In this article, we discuss 10 dividend stocks in Edgar Wachenheim’s portfolio.
Edgar Wachenheim is an American investor and the founder of Greenhaven Associates. He is currently serving as the CEO of the firm. As of 2021, the firm manages over $8 billion in assets. Before founding his own fund, Wachenheim worked in the investment division of Central-National Gottesman in 1969 and founded Greenhaven Associates in 1987, a value-oriented investment firm.
Wachenheim’s investment strategy can be described as value-oriented as he pays little attention to the current price of stocks and focuses on the actual value of companies. In his famous interview with Jim Cramer in 2018, Wachenheim mentioned that he buys deeply undervalued stocks as they have the potential to generate bigger returns for shareholders. Moreover, the firm considers companies with strong balance sheets, high-quality businesses, and very competent management.
According to Wachenheim, his hedge fund analyses the long-term risks in the economy and the relative value of the stock market while investing in a particular stock. His investment strategy is described in his book ‘Common Stocks & Common Sense’, which was published in 2016 and garnered praise from investors around the world. According to a report published by CNBC, from 1988 to 2017, Greenhaven Associates returned at an average annual rate of 19%.
As of Q1 2022, Greenhaven Associates holds a 13F portfolio value of over $3.7 billion, down from $3.9 billion in the previous quarter. The hedge fund invested heavily in the finance, consumer goods, and industrial goods sectors, with technology and services also taking up the smaller portions of the portfolio. Some of the firm’s major holdings include Morgan Stanley (NYSE:MS), Citigroup Inc. (NYSE:C), and JPMorgan Chase & Co. (NYSE:JPM).
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Our Methodology:
In this article, we discuss the best dividend stocks in Edgar Wachenheim’s 13F portfolio. For this list, we took data from Greenhaven Associates’ 13F portfolio as of Q1 2022.
Best Dividend Stocks According to Edgar Wachenheim’s Greenhaven Associates
10. The Charles Schwab Corporation (NYSE:SCHW)
Number of Hegde Fund Holders: 78
Dividend Yield as of May 24: 1.23%
Greenhaven Associates’ Stake Value: $1,686,000
The Charles Schwab Corporation (NYSE:SCHW) is an American multinational financial services company and bank that offers an electronic trading platform for investments. In January, the company reported $3.6 billion worth of assets brought to the firm, presenting a 15% growth from the previous month. Moreover, the firm also reported $7.28 trillion in total client assets at the end of April.
The Charles Schwab Corporation (NYSE:SCHW) currently pays a quarterly dividend of $0.20 per share, after increasing it by 11% this January. The stock’s dividend yield was recorded at 1.23% on May 24. Along with SCHW, Morgan Stanley (NYSE:MS), Citigroup Inc. (NYSE:C), and JPMorgan Chase & Co. (NYSE:JPM) are also some dividend stocks in Edgar Wachenheim’s portfolio.
This May, Deutsche Bank set an $84 price target on The Charles Schwab Corporation (NYSE:SCHW), with a Buy rating on the shares, as more buying opportunities are emerging for the financial companies.
During Q1 2022, Greenhaven Associates reduced its position in The Charles Schwab Corporation (NYSE:SCHW) by 12% and held a stake worth over $1.6 million. The company accounted for 0.04% of Edgar Wachenheim’s portfolio.
At the end of Q1 2022, 78 hedge funds tracked by Insider Monkey held stakes in The Charles Schwab Corporation (NYSE:SCHW), showing improvement from 72 hedge funds in the previous quarter. These stakes hold a consolidated value of roughly $5.5 billion.
Barron 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.”
9. D.R. Horton, Inc. (NYSE:DHI)
Number of Hegde Fund Holders: 52
Dividend Yield as of May 24: 1.33%
Greenhaven Associates’ Stake Value: $54,346,000
D.R. Horton, Inc. (NYSE:DHI) is an American home construction company and is one of the largest homebuilders in the country. In its fiscal Q2 2022 results, the company reported a 10% growth in the net sales orders and the revenue for the quarter stood at $8 billion, which presented a 24% year-over-year growth.
