In this article, we discuss 10 best dividend stocks to buy according to Kenneth A. Moffet’s Hourglass Capital.
Kenneth A. Moffet is a financial advisor and is currently serving as the Managing Principal of Houston-based investment management firm, Hourglass Capital. The hedge fund was founded in 1989 by the Institutional Equity Team, further expanding its investment offerings and advisory services in 2008.
Before joining Hourglass Capital, Moffet honed his investment skills while working as an Executive Director with Morgan Stanley, where he managed over $2 billion worth of client assets. He also worked at Goldman Sachs and used to manage private client accounts in the US and Mexico. Hourglass Capital uses top-down and bottom-up investment approaches while analyzing the true intrinsic value of the companies. The firm pays attention to asset prices and the value of the stocks and tries to benefit from the imbalance created between the market prices and the long-term values of the companies.
In its Q1 2022 investor’ letter, the hedge fund showed confidence in its energy stocks as the Energy sector of the S&P 500 returned 39% in the first quarter, compared with a -4.6% return of the S&P 500. The fund further expects the energy stocks to deliver more as the sector is well-positioned to benefit from the free cash flow growth. Hourglass Capital returned 5.4% in the first quarter of 2022 while delivering a 31.25% return to investors in 2021.
As of Q1 2022, Hourglass Capital holds a 13F portfolio value of over $320 million, up from $298.6 million in the previous quarter. The hedge fund has significant stakes in finance, healthcare, and the basic material sectors. As the tech-heavy NASDAQ is down 24.24% year-to-date, as of the market close of June 2, the hedge fund reduced its position in some of the major blue-chip tech stocks, such as Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT).
Our Methodology:
In this article, we discuss the best dividend stocks in Kenneth A. Moffet’s portfolio. The data mentioned in this list is taken from Hourglass Capital’s 13F portfolio as of Q1 2022.
10 Best Dividend Stocks to Buy According to Kenneth A. Moffet’s Hourglass Capital
10. Continental Resources, Inc. (NYSE:CLR)
Number of Hedge Fund Holders: 20
Dividend Yield as of June 2: 1.62%
Hourglass Capital’s Stake Value: $3,682,000
Continental Resources, Inc. (NYSE:CLR) is an American energy company that specializes in the production and exploration of petroleum and natural gas. The company plans to take advantage of higher crude oil prices as it announced to raise oil production to 200K-210K bbl from 195K-205K in 2022. In Q1 2022, Continental Resources, Inc. reported revenue of $1.82 billion, up from $1.21 billion recorded during the same period last year.
In April, Continental Resources, Inc. announced a 22% hike in its quarterly dividend to $0.28 per share, which was the company’s fifth consecutive quarterly increase since 2019. The stock’s dividend yield was recorded at 1.62%, as of the close of June 2. In April Truist appreciated the strong share repurchase program of Continental Resources, Inc. and believes that the company is well-positioned to take advantage of strong commodity prices. The firm lifted its price target on the stock to $95, with a Buy rating on the shares.
At the end of Q1 2022, Hourglass Capital held shares worth roughly $3.7 million in Continental Resources, Inc., increasing its position in the company by 14% during the quarter. The company represented 1.15% of Kenneth A. Moffet’s portfolio. The hedge fund paid attention to the energy sector in Q1 while reducing stakes in tech companies such as Apple Inc., Alphabet Inc., and Microsoft Corporation.
As per Insider Monkey’s Q1 2022 database, 20 hedge funds were bullish on Continental Resources, Inc., up from 19 in the previous quarter. The consolidated value of these stakes is over $261.4 million. With a stake worth $87 million, D E Shaw held the largest position in the Oklahoma-based company in Q1 2022.
Smead Capital Management mentioned Continental Resources, Inc. in its Q3 2021 investor letter. Here is what the firm has to say:
“Oil stocks dominated our winners for the quarter. Continental Resources (CLR) rose 21.82% as the stock market had to reprice future cash flows on higher energy prices.”
9. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 60
Dividend Yield as of June 2: 1.79%
Hourglass Capital’s Stake Value: $5,570,000
Hourglass Capital initiated its position in Walmart Inc. (NYSE:WMT) during the first quarter of 2020 with shares worth over $2.7 million. During Q1 2022, the hedge fund purchased additional 4,000 WMT shares worth $737,000, taking its total stake in the company to over $5.57 million. WMT accounted for 1.74% of Kenneth A. Moffet’s portfolio.
At the end of Q1 2022, 60 hedge funds in Insider Monkey’s database reported owning stakes in Walmart Inc., down from 63 in the previous quarter. The collective value of these stakes is over $6.56 billion.
This February, Walmart Inc. raised its quarterly dividend by 2% to $0.56 per share, taking its annual dividend to $2.24 per share. The company has been raising dividends consistently for the past 49 years. As of June 2, the stock’s dividend yield stood at 1.79%. This May, BMO Capital lowered its price target on Walmart Inc. to $165, with an Outperform rating on the shares. The firm expressed concerns about rising food prices but continues to view it as a highly attractive global retailer.
8. HP Inc. (NYSE:HPQ)
Number of Hedge Fund Holders: 35
Dividend Yield as of June 2: 2.48%
Hourglass Capital’s Stake Value: $4,701,000
HP Inc. (NYSE:HPQ) currently pays a quarterly dividend of $0.25 per share, having raised it by 29% in November 2021. In the past ten years, the company has raised its dividend at a CAGR of 15.1% and its payout ratio stands at 20.1%. As of June 2, the stock’s dividend yield was recorded at 2.48%.
In fiscal Q2 2022, HP Inc. topped market estimates, posting an EPS of $1.08, which beat analysts’ consensus by $0.03. The company’s revenue of $16.49 billion presented a 3.86% year-over-year growth and also surpassed estimates by $299.6 million. Appreciating the company’s commercial and premium PC growth in the fiscal second quarter, Citigroup recently lifted its price target on HP Inc. to $40, but kept a Neutral rating on the shares, as the company’s competitor Dell posted much stronger results.
The number of hedge funds tracked by Insider Monkey owning stakes in HP Inc. stood at 35 in Q1 2022, declining from 39 funds in the previous quarter. These 35 hedge funds owned a collective stake worth over $4.17 billion, up from $963.4 million worth of stakes held by hedge funds in Q4 2021. Warren Buffett’s Berkshire Hathaway owned the largest stake in the California-based company in Q1 2022, worth roughly $3.8 billion.
At the end of Q1 2022, Hourglass Capital owned 129,510 HPQ shares, valued at over $4.7 million. The company accounted for 1.46% of Kenneth A. Moffet’s portfolio.
7. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 53
Dividend Yield as of June 2: 3.22%
Hourglass Capital’s Stake Value: $7,240,000
Hourglass Capital initiated its position in Chevron Corporation (NYSE:CVX) during the fourth quarter of 2015, purchasing 24,104 shares, worth over $2.1 million. At the end of Q1 2022, the hedge fund held shares worth over $7.2 million in the energy company, which accounted for 2.26% of Kenneth A. Moffet’s portfolio.
In January, Chevron Corporation raised its quarterly dividend by 6% to $1.42 per share. This marked the company’s 35th consecutive year of dividend growth. The stock’s dividend yield was recorded at 3.22% on June 2. On May 31, Barclays raised its price target on Chevron Corporation to 196, with an Overweight rating on the shares, appreciating the company’s share repurchase program.
At the end of Q1 2022, 53 hedge funds tracked by Insider Monkey owned stakes in Chevron Corporation, the same as in the previous quarter. The consolidated value of these stakes is roughly $28 billion, compared with $6.5 billion worth of stakes owned by hedge funds in Q4 2021. Warren Buffett, Ken Fisher, and Ken Griffin are some of the major shareholders of the California-based energy company in Q1 2022.
