In this article, we discuss the 10 best dividend stocks to buy according to Joel Greenblatt’s Gotham Asset Management.
Joel Greenblatt is a famous value investor who founded Gotham Capital, an investment firm, in 1985. He is currently serving as the Managing Principal and Co-Chief Investment Officer of the firm’s successor, Gotham Asset Management.
Greenblatt’s ‘Magic Formula’ investing is one of the simplest strategies put forward by him in his book ‘The Little Book that Still Beats the Market’. The strategy revolves around investing in high-quality companies with stable fundamentals and cheap valuations. Through this strategy, Greenblatt was able to set up one of the greatest 10-year records, as his hedge fund averaged 50% in returns per year from 1985-1994. Also, from 1988 to 2004, underpinned by the Magic Formula, the hedge fund returned an annualized 30.8%, compared with a 12.4% return of S&P 500 during the same time period.
As of Q3 2021, Joel Greenblatt’s portfolio has a value of over $2.4 billion. His hedge fund invests heavily in technology, consumer goods, finance, and healthcare, among other sectors. Some of the famous holdings of Gotham Asset Management as of Q3 are Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Meta Platforms, Inc. (NASDAQ:FB).
However, in this article, we will focus on dividend stocks in Joel Greenblatt’s 13F portfolio in Q3.
Joel Greenblatt of Gotham Asset Management
Our Methodology:
In this article, we will focus on dividend stocks in Gotham Asset Management’s 13F portfolio as of Q3. We considered the stocks with maximum years of dividend growth for the list. Along with this, analysts’ ratings and business fundamentals were considered while choosing the stocks. The hedge fund sentiment for each stock was measured by using Insider Monkey’s data of the 867 hedge funds for Q3.
Dividend Stocks to Buy According to Joel Greenblatt’s Gotham Asset Management
10. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 81
Dividend Yield: 3.99%
AbbVie Inc. (NYSE:ABBV) is an American biopharmaceutical company. Gotham Asset Management started investing in the company during the first quarter of 2013. In Q3 2021, the hedge fund held a stake worth $11 million in AbbVie Inc. (NYSE:ABBV), which represents 0.46% of Joel Greenblatt’s portfolio.
On October 29, AbbVie Inc. (NYSE:ABBV) increased its dividend by 9% to $1.41 per share. The stock’s current dividend yield stands at 3.99%, which is higher than the biopharmaceutical industry’s average yield of 2.99%.
At the end of Q3, 81 hedge funds tracked by Insider Monkey reported owning stakes in AbbVie Inc. (NYSE:ABBV), down from 82 in the preceding quarter. These stakes are valued at over $4.14 billion. Warren Buffett’s hedge fund, Berkshire Hathaway, was the company’s largest shareholder in Q3, holding shares worth $1.5 billion.
Like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Meta Platforms, Inc. (NASDAQ:FB), AbbVie Inc. (NYSE:ABBV) is also becoming famous among investors.
Artisan Partners mentioned AbbVie Inc. (NYSE:ABBV) in its Q3 2021 investor letter. Here is what the firm has to say:
“Our sales included Abbvie, a biopharmaceutical company. Abbvie was a smaller position in the portfolio. We had concerns about its capital allocation and a stretched balance sheet, so we chose to move on.”
9. The Coca-Cola Company (NYSE:KO)
Dividend Yield: 2.89%
Number of Hedge Fund Holders: 61
The Coca-Cola Company (NYSE:KO)’s EPS for the third quarter beat analysts’ expectations by $0.07 at $0.06. Moreover, unit case volume grew by 6% globally. As the sales at The Coca-Cola Company (NYSE:KO) have taken off due to the reopening of businesses, recently, JPMorgan upgraded the shares to Overweight, with a $63 price target, up from $59.
In Q3 2021, Gotham Asset Management increased its stake in The Coca-Cola Company (NYSE:KO) by 77%, which represented 0.46% of the hedge fund’s 13F portfolio. The company has a 59-year track record of consistent dividend growth and offers an industry-leading dividend yield of 2.89%, which makes it one of the best dividend stocks to buy according to Joel Greenblatt’s Gotham Asset Management.
