Bruce Kovner founded Caxton Associates in 1983. The global macro hedge fund aims to deliver consistent absolute returns for shareholders by carefully observing the market environment. While investing, the fund focuses on macroeconomics and market situation and carries out a meticulous analysis of respective companies. The fund has been analyzing market shifts for over four decades while managing risk-related processes.
In 2008, Bruce Kovner resigned from Caxton Associates, bringing his three-decade run to an end. Currently, the fund is headed by Andrew Law. The firm profited significantly from betting on bonds, gold, and commodities in 2020 and delivered solid gains that year. Its Macro Fund gained 62% in 2020 while it delivered a 7.5% return in 2021, as reported by Financial Times. The report also mentioned the returns of its flagship Global Fund, which gained 7.9% and 42% in 2021 and 2020, respectively. In February this year, Caxton announced raising the management fee on its Global Fund to 2.25% as the fund reported gains from its investments in the current market environment.
As of the close of Q2 2022, Caxton Associates had a 13F portfolio valued at over $1 billion, compared with $1.2 billion in the previous quarter. The hedge fund invested in several sectors, with basic materials and healthcare making up the major portions of the portfolio. Some of the firm’s major holdings include Pfizer Inc. (NYSE:PFE), Citigroup Inc. (NYSE:C), and Moderna, Inc. (NASDAQ:MRNA). In this article, we will discuss dividend stocks in Caxton Associates’ portfolio.
Bruce Kovner of Caxton Associates LP
Our Methodology:
For this list, we selected dividend stocks from Caxton Associates’ 13F portfolio as of the second quarter of 2022. These stocks have strong dividend histories and solid financials and balance sheets. They are ranked according to their stake value.
Dividend Stocks to Buy According to Caxton Associates LP
10. Walmart Inc. (NYSE:WMT)
Caxton Associates’ Stake Value: $1,114,000
An American multinational retail company, Walmart Inc. (NYSE:WMT) recently announced a stake in Sustainable Beef LLC to expand its capacity for the beef industry and to improve the quality of beef sourcing. Street analysts are appreciating the company’s expansion into other businesses.
In Q2 2022, Caxton Associates owned 9.165 shares in Walmart Inc., boosting its position in the company by 77%. The fund’s total stake in the company amounted to over $1.1 million, which represented 0.1% of its 13F portfolio. Walmart Inc. has been raising its dividends consistently for the past 49 years. It currently pays a quarterly dividend of $0.56 per share and has a yield of 1.67%, as of September 2.
In August, Morgan Stanley appreciated Walmart Inc.’s ability to balance longer-term investments and raised its price target on the stock to $150 with an Overweight rating on the shares.
At the end of Q2 2022, 67 hedge funds in Insider Monkey’s database owned stakes in Walmart Inc., up from 60 in the previous quarter. The collective value of these stakes is over $3.78 billion. With stakes worth roughly $1.2 billion, GQG Partners owned the largest position in the company in Q2.
In addition to Pfizer Inc., Citigroup Inc., and Moderna, Inc., Walmart Inc. is another important dividend stock in Caxton Associates’ portfolio.
9. A. O. Smith Corporation (NYSE:AOS)
Caxton Associates’ Stake Value: $1,182,000
A. O. Smith Corporation (NYSE:AOS) manufactures residential and commercial water heaters and boilers and is the largest marketer of heaters in North America.
Caxton Associates has been investing in A. O. Smith Corporation since 2010 when the hedge fund purchased shares worth $284,000. In Q2 2022, the fund increased its position in the company by 184%, which takes its total AOS stake to nearly $1.2 million. The company represented 0.11% of the firm’s 13F portfolio.
A. O. Smith Corporation has a strong history of dividend growth, increasing its payouts consistently for the past 28 years. Moreover, the company has been paying uninterrupted dividends to shareholders for the past 82 years. It pays a quarterly dividend of $0.28 per share, with a dividend yield of 1.97%, as recorded on September 2.
As of the close of Q2 2022, 27 hedge funds tracked by Insider Monkey reported owning stakes in A. O. Smith Corporation, down from 38 in the previous quarter. The collective value of these stakes is over $387 million.