ClearBridge Investments mentioned Chevron Corporation in its Q1 2022 investor letter. Here is what the firm has to say:
“The energy sector, which led a strong market in 2021, generated even more dramatic relative performance in the quarter, advancing 39% and leading the benchmark Russell 1000 Value Index. Years of restrained investment in the energy sector, combined with a strong post-pandemic recovery, contributed to the higher commodity prices. The upward pressure escalated with the Russian invasion of Ukraine. Our energy holding Chevron (NYSE:CVX) benefited from higher commodity prices and was among the top contributors to first-quarter performance.”
6. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 83
Dividend Yield as of June 2: 3.60%
Hourglass Capital’s Stake Value: $6,559,000
Exxon Mobil Corporation (NYSE:XOM), formed by the merger of Exxon and Mobil in 1999, is an American multinational oil and gas company. Insider Monkey’s Q1 2022 database shows that the company remained popular among hedge funds, with 83 funds holding positions in the company, up from 71 hedge funds in the previous quarter. The collective value of the stakes held by 83 hedge funds stood at over $8.55 billion.
At the end of Q1 2022, Hourglass Capital owned a stake worth over $6.55 million in Exxon Mobil Corporation, buying additional 11,000 XOM shares during the quarter. The company constituted 2.04% of Kenneth A. Moffet’s portfolio. The hedge fund started building its position in the company during the fourth quarter of 2015, with shares worth over $3 million.
On May 31, Barclays raised its price target on Exxon Mobil Corporation to $111, with an Overweight rating on the shares. The stock is up 47.27% year-to-date, as of the close of June 2, unlike major stocks such as Apple Inc., Alphabet Inc., and Microsoft Corporation, which are delivering negative returns since the beginning of the year.
Exxon Mobil Corporation holds a 39-year track record of consistent dividend growth. Currently, the company pays a quarterly dividend of $0.88 per share, with a dividend yield of 3.60%, as of June 2.
Saturna Capital mentioned Exxon Mobil Corporation 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.”
5. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 76
Dividend Yield as of June 2: 3.86%
Hourglass Capital’s Stake Value: $14,326,000
An American biopharmaceutical company, AbbVie Inc. (NYSE:ABBV) was the largest holding of Hourglass Capital in the first quarter of 2022. The hedge fund owned 88,371 ABBV shares, after increasing its position in the company by 2% during the quarter. The shares are valued at over $14.3 million, representing 4.47% of Kennet A. Moffet’s portfolio.
In February, AbbVie Inc. declared a quarterly dividend of $1.41 per share. The company raised its dividend in October 2021 by 9%. The company has raised its dividend for consecutive 50 years, including its years as Abbott’s subsidiary before 2013. Moreover, since 2013, AbbVie Inc. has increased its dividend by 250%. The stock’s dividend yield came to be recorded at 3.86%.
In its May investors’ note, Wells Fargo mentioned that from 2023 to 2028, the firm sees the sales of AbbVie Inc. growing at a CAGR of 5%-11%, versus a consensus of 2%-4%. In view of this, the firm lifted its price target on the stock to $200 while maintaining an Overweight rating on the shares.
At the end of Q1 2022, 76 hedge funds tracked by Insider Monkey reported owning a $3.66 billion worth of collective stake in AbbVie Inc.. In comparison, 82 hedge funds held positions in the company in the previous quarter, with stakes valued at over $3.74 billion. Arrowstreet Capital was the largest shareholder of the company, holding stakes worth over $754 million.
Miller Howard Investments mentioned AbbVie Inc. 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.”
4. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 51
Dividend Yield as of June 2: 4.07%
Hourglass Capital’s Stake Value: $4,682,000
3M Company (NYSE:MMM), an American multinational manufacturing company, delivered a solid start to 2022, posting an EPS of $2.65 in the first quarter, which surpassed analysts’ expectations by $0.34. The company generated revenue of $8.83 billion, beating estimates by $81.35 million. Following the company’s first-quarter results, in April, Credit Suisse set a $161 price target on 3M Company, but kept a Neutral rating on the shares, noting the supply chain issues faced by the company.