Egerton Capital Limited was the largest shareholder of D.R. Horton, Inc. (NYSE:DHI) in Q1 2022, holding stakes worth over $582.5 million. Overall, 52 hedge funds in Insider Monkey’s database held roughly $2 billion worth of stake in the company in the first quarter of 2022. In the previous quarter, 54 hedge funds held shares in the Texas-based company, valued at $2.8 billion.
In its April investors’ note, BTIG appreciated the Q2 earnings of D.R. Horton, Inc. (NYSE:DHI), which were driven by better deliveries and better selling prices. The firm set a $104 price target on the company while maintaining a Buy rating on the shares. D.R. Horton, Inc. (NYSE:DHI) pays a quarterly dividend of $0.225 per share, having raised it by 12.5% in 2021. The stock’s dividend yield, as of May 24, stood at 1.33%.
Greenhaven Associates started investing in D.R. Horton, Inc. (NYSE:DHI) during the fourth quarter of 2014, purchasing shares worth over $51 million. At the end of Q1 2022, the hedge fund owned $54.3 million worth of stakes in the company, which accounted for 1.44% of Edgar Wachenheim’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)
8. Toll Brothers, Inc. (NYSE:TOL)
Number of Hegde Fund Holders: 29
Dividend Yield as of May 24: 1.71%
Greenhaven Associates’ Stake Value: $245,078,000
Toll Brothers, Inc. (NYSE:TOL) is an American building company that designs, builds, and markets commercial and residential projects. The company did not raise its annual dividend from 2018 to 2020 due to financial instability, but after that, it raised its dividend consecutively for two years. In March, Toll Brothers, Inc. (NYSE:TOL) hiked its dividend by 18%, which takes its quarterly dividend to $0.20 per share. The stock’s dividend yield was recorded at 1.71% on May 24.
In April, Credit Suisse initiated its coverage on Toll Brothers, Inc. (NYSE:TOL) with an Outperform rating and a $63 price target. The analyst noted the gradual growth of the company and expected it to reach a wider segment of the market.
During Q1 2022, Greenhaven Associates increased its position in Toll Brothers, Inc. (NYSE:TOL) by 1% and held shares worth over $245 million. The company made up 6.49% of Edgar Wachenheim’s portfolio. The hedge fund started building its position in the company in 2016, with shares worth $49 million.
The number of hedge funds tracked by Insider Monkey holding stakes in Toll Brothers, Inc. (NYSE:TOL) declined to 29 in Q1 2022, from 38 in the previous quarter. The total value of these stakes is roughly $616 million.
7. Union Pacific Corporation (NYSE:UNP)
Number of Hegde Fund Holders: 89
Dividend Yield as of May 24: 2.40%
Greenhaven Associates’ Stake Value: $555,000
Union Pacific Corporation (NYSE:UNP) is one of the largest transport companies in the US. It operates over 8,300 locomotives in over 23 states of the country. Insider Monkey’s Q1 2022 database shows that the company remained popular among hedge funds, as 89 hedge funds held stakes in the company, up significantly from 59 in the previous quarter. The collective value of these stakes is over $7 billion, compared with $5.6 billion worth of stakes held by hedge funds in the previous quarter.
Greenhaven Associates did not change its position in Union Pacific Corporation (NYSE:UNP) during the first quarter of 2022 and held stakes worth $555,000. The company constituted 0.01% of Edgar Wachenheim’s portfolio.
ClearBridge Investments mentioned Union Pacific Corporation (NYSE:UNP) in its Q4 2021 investor letter. Here is what the firm has to say:
“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. These consistent growers were complemented by solid contributions from structural holdings including Union Pacific.”
6. The Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hegde Fund Holders: 71
Dividend Yield as of May 24: 2.53%
Greenhaven Associates’ Stake Value: $693,837,000
The Goldman Sachs Group, Inc. (NYSE:GS) is a New York-based investment bank and financial services company. The company was the largest holding of Greenhaven Associates in Q1 2022 and represented 18.39% of Edgar Wachenheim’s portfolio. The hedge fund has been investing in the company since 2014 and increased its position by 4% during the first quarter of 2022. The hedge fund also holds considerable positions in Morgan Stanley (NYSE:MS), Citigroup Inc. (NYSE:C), and JPMorgan Chase & Co. (NYSE:JPM) at the end of Q1 2022.
