5 Dividend Stocks to Buy According to Donald Yacktman’s Hedge Fund

1. Altria Group, Inc. (NYSE:MO)

Number of Hedge Fund Holders: 45
Dividend Yield: 8.16%

Altria Group, Inc. (NYSE:MO), an American tobacco company, remains one of the best dividend stocks to buy according to Donald Yacktman’s hedge fund, as the company has a 13-year track record of consistent dividend growth.

This October, Morgan Stanley set a $47 price target on Altria Group, Inc. (NYSE:MO), with an Equal Weight rating on the shares. The stock has delivered an 8.15% return to shareholders, while its 12-month gains stand at 9.88%.

Among the 867 hedge funds tracked by Insider Monkey, Harris Associates was the largest shareholder of Altria Group, Inc. (NYSE:MO) in Q3, holding a $232.6 million worth of stake. Overall, 45 hedge funds held positions in the company in Q3, down from 47 in the previous quarter. These stakes are valued at $829.7 million.

Broyhill Asset Management mentioned Altria Group Inc (NYSE:MO) in its Q2 2021 investor letter. Here is what the firm has 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 10 Best Dividend Stocks Under $20 and 10 Best Healthcare Dividend Stocks

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