As per Insider Monkey’s Q1 2022 data, 51 hedge funds were bullish on 3M Company, showing growth from 41 funds in the previous quarter. The consolidated value of these stakes stood at over $1.53 billion. Among these hedge funds, Fisher Asset Management was the leading stakeholder of the Minnesota-based company in Q1 2022, with stakes worth over $898 million.
In Q1 2022, Hourglass Capital increased its position in 3M Company by 44%, owning 31,450 MMM shares, worth roughly $4.7 million. The company represented 1.46% of Kenneth A. Moffet’s portfolio.
In May this year, 3M Company declared a quarterly dividend of $1.49 per share, consistent with the previous dividend. The company maintains a 63-year track record of consistent dividend growth, with a five-year CAGR of 5.38%. As of June 2, the stock’s dividend yield stood at 4.07%.
3. The Williams Companies, Inc. (NYSE:WMB)
Number of Hedge Fund Holders: 38
Dividend Yield as of June 2: 4.54%
Hourglass Capital’s Stake Value: $6,161,000
The Williams Companies, Inc. (NYSE:WMB) is an American energy company with core businesses in natural gas processing and transportation. At the end of Q1 2022, Hourglass Capital owned 184,396 shares in the company, worth over $6.1 million. The company accounted for 1.92% of Kenneth A. Moffet’s portfolio.
The number of hedge funds tracked by Insider Monkey owning stakes in The Williams Companies, Inc. stood at 38 in Q1 2022, the same as in the previous quarter. These stakes are valued at $410.6 million. Arrowstreet Capital was the largest shareholder of the Oklahoma-based company, owning stakes worth over $76.3 million.
This April, Morgan Stanley lifted its price target on The Williams Companies, Inc. to $40, with an Equal Weight rating on the shares, presenting a bullish view of the midstream sector. The Williams Companies, Inc. pays a quarterly dividend of $0.425 per share, growing it by 4% in February. The stock’s dividend yield stood at 4.54%, as of the close of June 2.
ClearBridge Investments mentioned The Williams Companies, Inc. in its Q4 2021 investor letter. Here is what the firm has to say:
“On a regional level, the Strategy’s largest exposure is in the U.S. and Canada (58%) consisting of regulated and contracted utilities (31%) and economically sensitive user-pays infrastructure (27%). During the quarter we initiated new positions in U.S. energy infrastructure company Williams Companies. With supply chain issues, higher housing costs, higher commodity prices and producer price inflation remaining square in the sights for 2022, we think higher inflation is a risk for global markets. We expect growth to slow to trend or below by mid-2022 and U.S. Treasury yields to rise, which will mean a continuation of negative real bond yields. Additional forecast volatility and therefore market uncertainty will arise as new COVID-19 variants appear and circulate. However, with high levels of vaccination across the developed world and less propensity for mobility restrictions and lockdowns, we expect the economic implications to be limited.
2. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 43
Dividend Yield as of June 2: 4.73%
Hourglass Capital’s Stake Value: $5,751,000
International Business Machines Corporation (NYSE:IBM) is an American multinational tech company, having operations in over 171 countries. In May, the company signed an agreement with Amazon Web Services (AWS), offering its software catalog on AWS. This partnership will allow clients to have quick and easy access to IBM software.
In April 2022, International Business Machines Corporation declared a 0.6% growth in its quarterly dividend, which marked the company’s 27th consecutive year of dividend growth. Moreover, the company has paid consecutive quarterly dividends since 1916. As of June 2, the stock’s dividend yield came in at 4.73%.
As International Business Machines Corporation reported a 13% year-over-year growth in its Consulting revenue in Q1 2022, BMO Capital, in April, raised its price target on the stock to $152, with a Market Perform rating on the shares.
