In this article, we discuss 10 dividend stocks according to British-Irish billionaire John Armitage’s Egerton Capital.
British-Irish hedge fund manager John Armitage was recently declared one of Ireland’s top nine billionaires with an estimated net worth of roughly $3 billion. Armitage founded Egerton Capital in 1994 and brought the research-intensive approach to investing. As of April 2022, the hedge fund has approximately $20.4 billion in assets under management. Armitage is currently serving as the CIO and portfolio manager of the firm.
Egerton Capital employs a fundamental bottom-up approach while investing in companies in order to create a diversified portfolio. The hedge fund also invests in companies outside of the US and targets quality companies with attractive valuations, presenting solid growth potential. The fund mainly invests in large-cap companies after rigorous research while analyzing accessible information. In 2018, Egerton Capital was one of the top 20 performing hedge funds, earning $14.7 billion from 1995 to 2018, as reported by Reuters.
Apart from his investment philosophy, Armitage is also known for keeping political affiliations after he made considerable donations to the political parties in the UK during an election campaign in 2016. He gave £3.1 million to Conservatives, with an additional donation of £500,000 when Boris Johnson became Prime Minister.
As of Q1 2022, Egerton Capital holds a 13F portfolio value of roughly $19 billion, down from $21.5 billion in the previous quarter. The hedge fund made major investments in services, technology, and finance sectors, with healthcare and industrial goods representing a small portion of John Armitage’s portfolio. Some of the hedge fund’s major holdings include Mastercard Incorporated (NYSE:MA), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN).
John Armitage of Egerton Capital
Our Methodology:
In this article, we discuss the best dividend stocks in John Armitage’s portfolio. For this list, we took data from Egerton Capital’s 13F portfolio as of Q1 2022.
10 Best Dividend Stocks According to British-Irish Billionaire John Armitage
10. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 103
Dividend Yield as of May 26: 1.16%
Egerton Capital’s Stake Value: $833,968,000
An American multinational healthcare insurance company, UnitedHealth Group Incorporated (NYSE:UNH) has recently announced to incorporate the telehealth segment into its strategies to control cost and meet the needs of patients suffering from chronic conditions.
Egerton Capital started building its position in UnitedHealth Group Incorporated (NYSE:UNH) during the fourth quarter of 2019, with shares worth over $825 million. At the end of Q1 2022, the hedge fund held over 1.6 million shares in the company, worth roughly $834 million. The company accounted for 4.39% of John Armitage’s portfolio. Along with UNH, Mastercard Incorporated (NYSE:MA), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN) are some other major holdings of Egerton Capital.
UnitedHealth Group Incorporated (NYSE:UNH) currently pays a quarterly dividend of $1.45 per share, having raised it by 16% in 2021. The company has been a dividend-payer since 1990 and maintains an 11-year track record of consistent dividend growth. As of May 26, the stock’s dividend yield stood at 1.16%. As the healthcare sector outpaces GDP growth and UnitedHealth Group Incorporated (NYSE:UNH) is expanding into digital medicine, in April, BMO Capital lifted its price target on the stock to $600, while keeping a Market Perform rating on the shares.
At the end of Q1 2022, 103 hedge funds in Insider Monkey’s database held stakes in UnitedHealth Group Incorporated (NYSE:UNH), up from 96 in the previous quarter. These stakes hold a consolidated value of roughly $13 billion. Among these hedge funds, Eagle Capital Management was the company’s largest shareholder in Q1 2022, with shares worth over $1.4 billion.
Baron Funds mentioned UnitedHealth Group Incorporated (NYSE:UNH) in its Q1 2022 investor letter. Here is what the firm has to say:
“UnitedHealth Group Incorporated (NYSE:UNH) is a leading diversified health and wellbeing company whose divisions include insurance arm, United Healthcare and healthcare services arm, Optum, which offers care delivery and other services. Shares increased 1.8% on good fourth quarter results with revenues up 12.5% year-over-year, operating margins of 7.5% and EPS up 78% while also reaffirming its 2022 guidance. We believe UnitedHealth leads the health care industry in innovation and execution as evidenced by its strong value proposition leading to Medicare Advantage share gains, strong cost controls, and its leadership position in the shift to value-based care.”
9. The Charles Schwab Corporation (NYSE:SCHW)
Number of Hedge Fund Holders: 78
Dividend Yield as of May 26: 1.17%
Egerton Capital’s Stake Value: $1,000,341,000
The Charles Schwab Corporation (NYSE:SCHW) is an American multinational financial services company. In Q1 2022, the company generated revenue of $4.6 billion and reported $7.86 trillion in total client assets, up 11% from the same period last year.
