In this article, we discuss the 10 best dividend stocks according to Thomas Steyer’s Farallon Capital.
Thomas Steyer’s investment career started as soon as he graduated from Yale University in 1979. He founded Farallon Capital in 1986 and ran the hedge fund for 26 years. In 2012, he left the fund to focus more on politics and climate.
As of January 2022, Steyer’s real-time net worth stands at $1.4 billion.
Steyer’s investment philosophy takes its inspiration from Warren Buffett, who also believes that consistency is crucial when managing a diversified portfolio. As mentioned before, Steyer shifted his focus to environment-related issues as soon as he announced his retirement from Farallon Capital. His first step in this regard was the formation of NextGen Climate in 2012, whose main aim was to prevent climate disasters.
In 2020, Steyer announced the launch of a climate investment fund, Galvanize Climate Solutions, that will focus on decarbonization efforts. Along with this, the fund will also expand on the Movement Capitalism, which will be used to address the climate crisis. As of Q3 2021, Farallon Capital has a portfolio value of over $19.7 billion. The hedge fund invests in services, healthcare, and technology, among other sectors. In this article, we will focus on the dividend stocks in Farallon Capital’s portfolio. Some of those are Microsoft Corporation (NASDAQ:MSFT), Mastercard Incorporated (NYSE:MA), Visa Inc. (NYSE:V), and AbbVie Inc. (NYSE:ABBV).
Our Methodology:
In this article, we will mention some of the top dividend stocks in Farallon Capital’s portfolio. We considered the hedge fund’s 13F portfolio for this list. Along with this, we also paid attention to the hedge fund sentiment for each stock, analysts’ ratings and basic dividend policy of each company.
10. Ready Capital Corporation (NYSE:RC)
Number of Hedge Fund Holders: 13
Dividend Yield as of January 9: 10.49%
Ready Capital Corporation (NYSE:RC) is an American real estate investment trust that specializes in real estate-related investments. In Q3 2021, Farallon Capital holds shares worth $18 million in the company, which accounted for 0.09% of the hedge fund’s portfolio.
On December 14, Ready Capital Corporation (NYSE:RC) declared a quarterly dividend of $0.42 per share. The stock’s current dividend yield stands at 10.40%. Due to rising interest rates, recently, B. Riley raised its price target on Ready Capital Corporation (NYSE:RC) to $18, while maintaining a Buy rating on the shares.
At the end of Q3 2021, 13 hedge funds tracked by Insider Monkey reported owning stakes in Ready Capital Corporation (NYSE:RC), up from 11 in the previous quarter. The total value of these stakes is over $45.7 million.
Like famous stocks, such as Microsoft Corporation (NASDAQ:MSFT), Mastercard Incorporated (NYSE:MA), Visa Inc. (NYSE:V), and AbbVie Inc. (NYSE:ABBV), Ready Capital Corporation (NYSE:RC) is one of the most notable dividend stocks in Farallon Capital’s portfolio.
9. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 81
Dividend Yield as of January 9: 4.18%
An American biopharmaceutical company, AbbVie Inc. (NYSE:ABBV) is one of the recent acquisitions of Farallon Capital in Q3, which owns shares worth roughly $60 million. The company accounted for 0.26% of Farallon Capital’s portfolio.
On October 29, AbbVie Inc. (NYSE:ABBV) announced a 9% increase in its dividend at $1.41 per share, with a dividend yield of 4.18%. Since 2013, the company has increased its quarterly dividend by over 250% and has reported a 19.7% annual average increase in its dividend in the past five years. In Q3, AbbVie Inc. (NYSE:ABBV) posted an EPS of $3.33, beating estimates by $0.11. Keeping AbbVie Inc. (NYSE:ABBV) as one of its top picks in 2022, Mizuho lifted its price target on the stock to $154, while maintaining a Buy rating on the shares.
With shares worth $4.1 billion, 81 hedge funds tracked by Insider Monkey held positions in AbbVie Inc. (NYSE:ABBV) in Q3, down from 82 in the previous quarter. Warren Buffett’s Berkshire Hathaway was the company’s largest stakeholder in Q3, owning shares worth over $1.5 billion.
Miller Howard Investments mentioned AbbVie Inc. (NYSE:ABBV) 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) AbbVie (ABBV). 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.”
8. The Sherwin-Williams Company (NYSE:SHW)
Number of Hedge Fund Holders: 44
Dividend Yield as of January 9: 0.68%
The Sherwin-Williams Company (NYSE:SHW) is an American company that manufactures and distributes paints, coatings, and other related products. Farallon Capital started investing in the company during the first quarter of 2019. In Q3 2021, The Sherwin-Williams Company (NYSE:SHW) accounted for 1.37% of Farallon Capital’s portfolio.