As of Q3, 61 hedge funds tracked by Insider Monkey were bullish on The Coca-Cola Company (NYSE:KO), compared with 62 in the previous quarter. These stakes hold a consolidated value of $25.1 billion, up from $24.9 billion in Q2.
8. Merck & Co., Inc. (NYSE:MRK)
Dividend Yield: 3.64%
Number of Hedge Fund Holders: 77
Merck & Co., Inc. (NYSE:MRK) is an American pharmaceutical company that also offers health solutions through its medicines. On November 30, the company announced a 6% growth in its dividend at $0.69 per share, with a dividend yield of 3.64%. Also, Merck & Co., Inc. (NYSE:MRK) has been growing its dividend for the past 11 years consistently, which places it in the list of the best dividend stocks to buy according to Joel Greenblatt’s Gotham Asset Management.
At the end of September quarter 2021, 77 hedge funds tracked by Insider Monkey reported owning stakes in Merck & Co., Inc. (NYSE:MRK), down from 79 in the previous quarter. The consolidated value of these stakes is over $4.55 billion. Fisher Asset Management held the largest stake in Merck & Co., Inc. (NYSE:MRK) in Q3, worth $798.6 million.
Gotham Asset Management made its first investment in Merck & Co., Inc. (NYSE:MRK) during the first quarter of 2011, worth $617,000. In Q3 2021, the fund owns shares worth over $12 million in the company, which represented 0.48% of the hedge fund’s 13F portfolio.
Artisan Partners mentioned Merck & Co., Inc. (NYSE:MRK) in its Q1 2021 investor letter. Here is what the firm has to say:
“In Q1, we initiated a position in Merck, a provider of health care solutions including prescription medicines, vaccines, biologic therapies, animal health and consumer care products. We purchased Merck when the stock came under pressure in part on concerns that the newly minted Biden administration could implement regulatory changes and lower drug costs in the pharmaceutical industry. Recent, but anticipated changes to Merck’s management team have also weighed on shares, as have concerns over the company’s heavy reliance on immunotherapy treatment Keytruda. Notably, Merck is not getting much credit from investors for the 60+ programs it has in clinical development, despite having several solid and large new product opportunities. Additionally, the company’s strong balance sheet and robust free cash flow provide it multiple options for future partnerships and acquisitions. While Merck is undergoing a period of transition, we think the company’s fundamentals are strong and believe changes to management should be a catalyst for improvement.”
7. Exxon Mobil Corporation (NYSE:XOM)
Dividend Yield: 5.86%
Number of Hedge Fund Holders: 64
Exxon Mobil Corporation (NYSE:XOM) is an American gas and oil company that also specializes in sustainable energy solutions for its consumers. In Q3 2021, Gotham Asset Management increased its stake in the company significantly by 129% and now owns shares worth $12.4 million.
Currently, Exxon Mobil Corporation (NYSE:XOM) pays an annual dividend of $3.52 per share, with a dividend yield of 5.86%. The company is one of the best dividend stocks in Joel Greenblatt’s portfolio as it holds a 37-year track record of consistent dividend growth. Recently, JPMorgan presented a positive outlook on Exxon Mobil Corporation (NYSE:XOM) due to the expected free cash flow growth in the coming years. The firm lifted its price target on the stock to $83, while maintaining an Overweight rating on the shares.
The number of hedge funds tracked by Insider Monkey having stakes in Exxon Mobil Corporation (NYSE:XOM) declined to 64 in Q3 2021, from 68 in the preceding quarter. These stakes hold a consolidated value of over $4.6 billion, up from $3.69 billion in Q2.