In May, Oppenheimer presented a confident stance on the banking sector due to the loan growth and rising interest rates. The firm set a $519 price target on The Goldman Sachs Group, Inc. (NYSE:GS), with an Outperform rating on the shares. Along with this, BMO Capital also has an Outperform rating on the stock.
In 2021, The Goldman Sachs Group, Inc. (NYSE:GS) grew its quarterly dividend by 60% to $2 per share. As of May 24, the stock’s dividend yield came to be recorded at 2.53%.
At the end of March 2021, 71 hedge funds tracked by Insider Monkey held positions in The Goldman Sachs Group, Inc. (NYSE:GS), with stakes valued at roughly $4.6 billion. In the previous quarter, 75 hedge funds owned stakes in the company, worth $5.4 billion.
Ariel Investments mentioned The Goldman Sachs Group, Inc. (NYSE:GS) in its Q4 2021 investor letter. Here is what the firm has to say:
“Rising interest rates, after a surprisingly long period of low absolute rates and negative “real” rates, will create a headwind. While there has been much debate about the cause of these low rates, we believe the most important factor has been the $120 billion in monthly federal reserve open market bond purchases and the accumulation of an $8 trillion balance sheet. The former will end, and the latter will shrink. It is not just the Fed that has aggressively purchased bonds, bidding up prices and lowering yields. Bond traders and hedge fund managers have added to positions, confident that being on the same side as the Fed was the wise place to be. Now as the Fed is about to become a seller of bonds rather than a buyer, Wall Street’s “smart money” is likely to follow suit. Against this backdrop, fixed income securities and bond substitutes such as high dividend paying utilities and absolute return hedge funds are substantially overpriced and are not likely to produce attractive returns going forward.
This expectation of a reversion to the mean for interest rates helped 2021 performance, though not as much as we had hoped. The yield on the U.S. 10-year Treasury did indeed increase from +0.92% at the beginning of the year to +1.52% at year-end. An underreported story was the poor performance of bonds last year. The Barclays Aggregate Index declined -1.67% for the year ending December compared to a return of +28.71% for equities as measured by the S&P 500. Interest rates have continued to climb in 2022 with the 10-year Treasury at +1.79% as we go to print. This move higher in rates has contributed to our good, early start to 2022. The Goldman Sachs Group, Inc. (GS) jumped +47.59% for the year and +1.73% in the quarter.”
5. Stanley Black & Decker, Inc. (NYSE:SWK)
Number of Hegde Fund Holders: 38
Dividend Yield as of May 24: 2.68%
Greenhaven Associates’ Stake Value: $25,836,000
Stanley Black & Decker, Inc. (NYSE:SWK) is an American manufacturing company that specializes in industrial tools and household hardware. The company also provides security products to consumers.
Stanley Black & Decker, Inc. (NYSE:SWK) has been paying dividends to shareholders since 1876 while maintaining a 53-year track record of consistent dividend growth. The company currently pays a quarterly dividend of $0.79 per share, after increasing it by 13% in 2021.
Saturna Capital mentioned Stanley Black & Decker, Inc. (NYSE:SWK) in its Q3 2021 investor letter. Here is what the firm has to say:
“Stanley Black &Decker performed well through the first part of the year but struggled over the summer. China accounts for much of its production, and their zero-tolerance approach to pandemic safety measures has led to disruption, compounded by shipping difficulties and rising materials expenses. We still believe one outcome of the pandemic will be a buoyant home improvement market, given that one never knows when the next pandemic lockdown may occur.”
4. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hegde Fund Holders: 110
Dividend Yield as of May 24: 3.21%
Greenhaven Associates’ Stake Value: $88,201,000
JPMorgan Chase & Co. (NYSE:JPM) is an American financial services company and an investment bank. Recently, the company reported that its UK consumer bank has reached over half a million customers, with over $10 billion in deposits.
This May, Oppenheimer upgraded JPMorgan Chase & Co. (NYSE:JPM) to Outperform, with a $167 price target, as it shows a 30% upside potential in the coming year.