At the end of Q1 2022, 78 hedge funds tracked by Insider Monkey held stakes in The Charles Schwab Corporation (NYSE:SCHW), valued at roughly $5.5 billion.
In January 2022, The Charles Schwab Corporation (NYSE:SCHW) announced a quarterly dividend of $0.20 per share, showing an 11% growth from its prior dividend of $0.18 per share. The company has been increasing its dividend for the past 7 years. The stock’s dividend yield was recorded at 1.17% on May 26.
At the end of Q1 2022, Egerton Capital reduced its position in The Charles Schwab Corporation (NYSE:SCHW) by 19% and held shares worth over $1 billion. The company represented 5.27% of John Armitage’s portfolio.
Baron Funds mentioned The Charles Schwab Corporation (NYSE:SCHW) in its Q1 2022 investor letter. Here is what the firm has to say:
“Outperformance of the Fund’s investments in Communication Services, Financials, and Industrials and lower exposure to the lagging Consumer Discretionary sector added the most value. Within Financials, higher exposure to this outperforming sector and gains from online brokerage firm The Charles Schwab Corp (NYSE:SCHW) bolstered relative results. Schwab’s shares gained because of the positive impact higher interest rates will have on its future earnings.”
8. KKR & Co. Inc. (NYSE:KKR)
Number of Hedge Fund Holders: 54
Dividend Yield as of May 26: 1.23%
Egerton Capital’s Stake Value: $380,692,000
KKR & Co. Inc. (NYSE:KKR) is an American global investment company. Recently, the company made an announcement to buy a UK-based power generation corporation in a deal valued at $2.16 billion. The deal would be the company’s step toward expanding its presence in renewable energy.
Egerton Capital has been investing in KKR & Co. Inc. (NYSE:KKR) since the third quarter of 2018, initiating the position with shares worth $266.2 million. At the end of Q1 2022, the hedge fund held stakes worth approximately $380.7 million, which represented 2% of John Armitage’s portfolio.
In February, KKR & Co. Inc. (NYSE:KKR) announced a 6.9% increase in its quarterly dividend to $0.155 per share. The stock’s dividend yield, as of May 26, stood at 1.23%. In May, BMO Capital set an $80 price target on KKR & Co. Inc. (NYSE:KKR), with an Outperform rating on the shares. The firm mentioned that the company’s strong balance sheet can be a growth accelerator for it.
As per Insider Monkey’s Q1 2022 database, 54 hedge funds held stakes in KKR & Co. Inc. (NYSE:KKR), down from 55 in the previous quarter. These stakes hold a collective value of over $4.04 billion. Jeffrey Ubben’s ValueAct Capital was the company’s largest shareholder in Q1 2022, with shares worth over $1.32 billion.
Vulcan Value Partners mentioned KKR & Co. Inc. (NYSE:KKR) in its Q1 2022 investor letter. Here is what the firm has to say:
“KKR & Co. Inc. is a global investment firm that manages multiple alternative asset classes. The company’s operating profits grew approximately 45% during the fourth quarter of 2021 and roughly 55% for the year. In contrast, its stock price declined over 20% during the quarter. KKR generates robust free cash flow, and its value growth has been strong throughout the last year. It is unclear to us why KKR’s stock price has declined. However, we feel the company is positioned for long-term success and are pleased to own it with a discount to our estimate of its intrinsic value.”
7. D.R. Horton, Inc. (NYSE:DHI)
Number of Hedge Fund Holders: 52
Dividend Yield as of May 26: 1.25%
Egerton Capital’s Stake Value: $582,586,000
D.R. Horton, Inc. (NYSE:DHI) is an American construction company and one of the country’s largest homebuilders. In Q1 2022, the company reported revenue of $8 billion, presenting a 24% year-over-year growth. Moreover, its net sales orders grew by 10% as the company sold 24,340 homes during the quarter.
The number of hedge funds tracked by Insider Monkey holding stakes in D.R. Horton, Inc. (NYSE:DHI) slightly declined to 52 in Q1 2022, from 54 in the previous quarter. The consolidated value of these stakes is roughly $2 billion.
D.R. Horton, Inc. (NYSE:DHI) pays a quarterly dividend of $0.225 per share, after raising it by 13% in 2021. The company maintains an 8-year track record of consistent dividend growth. The stock’s dividend yield was recorded at 1.25% on May 26. In April, BTIG appreciated the solid quarterly earnings and strong pricing power of D.R. Horton, Inc. (NYSE:DHI) and set a $104 price target on the stock, with a Buy rating on the shares.
D.R. Horton, Inc. (NYSE:DHI) has been a part of Egerton Capital’s portfolio since 2019. At the end of Q1 2022, the hedge fund held roughly 8 million shares in the company, valued at $582.6 million. The company accounted for 3.06% of John Armitage’s portfolio.