First Eagle Investment Management mentioned Exxon Mobil Corporation (NYSE:XOM) in its Q2 2021 investor letter. Here is what the firm has to say:
“Leading contributors in the First Eagle Global Fund this quarter included Exxon Mobil Corporation. The continued recovery in oil prices as economies reopen helped fuel another strong performance across the energy complex, including shares of Exxon Mobil. Exxon Mobil recently lost a proxy fight with an activist investor that took three of the company’s 12 board seats. While the press was focused on the investor’s concerns over Exxon Mobil’s long-term energy transformation strategy, other factors fundamental to shareholder returns—like capital discipline and balance sheet management—were also at play.”
6. PPL Corporation (NYSE:PPL)
Dividend Yield: 5.62%
Number of Hedge Fund Holders: 20
An American energy company, PPL Corporation (NYSE:PPL) is one of the newest acquisitions of Gotham Asset Management in Q3 2021. The hedge fund held positions in the company previously as well but sold its entire stake by the fourth quarter of 2020. In Q3 2021, PPL Corporation (NYSE:PPL) represented 0.53% of Joel Greenblatt’s portfolio.
As of Q3 2021, 20 hedge funds tracked by Insider Monkey held stakes in PPL Corporation (NYSE:PPL), down from 23 in the previous quarter. The total value of these stakes is over $140.7 million. With over 1.1 million shares, Renaissance Technologies was the largest stakeholder of the company in Q3 2021.
On November 19, PPL Corporation (NYSE:PPL) announced a quarterly dividend of $0.415 per share, with a dividend yield of 5.62%. Recently, Wells Fargo upgraded the shares to Overweight, with a $34 price target. In Q3, PPL Corporation (NYSE:PPL) reported revenue of $1.51 billion, presenting a 7.9% year-over-year growth. In the past year, the stock returned 9.68%, as of the close of December 16.
PPL Corporation (NYSE:PPL) is one of the notable stocks in Greenblatt’s portfolio, like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Meta Platforms, Inc. (NASDAQ:FB).
Miller/Howard Investments mentioned PPL Corporation (NYSE:PPL) in its Q1 2021 investor letter. Here is what the firm has to say:
“PPL Corp. (PPL) announced the sale of its UK utility business to National Grid (NGG). In a separate transaction, PPL acquired NGG’s Rhode Island utility business. Once the dust settles, we expect PPL to rerate toward US peers.”
5. Target Corporation (NYSE:TGT)
Dividend Yield: 1.61%
Number of Hedge Fund Holders: 49
Target Corporation (NYSE:TGT), an American retail company, holds a 50-year track record of consistent dividend growth.
In Q3 2021, Target Corporation (NYSE:TGT) posted an EPS of $3.03, surpassing estimates by $0.23. Overall, the company has beaten revenue and EPS estimates 100% of the time over the last two years.
Gotham Asset Management started building its position in Target Corporation (NYSE:TGT) during the fourth quarter of 2010. In Q3 2021, the company accounted for 0.55% of Joel Greenblatt’s portfolio.
At the end of Q3 2021, 49 hedge funds tracked by Insider Monkey were bullish on Target Corporation (NYSE:TGT), down from 66 in the previous quarter. These stakes hold a consolidated value of over $4.3 billion.
Nelson Capital Management mentioned Target Corporation (NYSE:TGT) in its Q2 2021 investor letter. Here is what the firm has to say:
“We added Target (tkr: TGT) to our consumer staples sector. Target offers a broad array of products in owned and known brand items at affordable prices. Its omnichannel fulfilment centers allow customers to receive their items via in-store pickup, curbside pickup, same-day shipping and regular shipping while simultaneously reducing operating costs. With a significantly lower valuation than peers and a unique operating strategy, Target is an attractive holding.”
4. Automatic Data Processing, Inc. (NASDAQ:ADP)
Dividend Yield: 1.81%
Number of Hedge Fund Holders: 43
Automatic Data Processing, Inc. (NASDAQ:ADP) is an American company that offers HR solutions to its consumers. In Q3 2021, the number of hedge funds tracked by Insider Monkey having stakes in the company grew to 43, from 41 in the previous quarter. These stakes hold a consolidated value of $3.6 billion, up from $3 billion in Q2.
