In this article, we discuss 5 dividend stocks to buy according to Tom Russo’s Gardner Russo & Gardner. If you want to read the latest developments of the hedge fund and our detailed analysis of Russo’s investment philosophy, go directly to read 10 Best Dividend Stocks According to Tom Russo’s Gardner Russo & Gardner.
5. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 72
Dividend Yield as of May 30: 2.46%
Gardner Russo & Gardner’s Stake Value: $5,863,000
The Procter & Gamble Company (NYSE:PG) saw a spike in hedge fund interest in Q1 2022, as 72 hedge funds tracked by Insider Monkey held stakes in the company, up from 67 in the previous quarter. The consolidated value of these stakes is over $6.06 billion. Rajiv Jain’s GQG Partners owned over $1.5 billion worth of stakes in the company, becoming its largest shareholder in Q1 2022.
In April, The Procter & Gamble Company (NYSE:PG) increased its quarterly dividend by 5% to $0.9133 per share. The company has been raising its dividend for the past 66 years and has been paying dividends consistently since 1890. As of May 30, the stock’s dividend yield was recorded at 2.46%.
At the end of Q1 2022, Gardner Russo & Gardner owned 38,372 shares in The Procter & Gamble Company (NYSE:PG), valued at roughly $6 million. The company represented 0.05% of Tom Russo’s portfolio. In April, Barclays raised its price target on The Procter & Gamble Company (NYSE:PG) to $176, with an Overweight rating on the shares, highlighting the company’s solid performance in Q1 2022.
4. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 62
Dividend Yield as of May 30: 2.68%
Gardner Russo & Gardner’s Stake Value: $3,627,000
In Q1 2022, PepsiCo, Inc. (NASDAQ:PEP) topped analysts’ expectations, posting an EPS of $1.29, which beat estimates by $0.06. The company’s revenue of $16.2 billion also surpassed market estimates by $660 million. Wall Street analysts presented a positive stance on the company after its quarterly reports. In April, both JPMorgan and Guggenheim raised their price targets on PepsiCo, Inc. (NASDAQ:PEP) to $186 and $193, respectively.
At the end of Q1 2022, Gardner Russo & Gardner held stakes worth over $3.6 million in PepsiCo, Inc. (NASDAQ:PEP), which represented 0.03% of Tom Russo’s portfolio. The hedge fund has been investing in the company since 2010.
In May, PepsiCo, Inc. (NASDAQ:PEP) announced a quarterly dividend of $1.15 per share, growing it by 7%. This marked the company’s 50th consecutive year of dividend growth. The stock’s dividend yield was recorded at 2.68% on May 30.
As per Insider Monkey’s Q1 2022 database, 62 hedge funds held stakes in PepsiCo, Inc. (NASDAQ:PEP), valued at roughly $4.9 billion. In the previous quarter, 60 hedge funds held positions in the company, worth over $4.6 billion.
ClearBridge Investments mentioned PepsiCo, Inc. (NASDAQ:PEP) in its Q4 2021 investor letter. Here is what the firm has to say:
“The pandemic created opportunities for us to be more aggressive in a variety of areas of the market. We were opportunistic throughout the year. After a strong year for equities, we sought to bolster more defensive areas of the portfolio and added to PepsiCo, increasing our exposure to a high-quality and stable name.”
3. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 83
Dividend Yield as of May 30: 3.61%
Gardner Russo & Gardner’s Stake Value: $14,855,000
Exxon Mobil Corporation (NYSE:XOM) is an American multinational oil and gas company, formed by the merger of Exxon and Mobil in 1999. Since the beginning of the year, the stock has marched upward steadily, gaining 53.5%. Moreover, in Q1 2022, the company reported revenue of $90.5 billion, up 53% from the same period last year.
In May, Argus raised its price target on Exxon Mobil Corporation (NYSE:XOM) to $104, while maintaining a Buy rating on the shares. The firm’s analyst expected the company to benefit from the strong energy market and improving balance sheet. He also raised his EPS estimates to $9.52 from $6.40, as commodity prices continue to grow.
Exxon Mobil Corporation (NYSE:XOM) currently pays a quarterly dividend of $0.88 per share, with a dividend yield of 3.61%, as of May 30. The company has been raising its dividend for the past 39 years at an annual average rate of 6%. At the end of Q1 2022, Exxon Mobil Corporation (NYSE:XOM) represented 0.14% of Tom Russo’s portfolio, as his hedge fund increased its position in the company by 1% during the quarter.
Among the 900+ elite funds tracked by Insider Monkey, 83 hedge funds were bullish on Exxon Mobil Corporation (NYSE:XOM) in Q1 2022, up from 71 in the quarter earlier. The consolidated value of these stakes is over $8.5 billion, reflecting growth from $5.3 billion worth of stakes held by hedge funds in Q4 2021.
Saturna Capital mentioned Exxon Mobil Corporation (NYSE:XOM) in its Q4 2021 investor letter. Here is what the firm has to say:
“Few companies maintain their position at the top for more than a decade or two. One that did was Exxon, which appeared decennially from 1980 through 2010. In 2019 it was ranked 10th, but as of writing has dropped to 39th place.”
2. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 55
Dividend Yield as of May 30: 4.67%
Gardner Russo & Gardner’s Stake Value: $658,103,000
An American multinational tobacco company, Philip Morris International Inc. (NYSE:PM) was the seventh-largest holding of Gardner Russo & Gardner at the end of Q1 2022. The hedge fund owned over 7 million shares in the company, worth over $658 million, which accounted for 6.33% of Tom Russo’s portfolio.
As per Insider Monkey’s Q1 2022 database, 55 hedge funds reported owning stakes in Philip Morris International Inc. (NYSE:PM), valued at over $6.6 billion. In the previous quarter, 47 hedge funds owned a collective stake worth over $6.1 billion in the company. Among these hedge funds, GQG Partners was the largest shareholder of the New York-based company in Q1 2022, owning roughly 30 million shares, valued at over $2.8 billion.
In March, Philip Morris International Inc. (NYSE:PM) announced a quarterly dividend of $1.25 per share, in line with its previous dividend. The company has been raising its dividend ever since becoming a public company in 2008. As of May 30, the stock’s dividend yield was recorded at 4.67%.
Broyhill Asset Management mentioned Philip Morris International Inc. (NYSE:PM) in its Q2 2021 investor letter. Here is what the firm has to say:
“Philip Morris (PM) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 23%. We shared our thoughts on these regulations during the quarter, which are available here.
‘PM Valuation. PM is up ~ 15% YTD and would have the most to gain under a nicotine cap. A cap would likely accelerate conversion to iQOS, which is 100% incremental for PM (PM also has zero exposure to combustible cigarettes in the U.S. and licenses its IQOS product for MO to distribute domestically). As such, the decline in PM was much more muted, with the stock hitting new 52 week highs a day after the Biden headline, driven by yesterday’s earnings release. It didn’t take long for investors to shift their attention back to fundamentals and the fundamentals here are best in class. In short, results beat estimates across the board (a recurring theme here), and management raised guidance for the full year (another recurring theme). IQOS continued to deliver impressive growth, recording continued market share gains on the heels of continued user acquisition growth, up 1.5M to 19.1M total users. Importantly, IQOS now represents nearly 30% of PM net revenues (management expects “smoke-free” products to represent more than half of their business by 2025, which should make the ESG folks happy), which is driving top-line growth and margin expansion. Hard to believe that they have created a product with higher margins than combustible cigarettes!! We expect PM operating margins to increase by 100bps – 200bps annually as IQOS continues to gain share. The stock trades at ~ 15x today or 2/3 of the market’s multiple for a business likely to generate $35B in cash flow – or 25% of the market cap – in just the next three years. Over the last decade, shares have traded at an average multiple of 18x and within a range of ~ 14x – 22x (+/-1 standard deviation). The stock yields 5.1% at the current price, and we expect management to resume share purchases in the back half of this year.’”
1. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 47
Dividend Yield as of May 30: 6.61%
Gardner Russo & Gardner’s Stake Value: $17,323,000
Altria Group, Inc. (NYSE:MO) is an American manufacturing company, that produces tobacco, cigarettes, and other related products. Gardner Russo & Gardner increased its position in the company by 1% during the first quarter of 2022, owning shares worth $17.3 million. The company constituted 0.16% of Tom Russo’s portfolio.
In May, Altria Group, Inc. (NYSE:MO) declared a quarterly dividend of $0.90 per share, in line with its previous dividend. The company has raised its dividend 56 times in the past 52 years. As of May 30, the stock’s dividend yield stood at 6.61%.
In Q1 2022, Altria Group, Inc. (NYSE:MO) reported stable earnings, posting an EPS of $1.12, which beat the market estimates by $0.03. However, the company’s revenue of $4.82 billion missed the expectations by $60 million. Following its quarterly results, in April, Deutsche Bank lifted its price target on Altria Group, Inc. (NYSE:MO) to $60, while maintaining a Buy rating on the shares.
At the end of March 2022, 47 hedge funds tracked by Insider Monkey reported owning stakes in Altria Group, Inc. (NYSE:MO), up from 39 in the previous quarter. The collective value of these stakes is roughly $2 billion, compared with over $1.05 billion worth of stakes held by hedge funds in Q4 2021.
Broyhill Asset Management also mentioned Altria Group, Inc. (NYSE:MO) in its Q2 2021 investor letter. Here is what the firm had to say:
“Altria (MO) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 20%. We shared our thoughts on these regulations during the quarter, which are available here.
MO Valuation. MO is up ~ 18% YTD (even accounting for the recent sell-off). We expect MO to generate close to $5 in annual FCF per share over the next few years, putting the stock at ~ 10x, which is less than half the market’s multiple today. Over the last decade, shares have traded at an average multiple of 15x and within a range of ~ 10x – 20x (+/-1 standard deviation). The stock yields 7.2% at the current price, close to a 6% premium to treasuries. Historically, shares have traded closer to a 3% premium to the 10Y, which would imply a ~ $75 share price.”
You can also take a look at 15 Best Undervalued Stocks to Buy Now and 10 Best Mid-Cap Stocks To Buy Now
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