 22. PepsiCo, Inc. (NASDAQ:PEP) maintains a 49-year streak of consecutive dividend growth, increasing it at a CAGR of 9% from 2013 to 2021.
In Q4 2021, Kahn Brothers held a $330,000 worth of stake in PepsiCo, Inc. (NASDAQ:PEP), which represented 0.04% of its portfolio. The hedge fund did not change its position in the company during the quarter. As the consumer demand remained strong during 2021, in February, both Morgan Stanley and JPMorgan raised their price targets on PepsiCo, Inc. (NASDAQ:PEP) to $188 and $185, respectively.
At the end of Q4 2021, 60 hedge funds tracked by Insider Monkey reported owning stakes in PepsiCo, Inc. (NASDAQ:PEP), down from 61 in the previous quarter. The total value of these stakes is over $4.6 billion. Fundsmith LLP was the company’s largest shareholder in Q4, holding shares worth $1.8 billion.
Like PepsiCo, Inc. (NASDAQ:PEP), Berkshire Hathaway Inc. (NYSE:BRK-A) and Pfizer Inc. (NYSE:PFE) are also some of the hedge fund’s major holdings in Q4.
9. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 66
Kahn Brothers’ Stake Value: $57,461,000
Dividend Yield as of February 22: 3.21%
Bristol-Myers Squibb Company (NYSE:BMY), an American pharmaceutical company, saw a decline in the number of hedge funds having stakes in it. As of Q4 2021, 66 hedge funds tracked by Insider Monkey held stakes in the company, down significantly from 74 in the previous quarter. These stakes are valued at over $3.3 billion.
In Q4 2021, Kahn Brothers increased its position in Bristol-Myers Squibb Company (NYSE:BMY) by 6% and held shares worth over $57.4 million. The company represented 7.89% of the hedge fund’s portfolio. This January, JPMorgan lifted its price target on Bristol-Myers Squibb Company (NYSE:BMY) to $80, while maintaining an Overweight rating on the shares.
Bristol-Myers Squibb Company (NYSE:BMY) has been increasing its dividend for the past 15 years. Currently, the company pays a quarterly dividend of $0.54 per share, increasing it by 10% in December 2021. The stock’s current dividend yield is recorded to be at 3.21%.
8. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 83
Kahn Brothers’ Stake Value: $60,108,000
Dividend Yield as of February 22: 3.34%
In Q4 2021, Kahn Brothers held a $60.1 million worth of stakes in Pfizer Inc. (NYSE:PFE), after increasing its position in the company by 4%. It accounted for 8.25% of the hedge fund’s 13F portfolio and is the fund’s fourth-largest holding in Q4.
In December 2021, Pfizer Inc. (NYSE:PFE) raised its quarterly dividend by 2.6% at $0.40 per share. The stock’s dividend yield stands at 3.34%, as of February 22. Pfizer Inc. (NYSE:PFE) holds an 11-year track record of consistent dividend growth. This January, JPMorgan lifted its price target on Pfizer Inc. (NYSE:PFE) to $57, with a Neutral rating on the shares, expecting growth in the company’s Covid-related sales.
The number of hedge funds tracked by Insider Monkey having stakes in Pfizer Inc. (NYSE:PFE) grew significantly to 83 in Q4 2021, from 74 in the previous quarter. The total value of these stakes is over $5 billion, showing considerable growth from a $2.6 billion worth of stakes held by hedge funds in the preceding quarter.
In its Q3 2021 investor letter, Saturna Capital mentioned Pfizer Inc. (NYSE:PFE) among other stocks. Here is what the firm has to say:
“The Fund’s strongest performer during the quarter was pharmaceutical manufacturer Pfizer. The company submitted trial data to the FDA for use of its COVID-19 vaccine for younger children, and it is widely expected that the FDA will approve it. Health authorities also began recommending booster shots of the Pfizer vaccine for select populations, further increasing demand for vaccinations.”
7. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 80
Kahn Brothers’ Stake Value: $54,354,000
Dividend Yield as of February 22: 3.63%
Merck & Co., Inc. (NYSE:MRK), an American multinational pharmaceutical company, currently pays a quarterly dividend of $0.69 per share, increasing it by 6% in 2021. Merck & Co., Inc. (NYSE:MRK) has been increasing its dividend for the past 11 years, falling into the category of Dividend Achievers. Moreover, the company’s 5-year dividend CAGR stands at 8.2%.
By the end of Q4 2021, 80 hedge funds tracked by Insider Monkey were bullish on Merck & Co., Inc. (NYSE:MRK), up from 77 in the previous quarter. These stakes hold a consolidated value of roughly $3.8 billion. Among these hedge funds, Fisher Asset Management held the largest stake in the company in Q4, valued at $874.4 million.
Kahn Brothers held a stake worth over $54.3 million in Merck & Co., Inc. (NYSE:MRK) in Q4, which represented 7.46% of the hedge fund’s portfolio. This January, JPMorgan presented a positive outlook on Merck & Co., Inc. (NYSE:MRK) and set a $95 price target on the stock, while maintaining an Overweight rating on the shares.
Miller Howard Investments mentioned Merck & Co., Inc. (NYSE:MRK) in its Q3 2021 investor letter. Here is what the firm has to say:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We hold three pharmaceutical companies, (which includes) Merck (MRK). All three have strong cash flows and balance sheets, making their high dividends reasonably safe. The investment controversy surrounding these pharma companies is whether they can develop or acquire new products to replace their current blockbuster drugs. The low valuations on these stocks reflects what we believe to be undue pessimism by investors on the prospects for new drugs.”
6. Provident Financial Services, Inc. (NYSE:PFS)
Number of Hedge Fund Holders: 8
Kahn Brothers’ Stake Value: $665,000
Dividend Yield as of February 22: 4.05%
Provident Financial Services, Inc. (NYSE:PFS) is an American bank holding company that provides related services to its consumers in the U.S. Kahn Brothers started investing in the company during the third quarter of 2020, with shares worth over $335 million. In Q4 2021, the hedge fund held a stake worth $665,000 in the company, which accounted for 0.09% of its 13F portfolio. Along with this, Berkshire Hathaway Inc. (NYSE:BRK-A), PepsiCo, Inc. (NASDAQ:PEP), and Pfizer Inc. (NYSE:PFE) are some major holdings of Kahn Brothers in Q4.
On October 29, Provident Financial Services, Inc. (NYSE:PFS) announced a 4.3% growth in its quarterly dividend at $0.24 per share. In the past year, Provident Financial Services, Inc. (NYSE:PFS) delivered a 17.4% return to shareholders, as of the close of February 22.
At the end of Q4 2021, 8 hedge funds tracked by Insider Monkey reported owning stakes in Provident Financial Services, Inc. (NYSE:PFS), up from 5 in the previous quarter. The consolidated value of these stakes is over $8 million. Renaissance Technologies was the company’s largest shareholder in Q4, holding shares worth over $5 million.
5. BP p.l.c. (NYSE:BP)
Number of Hedge Fund Holders: 26
Kahn Brothers’ Stake Value: $59,674,000
Dividend Yield as of February 22: 4.17%
BP p.l.c. (NYSE:BP), a British oil and gas company, was the fifth-largest holding of Kahn Brothers in Q4. The hedge fund held over 2.2 million shares in the company, valued at roughly $60 million. The company represented 8.19% of the fund’s 13F portfolio.
BP p.l.c. (NYSE:BP) currently pays a quarterly dividend of $0.3276 per share, growing it by 4% in 2021. The stock’s current dividend yield is 4.17%, as recorded on February 22. Appreciating the company’s strong Q4 results, in February, JPMorgan raised its price target on BP p.l.c. (NYSE:BP) to 600 GBP, while maintaining an Overweight rating on the shares.