Third Avenue Management mentioned D.R. Horton, Inc. (NYSE:DHI) in its Q1 2022 investor letter. Here is what the firm has to say:
“Outside of these additions, the Fund also sold “out-of-the-money” put options on the common stock of D.R. Horton, Inc. (“DR Horton”)-the largest homebuilder in the U.S. that accounted for nearly 1 out 9 new homes sold in the U.S. last year. Having followed the company for years, Fund Management can say without hesitation that DR Horton is an incredibly efficient builder focused on delivering quality product at the entry-level price point (its average selling price was less than $325,000 last year) with leading positions in key Sunbelt markets including Dallas, Houston, Austin, Atlanta, and Phoenix.
While the near-term outlook for DR Horton is somewhat uncertain given mortgage rate and supply chain volatility, the medium-to-long-term prospects for volume-based homebuilders with super-strong balance sheets and scale advantages seem promising (such as DR Horton and Lennar Corp.) in Fund Management’s view. This is especially the case when considering that:
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Residential inventories are at record- low levels in most major markets whether gauged by “month’s supply” or aggregate units available,
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Demand for single- family residences is accelerating as the largest generation in U.S. history (the “millennial cohort”) enters its prime home buying years and desires more space not only due to “life events” but also “remote” and “hybrid” working arrangements, and
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Significant inflation in rental rates for multi-family units in urban areas has left the rent-to-own proposition for single- family homes in suburban areas in a compelling range…” (Click here to see the full text)
6. CSX Corporation (NASDAQ:CSX)
Number of Hedge Fund Holders: 72
Dividend Yield as of May 26: 1.26%
Egerton Capital’s Stake Value: $1,135,042,000
CSX Corporation (NASDAQ:CSX) is an American holding company that is focused on rail transportation and real estate. In Q1 2022, the company reported a 24% growth in its revenue-per-unit at $2.2 billion. The overall revenue of the company stood at $3.41 billion, which beat market estimates by $100 million.
In February, CSX Corporation (NASDAQ:CSX) announced a 7.5% growth in its quarterly dividend to $0.10 per share. Over the past 10 years, the company has raised its dividend at a CAGR of 11%. As of May 26, the stock’s dividend yield stood at 1.26%. As the company’s profits continue to show growth, in April, Argus lifted its price target on CSX Corporation (NASDAQ:CSX) to $41, with a Buy rating on the shares.
Insider Monkey’s Q1 2022 database shows that CSX Corporation (NASDAQ:CSX) remained popular among elite funds, as 72 hedge funds held stakes in the company, up from 56 in the previous quarter. The consolidated value of these stakes is roughly $6.3 billion, showing considerable growth from $5.34 billion worth of stakes held by hedge funds in Q4 2021.
At the end of Q1 2022, Egerton Capital held over 30.3 million shares in CSX Corporation (NASDAQ:CSX), valued at $1.13 billion. The company constituted 5.98% of John Armitage’s portfolio. Like famous stocks such as Mastercard Incorporated (NYSE:MA), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN), CSX Corporation (NASDAQ:CSX) is also underperforming, having lost 5% of its value in 2022 so far.
ClearBridge Investments mentioned CSX Corporation (NASDAQ:CSX) in its Q4 2021 investor letter. Here is what the firm has to say:
“On a regional basis, the U.S. and Canada was the top contributor to quarterly performance, of which U.S. rail operators CSX was among the lead performers. CSX is one of five leading North American rail companies, with over 21,000 miles of rail, covering 23 states and 40+ ports. CSX is engaged in the transportation of rail freight in the Southeast, East, and Midwest via interchange with other rail carriers, to and from the rest of the U.S. and Canada. CSX performed well during the quarter after the company beats market expectations on its third-quarter results. The beats were largely driven by strong pricing, which could be hitting record highs, and healthy commodity/coal volume driven by the current energy crisis.”
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.”
4. Analog Devices, Inc. (NASDAQ:ADI)
Number of Hedge Fund Holders: 67
Dividend Yield as of May 26: 1.84%
Egerton Capital’s Stake Value: $615,903,000
Analog Devices, Inc. (NASDAQ:ADI) is an American multinational semiconductor manufacturing company. At the end of Q1 2022, Egerton Capital held shares of the company worth approximately $616 million, after increasing its position by 20%. The company represented 3.24% of John Armitage’s portfolio.
In February, Analog Devices, Inc. (NASDAQ:ADI) announced a 10% hike in its quarterly dividend to $0.76 per share, which was the company’s 19th consecutive dividend raise in the last 18 years. The stock’s dividend yield, as of May 25, was recorded at 1.84%.