At the end of Q1 2022, Hourglass Capital held shares worth over $5.7 million in International Business Machines Corporation, accounting for 1.79% of Kenneth A. Moffet’s portfolio. The hedge fund first invested in the company during the first quarter of 2016 with 30,150 shares, worth $4.36 million.
According to Insider Monkey’s Q1 2022 data, 43 hedge funds held stakes in International Business Machines Corporation, valued at over $1.16 billion. In comparison, 44 hedge funds held positions in the company in the previous quarter, with stakes valued at roughly $1.3 billion.
St. James Investment Company mentioned International Business Machines Corporation in its Q4 2021 investor letter. Here is what the firm has to say:
“IBM was not the first company to build computers. The distinction belongs to Sperry-Rand’s subsidiary UNIVAC, which introduced the first commercially successful computers in the early 1950s. In this era, IBM did possess the largest research and development department of the business machines industry and quickly caught up, introducing cost-competitive computers a few years after UNIVAC. By the late 1950s, IBM held the dominant market share in computers. IBM also touted a vastly superior sales organization, which used a sales tactic called “paper machines” (the equivalent of today’s “vaporware”). If a competitor’s product was selling well in a market segment that IBM had yet to penetrate, the company would announce a competing product and start taking orders for the “paper machine” long before it was available.
One cannot overstate how powerful IBM was in the computer industry in the 1950s and 1960s. Every competitor rightly worried that if their product worked too well for too long, it was only a matter of time before an army of IBM salesforce representatives mobilized. In their easily recognizable uniforms of starched white shirts, red ties and blue suits, IBM marketers marched on their customers and offered a more expensive, but much more defensible, choice. “Nobody gets fired for buying IBM” was a common phrase. Even competitors acknowledged that the company excelled at sales. As a UNIVAC executive once complained, ‘It doesn’t do much good to build a better mousetrap if the other guy selling mousetraps has five times as many salesmen.’” (Click here to see the full text)
1. Kinder Morgan, Inc. (NYSE:KMI)
Number of Hedge Fund Holders: 40
Dividend Yield as of June 2: 5.59%
Hourglass Capital’s Stake Value: $5,549,000
Kinder Morgan, Inc. (NYSE:KMI) is an American energy infrastructure company that specializes in controlling oil and gas pipeline terminals. In Q1 2022, the company reported a 2% growth in natural gas transport volumes, compared to the first quarter of 2021. Moreover, Kinder Morgan, Inc. also reported a 12% year-over-year growth in its natural gas gathering volumes.
In May, Truist initiated its coverage on Kinder Morgan, Inc., with a Buy rating and a $22 price target. On April 20, the company announced a 3% hike in its quarterly dividend to $0.2775 per share. This was the company’s 5th consecutive year of dividend growth. As of June 2, the stock’s dividend yield came in at 5.59%.
At the end of Q1 2022, Hourglass Capital held stakes worth roughly $5.6 million in Kinder Morgan, Inc., which represented 1.73% of Kenneth A. Moffet’s portfolio. The hedge fund increased its position in the company by 34% during the quarter.
As per Insider Monkey’s Q1 2022 database, 40 hedge funds held stakes in Kinder Morgan, Inc., up from 39 in the previous quarter. The consolidated value of these stakes is over $1.34 billion. FPR Partners held the largest stake in the Texas-based company in Q1 2022, with shares worth over $307.3 million.
You can also take a look at 10 Value Stocks Hedge Funds Like in 2022 and Oil Price Predictions for 2022 and 10 Stocks to Watch
Follow Insider Monkey on Twitter
Suggested articles:
- 10 Safe Stocks To Invest in For The Long-Term in 2022
- 10 Undervalued Dividend Stocks to Buy in 2022
- Top 10 Blue Chip Stocks to Buy in 2022
This article is originally published at Insider Monkey.