At the end of Q4 2021, 26 hedge funds tracked by Insider Monkey reported owning stakes in BP p.l.c. (NYSE:BP), down from 29 in the previous quarter. The total value of these stakes is over $1.2 billion.
4. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 53
Kahn Brothers’ Stake Value: $392,000
Dividend Yield as of February 22: 4.23%
Chevron Corporation (NYSE:CVX) is an American multinational energy company having operations in over 180 countries. In Q4 2021, the number of hedge funds tracked by Insider Monkey having stakes in the company grew slightly to 53, from 51 in Q3. The total value of these stakes is over $6.5 billion. Warren Buffett’s Berkshire Hathaway held stakes worth over $4.4 billion in Chevron Corporation (NYSE:CVX), becoming its largest shareholder in Q4.
Chevron Corporation (NYSE:CVX) is one of the best stocks for income investors as the company maintains a 35-year track record of consistent dividend growth. On January 26, the company hiked its quarterly dividend by 6% at $1.42 per share. The stock’s dividend yield stands at 4.23%, as of February 22. In February, Barclays lifted its price target on Chevron Corporation (NYSE:CVX) to $148, while keeping an ‘Overweight’ rating on the shares.
Kahn Brothers started building its position in Chevron Corporation (NYSE:CVX) sometime during the fourth quarter of 2010. In Q4 2021, the hedge fund held a stake worth $392,000 in the company, which accounted for 0.05% of its 13F portfolio.
Goehring & Rozencwajg Associates mentioned Chevron Corporation (NYSE:CVX) in its Q3 2021 investor letter. Here is what the firm had to say:
“After successfully replacing 25% of Exxon’s board of directors despite owning just 0.02% of the outstanding equity, Engine No. 1, the climate-focused activist hedge fund, met with Chevron’s management late last summer. In discussions that were later described as “cordial,” Chevron executives shared their plan to reduce carbon emissions. Subsequently, Chevron announced new plans to further reduce carbon output, along with their intention to appoint a new director with “environmental expertise.” Although it remains unclear exactly what Engine No. 1 is planning, rumors suggest the fund has contacted other investors, strongly suggesting they intend to launch a second campaign in the not-too-distant future.
What should Chevron expect?
It was recently reported by The Wall Street Journal that Exxon was considering abandoning two massive natural gas projects: the 75 trillion cubic foot (tcf ) Rovuma LNG project (capital cost $30 bn) and the 5 tcf Ca Voi Xanh offshore-Vietnam gas project (capital cost $10 bn). Exxon board members (most likely including the three supported by Engine No. 1) have publically expressed concerns about both projects. According to internal reports, these projects are among the highest CO2 producers in Exxon’s pipeline; it is no surprise these projects have been called into question. However, we find the plight of both fields to be perplexing since production would almost certainly be used to displace coal in electricity generation, cutting CO2 emissions by nearly 50%. This fact seems to be lost on the new Exxon board members.”
3. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 71
Kahn Brothers’ Stake Value: $952,000
Dividend Yield as of February 22: 4.54%
An American natural gas company, Exxon Mobil Corporation (NYSE:XOM) recently announced its Q4 results and posted an 82.6% growth in its quarterly revenue at $85 billion. Given this, Argus remained positive on the company’s performance and upgraded the stock to Buy, with a $92 price target.
In Q4 2021, Exxon Mobil Corporation (NYSE:XOM) experienced a positive hedge fund sentiment, as 71 hedge funds tracked by Insider Monkey were bullish on the company, up from 64 in the previous quarter. The total value of the stakes held by 71 hedge funds stood at roughly $5.4 billion.