ClearBridge Investments mentioned JPMorgan Chase & Co. (NYSE:JPM) in its Q4 2021 investor letter. Here is what the firm has to say:
“Our energy and financials holdings kept pace in the 2021 rally. In financials, JPMorgan benefited from strong economic growth, a rise in Treasury yields, and a benign credit environment.”
3. Morgan Stanley (NYSE:MS)
Number of Hegde Fund Holders: 61
Dividend Yield as of May 24: 3.40%
Greenhaven Associates’ Stake Value: $874,000
Morgan Stanley (NYSE:MS) reported solid Q1 2022 results. The company posted $5.12 billion in asset management, up 16% from the prior-year quarter. Moreover, the company’s revenue for the quarter was recorded at roughly $15 billion, which beat market consensus by $640 million.
On account of the strong Q1 results by Morgan Stanley (NYSE:MS), in April, BMO Capital raised its price target on the stock to $113, with an Outperform rating on the shares.
Artisan Partners mentioned Morgan Stanley (NYSE:MS) in its Q3 2021 investor letter. Here is what the firm has to say:
“Morgan Stanley, a leading global financial services company, came into the portfolio in late 2020 as a result of its purchase of E*TRADE. The acquisition is a great fit for Morgan Stanley’s wealth management platform and provides a considerable amount of non-interest-bearing deposit funding. James Gorman, chairman and CEO, has steadily derisked the business by adding less volatile fee streams to complement its leading positions in cyclical businesses such as advisory, equities and FICC (fixed income, currencies and commodities). We believe the company will prove its resiliency and value over the long term.”
2. Citigroup Inc. (NYSE:C)
Number of Hegde Fund Holders: 88
Dividend Yield as of May 24: 3.87%
Greenhaven Associates’ Stake Value: $286,867,000
Citigroup Inc. (NYSE:C) currently pays a quarterly dividend of $0.51 per share, with a dividend yield of 3.87%, as of the market close of May 24. In its Q1 2022 earnings, the company posted revenue of over $19.2 billion, which was noticed by Barclays. In April, the firm set a $67 price target on Citigroup Inc. (NYSE:C), following its strong revenue, with an Equal Weight rating on the shares.
Greenhaven Associates initiated its position in Citigroup Inc. (NYSE:C) in 2014 but pulled off its entire stake in the company in the first quarter of 2021 and renewed its stakes in Q4 2021. During the first quarter of 2022, the hedge fund increased its position in the company by 19%.
Artisan Value Fund mentioned Citigroup Inc. (NYSE:C) in its Q4 2021 investor letter. Here is what the firm has to say:
“We fully exited the position in Citigroup. Global financial services company Citigroup made a $900 million clerical error and received a public reprimand from federal regulators. This, after a decade focused on process control, information technology and risk systems, makes the error substantially more costly than just the $900 million mistake. Regulators believe the company’s risk management improvements have fallen short of expectations. To rectify the situation, a process and technology spending surge could negatively affect 2021-2022 profits by 10% to 20%. Trust and confidence are important in large financial institutions, and this incident combined with the CEO’s sudden retirement shook ours.”
1. Whirlpool Corporation (NYSE:WHR)
Number of Hegde Fund Holders: 33
Dividend Yield as of May 24: 4.03%
Greenhaven Associates’ Stake Value: $489,591,000
Whirlpool Corporation (NYSE:WHR) is an American multinational home appliance company. The company was the fourth-largest holding of Greenhaven Associates in Q1 2022, as the hedge fund held shares worth roughly $490 million in the company. It accounted for 12.98% of Edgar Wachenheim’s portfolio.
Lyrical Asset Management was one of the leading shareholders of Whirlpool Corporation (NYSE:WHR) in Q1 2022, holding stakes worth over $236.2 million. Overall, 33 hedge funds tracked by Insider Monkey reported owning stakes in the company in Q1 2022, up from 28 in the previous quarter. These stakes hold a collective value of $962.6 million.
In February, Whirlpool Corporation (NYSE:WHR) announced a quarterly dividend of $1.75 per share, a 25% increase from its prior dividend of $1.40 per share. This was the company’s 9th consecutive year of dividend growth.
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Disclosure. None. 10 Best Dividend Stocks According to Edgar Wachenheim’s Greenhaven Associates is originally published on Insider Monkey.