LRT Capital Management mentioned A. O. Smith Corporation in its Q2 2022 investor letter. Here is what the firm has to say:
“A.O. Smith is the largest US manufacturer of residential and commercial water heaters, boilers and water treatment products. The company generates close to $3 billion in annual sales. The majority of the company’s business (73%) is done in North America, with the balance coming from China and India. Approximately 80% of demand is replacing existing heaters and 20% is tied to new construction. The company continues to benefit from a shift towards higher efficiency, but more expensive, tankless heaters.
A.O. Smith generates returns on invested capital in the high teens. The company uses its earnings to consistently grow its dividends and share repurchases. Over the past three years the company’s performance has been hurt by its exposure to China as its business there suffered due to the US-China trade war and poor execution. We believe the China business is back on track and the all-important US business is doing better than ever as housing demand heats up in the US. The company beat earnings estimates over the past several quarters and is currently enjoying very good performance as the hot U.S housing market continues to be strong.19 A.O. Smith also recently increased its share repurchase authorization.”
8. Illinois Tool Works Inc. (NYSE:ITW)
Caxton Associates’ Stake Value: $1,198,000
Illinois Tool Works Inc. (NYSE:ITW) is an Illinois-based manufacturing company that specializes in engineered and specialty products. The company was one of the latest holdings of Caxton Associates. The hedge fund opened its position in the company with 6,576 shares, valued at nearly $1.2 million. The company accounted for 0.11% of the firm’s 13F portfolio.
In August, Citigroup raised its price target on Illinois Tool Works Inc. to $210 with a Neutral rating on the shares, highlighting the company’s growth efforts and its resilience in the current market environment.
Illinois Tool Works Inc. has been raising its dividends consistently for the past 51 years, falling into the category of Dividend Aristocrats. In the past 10 years, it has raised its payouts at a CAGR of 13%. The company’s quarterly dividend stands at $1.22 per share and has a yield of 2.64%, as of September 2.
As of the end of June 2022, 34 hedge funds tracked by Insider Monkey owned investments in Illinois Tool Works Inc., compared with 36 in the previous quarter. These stakes hold a total value of over $366 million. AQR Capital Management was the company’s leading stakeholder in Q2.
7. PPG Industries, Inc. (NYSE:PPG)
Caxton Associates’ Stake Value: $1,328,000
PPG Industries, Inc. (NYSE:PPG) is a global supplier of paints, coatings, and other specialty materials. On July 21, the company announced a 5% hike in its quarterly dividend to $0.62 per share. This was the company’s 51st consecutive year of dividend growth. As of September 2, the stock’s dividend yield came in at 1.95%.
Caxton Associates resumed its position in PPG Industries, Inc. during the second quarter of 2022, after selling off its stake worth $500,000 in Q4 2021. The hedge fund owned 11,618 PPG shares, worth over $1.3 million. The company accounted for 0.12% of the firm’s 13F portfolio.
In July, Mizuho raised its price target on PPG Industries, Inc. to $163 with a Buy rating on the shares, as the firm sees solid demand across the company’s end markets.
According to Insider Monkey’s database, 22 hedge funds owned stakes in PPG Industries, Inc. in Q2 2022, compared with 33 in the previous quarter. These stakes hold a collective value of over $240 million. With over 1.1 million shares, First Eagle Investment Management owned the largest stake in the company in Q1.
ClearBridge Investments mentioned PPG Industries, Inc. in its Q1 2022 investor letter. Here is what the firm has to say:
“”While commodities-exposed areas of the materials sector such as mining and steel fared well in the quarter, we tend to have less direct exposure to commodities across our portfolio. Holdings like paint and coating company PPG Industries (NYSE:PPG) that use natural gas and oil related products as feedstock into their products faced sharp input cost escalation, driving meaningful margin compression, which was not well-received by investors. While negative in the short term, we remain confident that the company will be able to adjust pricing accordingly and recover margins over the medium term.”
6. AT&T Inc. (NYSE:T)
Caxton Associates’ Stake Value: $1,556,000
AT&T Inc. is an American multinational telecommunications company. The company was a part of 55 hedge fund portfolios in Q2 2022, down from 74 in the previous quarter. These stakes hold a consolidated value of over $1.7 billion, compared with $4 billion worth of stakes owned by hedge funds in the preceding quarter.
