In this article, we discuss 10 dividend stocks according to John Armitage’s Egerton Capital. If you want to read our detailed analysis of the hedge fund’s past performance and Armitage’s investment philosophy, go directly to read 10 Best Dividend Stocks According to British-Irish Billionaire John Armitage.
5. Lowe’s Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 65
Dividend Yield as of May 26: 1.65%
Egerton Capital’s Stake Value: $730,100,000
Lowe’s Companies, Inc. (NYSE:LOW) is an American retail company that specializes in home improvement. In 2021, the company announced a 33% increase in its quarterly dividend to $0.80 per share, which was the company’s 25th consecutive year of dividend growth. Moreover, the company has paid dividend to shareholders every quarter since going public in 1961.
With a stake worth over $9.6 billion, Adam Capital was the largest shareholder of Lowe’s Companies, Inc. (NYSE:LOW) in Q1 2022. Overall, 65 hedge funds in Insider Monkey’s database held stakes in the company in Q1, down from 72 in the previous quarter.
Egerton Capital started building its position in Lowe’s Companies, Inc. (NYSE:LOW) during the fourth quarter of 2021, with shares worth roughly $600 million. In Q1 2022, the hedge fund increased its position in the company by 57%, equaling shares worth over $730 million. Lowe’s Companies, Inc. (NYSE:LOW) accounted for 3.84% of John Armitage’s portfolio.
In May, Jefferies called sales and margin guidance of Lowe’s Companies, Inc. (NYSE:LOW) ‘achievable’ and set a $238 price target on the stock, with a Buy rating on the shares.
Pershing Square Capital Management mentioned Lowe’s Companies, Inc. (NYSE:LOW) in its Q4 2021 investor letter. Here is what the firm has to say:
“Lowe’s is a high-quality business with significant long-term earnings growth potential
Supportive macroeconomic backdrop
-Aging housing stock, lack of new inventory, robust home equity values, and unprecedented pro project backlog
-COVID-19 causing millennials to enter the housing marketPositioned to grow EPS largely independent of market conditions
-Idiosyncratic revenue opportunities driving share gains
-Self-help initiatives catalyzing operating margin expansion
-Buybacks representing ~8% of current market capitalization planned for 2022Multi-year business transformation with substantial earnings upside
-Margin target of 13% has substantial upside; Home Depot at ~15.3% and increasing
-Potential to generate high-teens EPS growth over the next several years.Lowe’s continues to trade at a significantly discounted P/E multiple relative to Home Depot despite materially higher prospective EPS growth. LOW’s share price including dividends increased 63% in 2021 and has decreased 10% year-to-date in 2022.”