Exxon Mobil Corporation (NYSE:XOM) offers a quarterly dividend of $0.88 per share, which yields 4.54%, recorded on February 22. The company has been paying dividends to shareholders for the past 100 years and also maintains a 39-year streak of consistent dividend growth. In Q4 2021, Kahn Brothers held a roughly $1 million worth of stake in Exxon Mobil Corporation (NYSE:XOM), which accounted for 0.13% of the fund’s portfolio.
First Eagle Investment Management mentioned Exxon Mobil Corporation (NYSE:XOM) in its Q2 2021 investor letter. Here is what the investment management firm has to say:
“Leading contributors in the First Eagle Global Fund this quarter included Exxon Mobil Corporation. The continued recovery in oil prices as economies reopen helped fuel another strong performance across the energy complex, including shares of Exxon Mobil. Exxon Mobil recently lost a proxy fight with an activist investor that took three of the company’s 12 board seats. While the press was focused on the investor’s concerns over Exxon Mobil’s long term energy transformation strategy, other factors fundamental to shareholder returns—like capital discipline and balance sheet management—were also at play.”
2. GlaxoSmithKline plc (NYSE:GSK)
Number of Hedge Fund Holders: 36
Kahn Brothers’ Stake Value: $63,440,000
Dividend Yield as of February 22: 5.09%
On February 9, GlaxoSmithKline plc (NYSE:GSK), a British pharmaceutical company, announced a quarterly dividend of GBP 0.23 per share, presenting a 21.1% growth from its previous dividend. The stock’s dividend yield stands at 5.05%, which is one of the highest in the pharma industry.
GlaxoSmithKline plc (NYSE:GSK) was the third-largest holding of Kahn Brothers in the fourth quarter of 2021. The hedge fund held a stake worth over $63 million in the company, which accounted for 8.71% of its 13F portfolio. On February 10, Deutsche Bank lifted its price target on GlaxoSmithKline plc (NYSE:GSK) to GBP 1,500, with a ‘Hold’ rating on the shares.
According to Insider Monkey’s Q4 data, 36 hedge funds held stakes in GlaxoSmithKline plc (NYSE:GSK), up from 31 in the previous quarter. These stakes hold a value of over $2.1 billion. Besides Kahn Brothers, Arrowstreet Capital was also one of the company’s major shareholders in Q4, owning shares worth over $320 million.
Nelson Capital Management mentioned GlaxoSmithKline plc (NYSE:GSK) in its Q2 2021 investor letter. Here is what the firm has to say:
“We sold our position in GlaxoSmithKline (tkr: GSK) due to disappointing failures with its Covid-19 vaccine and highly anticipated lung cancer drug, along with concerns regarding management, specifically the scientific leadership. GlaxoSmithKline is also spinning off its steady consumer segment, leaving the remaining company with its more volatile segments.”
1. New York Community Bancorp, Inc. (NYSE:NYCB)
Number of Hedge Fund Holders: 30
Kahn Brothers’ Stake Value: $59,555,000
Dividend Yield as of February 22: 5.88%
New York Community Bancorp, Inc. (NYSE:NYCB), an American commercial bank, currently offers a quarterly dividend of $0.17 per share. The stock’s dividend yield stands at 5.88%, as of February 22.
By the end of Q4 2021, 30 hedge funds tracked by Insider Monkey held positions in New York Community Bancorp, Inc. (NYSE:NYCB), with stakes valued at roughly $456 million. In comparison, 27 hedge funds held shares in the company in the previous quarter, worth $482.5 million.
Kahn Brothers started investing in New York Community Bancorp, Inc. (NYSE:NYCB) during the fourth quarter of 2010. In Q4 2021, the hedge fund increased its position in the company by 2% and held shares worth roughly $60 million. The company made up 8.18% of the hedge fund’s 13F portfolio.
You can also take a look at 10 Best Healthcare Dividend Stocks and Top 15 Dividend Stocks With Upside Potential
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Disclosure. None. 10 Best Dividend Stocks to Buy According to Kahn Brothers is originally published on Insider Monkey.