Caxton Associates first invested in AT&T Inc. during the fourth quarter of 2013, purchasing shares worth over $1.5 million. In Q2 2022, the hedge fund increased its position in the company by 11% compared to the previous quarter and owned total stakes worth over $1.5 million. The company accounted for 0.15% of the fund’s 13F portfolio and is its important holding along with Pfizer Inc., Citigroup Inc., and Moderna, Inc..
AT&T Inc. has been raising its dividends consistently for the past 23 years. The company currently pays a quarterly dividend of $0.2775 per share, with a dividend yield of 6.35%, as of September 2.
In July, Morgan Stanley raised its price target on AT&T Inc. to $22 with an Overweight rating on the shares, as the company showed growth in its wireless service revenue.
Argosy Investors mentioned AT&T Inc. in its Q2 2022 investor letter. Here is what the firm has to say:
“I purchased shares of AT&T Inc. (NYSE:T) prior to its spin-off of Warner Brothers Discovery (WBD). Most people are probably familiar with AT&T. They are a major cellular service provider, and until recently owner of the Time Warner media assets, which include HBO, CNN, TNT, TBS, Cartoon Network, DC Comics and the Batman content brands, and more. At the time of my purchase, I estimated that the combined T/WBD assets traded at a 15% levered FCF yield, or 6x FCF. I also believe that WBD, which now has HBO Max, has future growth in front of it which was previously in doubt when Discovery was primarily tied to the declining cable television bundle. Since then, Netflix reported disappointing subscriber growth, which threw all streaming companies into disarray. WBD followed that news with a disappointing outlook on its business during its own quarterly earnings.
As a result, shares of WBD have declined nearly 40% since the spin-off. WBD now trades for 7x 2023E FCF and there is great potential for returns over the next few years as WBD pays down debt used to finance its merger combining Warner Brothers and Discovery and grows. We do not own a large position in WBD at present, but we may add to it over time.”
5. Telephone and Data Systems, Inc. (NYSE:TDS)
Caxton Associates’ Stake Value: $1,783,000
Telephone and Data Systems, Inc. (NYSE:TDS) is a multinational telecommunications company based in Chicago that provides wireless and broadband services to its consumers. The company is one of the recent holdings of Caxton Associates. The hedge fund opened its position in the company with 112,923 shares, valued at over $1.78 million. The company made up 0.17% of the firm’s portfolio in Q2.
On August 11, Telephone and Data Systems, Inc. declared a quarterly dividend of $0.11 per share, consistent with its previous dividend. In 2022, the company extended its dividend growth streak to 47 years and its 5-year dividend CAGR stands at 3.22%. As of September 2, the stock’s dividend yield came in at 4.39%.
The number of hedge funds tracked by Insider Monkey owning stakes in Telephone and Data Systems, Inc. jumped to 16 in Q2 2022, from 12 in the previous quarter. These stakes hold a collective value of nearly $63.6 million. GAMCO Investors was the company’s leading stakeholder in Q2, owning stakes worth over $27 million.
4. Medtronic plc (NYSE:MDT)
Caxton Associates’ Stake Value: $1,801,000
Medtronic plc (NYSE:MDT) is an Ireland-based medical device company that provides services and solutions in medical technology. On August 18, the company declared a quarterly dividend of $0.68 per share. The company raised its dividend by 8% in May. This was the company’s 45th consecutive year of dividend growth. As of September 2, the stock has a yield of 3.07%.
Caxton Associates initiated its position in Medtronic plc (NYSE:MDT) during the second quarter of 2022, purchasing 20,065 shares. The firm’s total stake in the company amounted to over $1.8 million, which represented 0.17% of its 13F portfolio.
In August, Wells Fargo maintained its Equal Weight rating on Medtronic plc (NYSE:MDT) and a $96 price target, highlighting the company’s earnings beat in Q1. The firm also appreciated the company’s revised guidance for its FY23 organic growth.
At the end of Q2 2022, 54 hedge funds tracked by Insider Monkey owned stakes in Medtronic plc (NYSE:MDT), the same as in the previous quarter. The collective value of these stakes is over $2.48 billion, compared with $1.9 billion worth of stakes owned by hedge funds in Q1 2022.