At the end of Q3 2021, 44 hedge funds tracked by Insider Monkey were bullish on The Sherwin-Williams Company (NYSE:SHW), down from 49 in the previous quarter. These stakes hold a consolidated value of over $1.57 billion. With shares worth roughly $324 million, Chilton Investment Company remained the company’s largest shareholder in Q3.
On October 20, The Sherwin-Williams Company (NYSE:SHW) announced a quarterly dividend of $0.55 per share, showcasing a 125% year-over-year growth. Moreover, the company has maintained a 42-year streak of consistent dividend growth, becoming one of the best stocks for dividend investors. Recently, BMO Capital lifted its price target on The Sherwin-Williams Company (NYSE:SHW) to $355, while keeping an Outperform rating on the shares, expecting improvement in the company’s supply chain issues.
Like Microsoft Corporation (NASDAQ:MSFT), Mastercard Incorporated (NYSE:MA), Visa Inc. (NYSE:V), and AbbVie Inc. (NYSE:ABBV), The Sherwin-Williams Company (NYSE:SHW) remained a popular dividend stocks among elite money managers in 2021.
7. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 143
Dividend Yield as of January 9: 0.69%
Visa Inc. (NYSE:V) saw a decline in the number of hedge funds having stakes in it. As of Q3 2021, 143 hedge funds tracked by Insider Monkey held stakes in the company, down from 162 in the previous quarter. These stakes hold a consolidated value of over $26.1 billion.
Currently, Visa Inc. (NYSE:V) offers a small dividend yield of 0.69% to investors but the company maintains a 14-year record of consistent dividend growth. On October 26, the company announced a 17% growth in its dividend at $0.375 per share. Recently, Mizuho set a $220 price target on Visa Inc. (NYSE:V), with a Neutral rating on the shares.
In Q3 2021, Farallon Capital held over 1.2 million shares in Visa Inc. (NYSE:V), valued at roughly $277 million. The company represented 1.4% of the hedge fund’s portfolio.
L1 Capital mentioned Visa Inc. (NYSE:V) in its Q3 2021 investor letter. Here is what the firm has to say:
“In our view, the payment network company, Visa, remains very well positioned to participate in an ever-expanding market for electronic payments. In time, ‘Buy now, Pay Later’ may have a modest impact on Visa’s transaction volumes, however, in aggregate, we believe it will have the greater effect of supporting growth in electronic payments more broadly. In the nearer term, we believe the recovery in international travel as the world gradually normalizes and learns to live with COVID-19 will be materially positive for Visa’s financial performance. eCommerce will also remain a positive key driver for Visa growth.”
6. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 50
Dividend Yield as of January 9: 2.65%
Broadcom Inc. (NASDAQ:AVGO) is an American semiconductor company that also offers network, wireless, and software services to its consumers. Farallon Capital started investing in the company during the fourth quarter of 2020, with shares worth $272.7 million. In Q3 2021, Broadcom Inc. (NASDAQ:AVGO) accounted for 1.59% of the hedge fund’s portfolio.
On December 9, Broadcom Inc. (NASDAQ:AVGO) announced a quarterly dividend of $4.10 per share, presenting a 14% increase from its prior dividend. The stock’s current dividend yield stands at 2.65%, twice the S&P 500’s yield of 1.3%. In fiscal Q4 2021, Broadcom Inc. (NASDAQ:AVGO) posted an EPS of $7.81, which beat analysts’ consensus by $0.04. Presenting a positive outlook on the semiconductor industry in 2022, recently, Piper Sandler lifted its price target on the stock to $750, while keeping an Overweight rating on the shares.
In Q3 2021, Broadcom Inc. (NASDAQ:AVGO) experienced a positive hedge fund sentiment as 50 hedge funds tracked by Insider Monkey were bullish on the company, up from 47 in the preceding quarter. These stakes are valued at over $2.7 billion.
Broadcom Inc. (NASDAQ:AVGO) is gaining ground among dividend investors, in addition to famous stocks like Microsoft Corporation (NASDAQ:MSFT), Mastercard Incorporated (NYSE:MA), Visa Inc. (NYSE:V), and AbbVie Inc. (NYSE:ABBV).
Miller Howard Investments mentioned Broadcom Inc. (NASDAQ:AVGO) in its Q3 2021 investor letter. Here is what the firm has to say:
“Technology remains important in our portfolios, although the sector weights have come down over the past year. We now hold Broadcom (AVGO) of which have strong growth prospects, yet attractive valuations in our view. Unlike many younger tech companies, we believe our holdings should significantly benefit from an upturn in the economy.”