As per Insider Monkey’s Q1 2022 database, 67 hedge funds held stakes in Analog Devices, Inc. (NASDAQ:ADI), down from 72 in the previous quarter. These stakes hold a consolidated value of over $4.8 billion.
Madison Funds mentioned Analog Devices, Inc. (NASDAQ:ADI) in its Q3 2021 investor letter. Here is what the firm has to say:
“At its 2017 investor day, Analog Device’s VP of Automotive, Mark Gill, described how the company’s content on well-equipped electric vehicles was $600 per car compared to $250 per car for the traditional 2017 internal combustion engine car. Since then, Analog has highlighted the success of its EV battery management systems (BMS) product nearly every quarter. The BMS product is hardware and software that manages the power into and out of the battery systems. It’s the brains of the operation. Analog says it’s on its fifth generation BMS product, that it has the no. 1 market share in high voltage products, and that it is on 5 of the top 10 selling EVs. While we think that the BMS product is just 1 to 1.5% of Analog Devices, Inc. (NASDAQ:ADI)’s product mix, we think that it could add nearly a point of revenue growth per year to the company’s top-line given the expected ramp in EV production. This is a material amount of growth atop an already nicely growing company revenue line.”
3. Tractor Supply Company (NASDAQ:TSCO)
Number of Hedge Fund Holders: 43
Dividend Yield as of May 26: 2.01%
Egerton Capital’s Stake Value: $20,518,000
Tractor Supply Company (NASDAQ:TSCO) is an American retail chain company that sells products for home improvement. Egerton Capital opened a new position in the company in Q1 2022, purchasing 88,190 shares worth over $20.5 million. The company accounted for 0.1% of John Armitage’s portfolio.
Insider Monkey’s Q1 2022 database shows that along with Egerton Capital, Tractor Supply Company (NASDAQ:TSCO) also grabbed the attention of other hedge funds, as 43 elite funds held stakes in the company at the end of Q1, up significantly from 31 in the previous quarter. The consolidated value of these stakes is over $1 billion.
In January, Tractor Supply Company (NASDAQ:TSCO) announced a 77% hike in its quarterly dividend to $0.92 per share, with a dividend yield of 2.01%, as of the close of May 26. This raise marked the company’s 12th consecutive year of dividend growth. In April, Oppenheimer presented a positive outlook on Tractor Supply Company (NASDAQ:TSCO), appreciating the company’s significant internal efforts. The firm raised its price target on the stock to $270, with an Outperform rating on the shares.
2. Canadian National Railway Company (NYSE:CNI)
Number of Hedge Fund Holders: 38
Dividend Yield as of May 26: 2.03%
Egerton Capital’s Stake Value: $1,259,358,000
Canadian National Railway Company (NYSE:CNI) is a Montreal-based rail freight company that transports billions of worth of goods. In May, BMO Capital upgraded the stock to Outperform from Market Perform and saw potential upside in shares. The firm set a C$170 price target on the stock.
During Q1 2022, Egerton Capital increased its position in Canadian National Railway Company (NYSE:CNI) by 22% and held shares worth over $1.25 billion. The company was the fourth-largest holding of the hedge fund, representing 6.63% of its 13F portfolio.
In January, Canadian National Railway Company (NYSE:CNI) announced a quarterly dividend of C$0.7325, reflecting a 19% growth from its previous dividend. The stock’s dividend yield was recorded at 2.03% on May 26.
At the end of Q1 2022, 38 hedge funds in Insider Monkey’s database held stakes in Canadian National Railway Company (NYSE:CNI), valued at roughly $8.4 billion. In comparison, 42 hedge funds held stakes in the company in the previous quarter, worth over $7.7 billion. TCI Fund Management held roughly $5 billion worth of stakes in the company, becoming its largest shareholder in Q1 2022.
1. Blackstone Mortgage Trust, Inc. (NYSE:BXMT)
Number of Hedge Fund Holders: 13
Dividend Yield as of May 26: 8.05%
Egerton Capital’s Stake Value: $84,973,000
Blackstone Mortgage Trust, Inc. (NYSE:BXMT) is an American real estate investment trust. In Q1 2022, the company reported revenue of $133.7 million, up 22.5% from the same period last year.
At the end of Q1 2022, 13 hedge funds tracked by Insider Monkey reported owning stakes in Blackstone Mortgage Trust, Inc. (NYSE:BXMT), down from 15 in the previous quarter.
Blackstone Mortgage Trust, Inc. (NYSE:BXMT) has been paying dividends to shareholders for over a decade now. The company currently pays a quarterly dividend of $0.62 per share, with a dividend yield of 8.05%, as of May 26.
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Disclosure. None. 10 Best Dividend Stocks According to British-Irish Billionaire John Armitage is originally published on Insider Monkey.