Polen Capital mentioned Medtronic plc (NYSE:MDT) in its Q1 2022 investor letter. Here is what the firm has to say:
“Ireland-based Medtronic is a leading health care company focused on supplying many important life-saving devices like pacemakers, defibrillators, and insulin pumps. This is another company with attractive pricing power and a business model that can hold up well during inflationary periods. Medtronic has increased market share across almost 70% of its portfolio since the start of the pandemic, which is a higher percentage than even before the pandemic. With growth-oriented companies falling out of favor over the quarter, the stock’s relatively discounted valuation (at approximately 19x earnings) also bolstered its performance.”
3. Dover Corporation (NYSE:DOV)
Caxton Associates’ Stake Value: $1,807,000
Dover Corporation (NYSE:DOV) is an American corporation that specializes in industrial products and delivers innovative equipment to a wide range of markets. In July, Mizuho reiterated its Buy rating on the stock as advanced customer ordering behavior normalize after the pandemic.
Dover Corporation holds one of the strongest dividend growth track records in the market. 2022 marked the company’s 67th consecutive year of dividend growth. The company pays a quarterly dividend of $0.505 per share and has a yield of 1.56%, as of September 2.
Dover Corporation was one of the latest acquisitions of Caxton Associates, as the hedge fund opened its position with 14,897 shares in Q2. The fund’s total stake in the company stood at over $1.8 million, representing 0.17% of its 13F portfolio.
Adage Capital Management owned stakes worth over $100 million in Dover Corporation, becoming the company’s leading stakeholder in Q2. Overall, 30 hedge funds tracked by Insider Monkey owned stakes in the company in Q2, compared with 27 in the previous quarter. The collective value of these stakes is over $420.3 million.
2. Best Buy Co., Inc. (NYSE:BBY)
Caxton Associates’ Stake Value: $1,811,000
Best Buy Co., Inc. (NYSE:BBY) is a Minnesota-based consumer electronics company that also sells other related products to consumers. According to Insider Monkey’s data, 26 hedge funds owned stakes in the company in Q2 2022, up from 25 in the previous quarter. The consolidated value of these stakes is over $406.8 million, compared with $251.4 million worth of stakes owned by hedge funds in the preceding quarter.
Caxton Associates resumed building its position in Best Buy Co., Inc. during Q2 2022, after selling off its stake worth $315,000 in the fourth quarter of 2021. Currently, the fund owns 27,788 BBY shares, valued at over $1.8 million, as of the end of the second quarter. The company represented 0.17% of the firm’s 13F portfolio.
In March 2022, Best Buy Co., Inc. announced a 26% hike in its quarterly dividend, which was its ninth consecutive year of dividend growth. It currently pays a quarterly dividend of $0.88 per share, with a yield of 4.92%, as of September 2.
In August, Wedbush raised its price target on Best Buy Co., Inc. to $80 with a Neutral rating on the shares, highlighting the company’s Q2 results and its guidance for upcoming quarters.
1. 3M Company (NYSE:MMM)
Caxton Associates’ Stake Value: $3,198,000
In Q2 2022, Caxton reported owning 24,714 shares in the company, valued at nearly $3.2 million. The hedge fund boosted its stake in the company by 93% during the quarter. The company represented 0.31% of Caxton’s portfolio.
On August 12, 3M Company (NYSE:MMM) declared a quarterly dividend of $1.49 per share, in line with its previous dividend. The company has been making consistent dividend payments for the past 100 years and raised its payouts every year for the past 65 years. As of September 2, the stock’s dividend yield came in at 4.85%.
In July, Wells Fargo raised its price target on 3M Company to $144 with an Equal Weight rating on the shares, as the company announced to spin off its healthcare business by the end of 2023.
The number of hedge funds tracked by Insider Monkey owning stakes in 3M Company grew to 54 in Q2 2022, from 51 in the previous quarter. The collective value of these stakes is over $1.38 billion. Ken Fisher, Ken Griffin, and Jim Simons were the company’s most prominent stakeholders in Q2.
Mayar Capital mentioned 3M Company in its Q2 2022 investor letter. Here is what the firm has to say:
“We also bought back into 3M (NYSE:MMM) as the stock reached attractive levels. We’d sold our shares in 3M last year when the price exceeded our estimated fair value, and as better opportunities to invest in presented themselves at the time. Nonetheless, we’ve always liked this business with its diversified revenues, its R&D leadership and its stable margins.
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This article is originally published at Insider Monkey.