5. Anthem, Inc. (NYSE:ANTM)
Number of Hedge Fund Holders: 59
Dividend Yield as of January 9: 1.04%
Anthem, Inc. (NYSE:ANTM) is an American health company that provides health insurance to 117 million consumers. On October 20, the company announced a quarterly dividend of $1.13 per share, with a dividend yield of 1.04%. Anthem, Inc. (NYSE:ANTM) has been increasing its dividend for the past 10 years consistently, reporting a 16% average annual growth.
In Q3 2021, Farallon Capital owned shares worth $318.7 million in Anthem, Inc. (NYSE:ANTM), which accounted for 1.61% of the hedge fund’s portfolio. In its third-quarter results, the company posted an EPS of $6.79, beating estimates by $0.42. Acknowledging the company’s strong fundamentals, recently, Truist lifted its price target on Anthem, Inc. (NYSE:ANTM) to $540, with a Buy rating on the shares.
At the end of Q3 2021, 59 hedge funds tracked by Insider Monkey reported owning stakes in Anthem, Inc. (NYSE:ANTM), compared with 67 in the previous quarter. These stakes hold a consolidated value of $4.5 billion. Eagle Capital Management was the company’s largest shareholder in Q3, owning over 2.5 million shares.
4. Willis Towers Watson Public Limited Company (NASDAQ:WLTW)
Number of Hedge Fund Holders: 75
Dividend Yield as of January 9: 1.38%
The number of hedge funds tracked by Insider Monkey having stakes in a British-American insurance company, Willis Towers Watson Public Limited Company (NASDAQ:WLTW), grew to 75 in Q3 2021, from 70 in the previous quarter. These stakes are valued at over $5.05 billion.
On December 8, Willis Towers Watson Public Limited Company (NASDAQ:WLTW) announced a quarterly dividend of $0.80 per share, with a dividend yield of 1.38%. The company’s five-year dividend growth rate stands at 9.48%, with its dividend payout ratio of 23.3%. This December, Evercore ISI initiated its coverage on Willis Towers Watson Public Limited Company (NASDAQ:WLTW) with a $240 price target, citing the company’s organic growth and improving margins.
Farallon Capital made its first investment of over $10.4 million in Willis Towers Watson Public Limited Company (NASDAQ:WLTW) during the third quarter of 2020. In Q3 2021, the hedge fund held shares worth $319.1 million in the company, which accounted for 1.61% of the hedge fund’s portfolio.
Vltava Fund mentioned Willis Towers Watson Public Limited Company (NASDAQ:WLTW) in its Q3 2021 investor letter. Here is what the firm has to say:
“The second position is much larger and was thrown into our hands by an unexpected turn of events. It is the stock of Willis Towers Watson. This is a British company with roots dating back to 1828. WLTW is the third-largest insurance broker in the world. This is a sector with which we are very familiar, as some time ago we held in our portfolio shares of its slightly larger competitor AON.
It was AON in fact that announced last spring it had agreed to merge with WLTW. In the merger, WLTW shareholders would have received AON shares. As is usually the case with such announcements, investors stepped in to conduct what is known as merger arbitrage. In this particular case, they bought WLTW shares and sold short AON shares in order to profit from the fact that the prices of the two stocks did not yet fully reflect the exchange ratio in the merger. Moreover, merger arbitrage commonly makes extensive use of leverage in order to increase profits.
This summer, however, AON and WLTW jointly announced that they were pulling out of the planned merger because they had not received approval from the US Department of Justice. The regulator had feared that in an already quite concentrated industry, a merger of the second- and third-largest players would restrict competition too much. The immediate reaction to this announcement was, of course, closing of positions from the merger arbitrage. This brought an immediate increase in the price of AON shares and decline in the price of WLTW shares. We saw this as an excellent buying opportunity in WLTW stock. (In addition, WLTW had received a USD 1 billion breakup fee from AON.) Because we knew the industry and the two companies well from earlier years, we were able to react immediately, and a new, very attractive investment appeared in Vltava Fund’s portfolio rather unexpectedly and quickly.
Insurance brokerage is a very good business. Simply put, insurance brokers are intermediaries who sell, find, or negotiate insurance on behalf of a client for a fee. They do not bear the insurance risk themselves and thereby do not risk their own capital. They live from commissions and the fact that this is a large and recurring business. Just to give you a sense of this, I will note, for example, that of the 500 companies in the Fortune Global 500 list, more than 90% are clients of WLTW. The entire industry is very concentrated and has relatively high barriers to entry. WLTW is the third-largest global player, has very high free cash flow, low capital investment requirements, and a very valuable client base. The business as a whole also provides some long-term inflation protection, as the speed at which the volume of total premiums grows follows the speed at which the economy and asset prices grow in nominal terms. I have to say we are very happy that circumstances have passed this investment on to us.”
3. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 146
Dividend Yield as of January 9: 0.53%
Mastercard Incorporated (NYSE:MA) has a 9-year track record of consistent dividend growth.
At the end of Q3 2021, 146 hedge funds tracked by Insider Monkey were bullish on Mastercard Incorporated (NYSE:MA), down from 156 in the previous quarter. The total value of these stakes is over $17.6 billion, up from $17 billion in Q2. With shares worth over $2.4 billion, Akre Capital Management was the company’s largest shareholder.
Farallon Capital started investing in Mastercard Incorporated (NYSE:MA) during the first quarter of 2021. In Q3, the hedge fund increased its stake by 3% in the company, which represented 1.66% of the hedge fund’s portfolio. Recently, Evercore named Mastercard Incorporated (NYSE:MA) as one of its top picks in the payments segment for 2022 and lifted its price target on the stock to $480.
L1 Capital mentioned Mastercard Incorporated (NYSE:MA) in its Q3 2021 investor letter. Here is what the firm has to say:
“Mastercard returned to top 10. We have held Mastercard since inception of the Fund. Over the 6 weeks to 30 September 2021, Mastercard’s share price retreated 10% and we took advantage of what we believe will be a short-term pullback in the share price to add to our investment. Recent weakness in Mastercard’s share price is most likely due to concerns about disintermediation and other pressures caused by growth in ‘Buy now, Pay later’ and other new payment offerings, as well a general market rotation away from higher growth companies in favour of more cyclical businesses.”
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 250
Dividend Yield as of January 9: 0.79%
Though Microsoft Corporation (NASDAQ:MSFT) cannot be taken as an ideal dividend stock due to its low yield, the company has a 15-year track record of consistent dividend growth. Currently, Microsoft Corporation (NASDAQ:MSFT) pays a quarterly dividend of $0.62 per share.
Recently, Jefferies presented a positive outlook on Microsoft Corporation (NASDAQ:MSFT) due to its consistent revenue growth and lifted its price target on the stock to $400, with a Buy rating on the shares. In Q3, Farallon Capital owns over 1.5 million shares in the company, which represented 2.16% of the fund’s portfolio.
At the end of Q3 2021, the number of hedge funds tracked by Insider Monkey having stakes in Microsoft Corporation (NASDAQ:MSFT) grew to 250, from 238 in the preceding quarter. The total value of these stakes is over $65.8 billion. Ken Fisher’s Fisher Asset Management was the company’s largest shareholder in Q3, owning shares worth roughly $7.2 billion.
ClearBridge Investments mentioned Microsoft Corporation (NASDAQ:MSFT) in its Q3 2021 investor letter. Here is what the firm has to say:
“The Strategy modestly outperformed the benchmark; consistent with our fundamental approach that seeks balanced exposure to industries and the growth and value spectrum, performance was driven by companies from diverse sectors. Microsoft, which develops software including the Windows family of products, the Microsoft Office system and the Azure cloud platform, and is a leader in data protection and customer privacy as well as human rights and diversity, contributed strongly as earnings maintained positive sentiment. Microsoft is seeing a number of businesses reach a new, higher level of engagement, adoption and momentum.”
1. Raytheon Technologies Corporation (NYSE:RTX)
Number of Hedge Fund Holders: 48
Dividend Yield as of January 9: 2.26%
Raytheon Technologies Corporation (NYSE:RTX) is an American defense contractor and industrial company that manufactures and develops radars, sensors, and related products. The company was the tenth-largest holding of Farallon Capital in Q3 and accounted for 2.27% of the fund’s portfolio.
Raytheon Technologies Corporation (NYSE:RTX) presents solid business fundamentals to investors with growing EPS, which leads to higher dividend payments. The company increased its dividend by 7.4% in 2021 and currently pays a quarterly dividend of $0.51 per share.
Recently, Wells Fargo lifted its price target on Raytheon Technologies Corporation (NYSE:RTX) to $97, with an Equal Weight rating on the shares.
In Q3 2021, 48 hedge funds in Insider Monkey’s database reported owning stakes in Raytheon Technologies Corporation (NYSE:RTX), compared with 53 in the previous quarter. These stakes hold a consolidated value of over $2.25 billion, up from $2.1 billion in Q2.
Davis Funds mentioned Raytheon Technologies Corporation (NYSE:RTX) in its Q3 2021 investor letter. Here is what the firm has to say:
“In the industrial space, we own a select list of well-entrenched market leaders, such as Raytheon Technologies in aerospace. These have recovered this year from their lulls in 2020, yet continue to trade at reasonable multiples of subdued earnings, creating a potential setup for the double play of recovering multiples on recovering earnings.”
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Disclosure. None. 10 Best Dividend Stocks According to Thomas Steyer’s Farallon Capital is originally published on Insider Monkey.