Gotham Asset Management increased its stake by 28% in Automatic Data Processing, Inc. (NASDAQ:ADP) in Q3, and now holds shares worth $14.4 million.
On November 10, Automatic Data Processing, Inc. (NASDAQ:ADP) increased its quarterly dividend by 12% to $1.04 per share, with a dividend yield of 1.81%. The company has a track record of 46 years of consistent dividend growth.
3. Cisco Systems, Inc. (NASDAQ:CSCO)
Dividend Yield: 2.45%
Number of Hedge Fund Holders: 63
Cisco Systems, Inc. (NASDAQ:CSCO) is an American technology company that mainly specializes in hardware, software, and telecommunications equipment. Recently, the company was listed as one of the top picks of Evercore for 2022 in the hardware and IT sector.
Cisco Systems, Inc. (NASDAQ:CSCO) has an 11-year track record of consistent dividend growth.
ClearBridge Investments mentioned Cisco Systems, Inc. (NASDAQ:CSCO) in its Q1 2021 investor letter. Here is what the firm has to say:
“Also in IT, we added Cisco Systems, which provides IT and networking services in the form of network security, software development and cloud computing. Cisco continues to derive over 50% of its sales from on-premise deployments of its products of enterprise and small and midsize customers, while recurring revenues from software are becoming a larger part of the mix. Return-to-office enterprise spending should offer upside to its core campus business. Cisco was an early technology leader in sustainability over two decades ago, through its Internet-connecting capabilities which supported live concerts in partnership with the United Nations Development Program to raise awareness and funds to fight poverty. Cisco has very strong environmental standards (including driving lower energy consumption in IT departments through new product innovations and a longstanding goal to reduce emissions and reliance on non-renewable energy sources). Its data privacy and supply chain management policies are best in class.”
2. Johnson & Johnson (NYSE:JNJ)
Dividend Yield: 2.52%
Number of Hedge Fund Holders: 88
Gotham Asset Management started investing in Johnson & Johnson (NYSE:JNJ) during the fourth quarter of 2010. In Q3 2021, the hedge fund held a stake worth $18.1 million in the company, which represented 0.73% of its portfolio.
Johnson & Johnson (NYSE:JNJ) has been paying dividends to its shareholders consecutively for the past 59 years. Currently, the company pays an annual dividend of $4.24 per share, with a dividend yield of 2.52%.
Distillate Capital mentioned Johnson & Johnson (NYSE:JNJ) in its Q2 2021 investor letter. Here is what the firm has to say:
“The largest additions in the rebalance, Johnson & Johnson was around 50 and 40 basis points incrementally. J&J underperformed in the quarter while its normalized free cash flows held steady and so its position size was topped off to match the stable cash flows.”
1. Pfizer Inc. (NYSE:PFE)
Dividend Yield: 2.62%
Number of Hedge Fund Holders: 74
Pfizer Inc. (NYSE:PFE) was the eighth-largest holding of Gotham Asset Management in Q3. The hedge fund holds shares worth $22.8 million in the company, which represented 0.92% of Joel Greenblatt’s portfolio.
Recently, Pfizer Inc. (NYSE:PFE) uplifted its sales guidance for Covid-19 vaccines to $31 billion for 2022, up from its previous estimates of $29 billion. The company currently pays an annual dividend of $1.56 per share, with a dividend yield of 2.62%.
Saturna Capital mentioned Pfizer Inc. (NYSE:PFE) in its Q3 2021 investor letter. Here is what the firm has to say:
“The Fund’s strongest performer during the quarter was pharmaceutical manufacturer Pfizer. The company submitted trial data to the FDA for use of its COVID-19 vaccine for younger children, and it is widely expected that the FDA will approve it. Health authorities also began recommending booster shots of the Pfizer vaccine for select populations, further increasing demand for vaccinations.”
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Disclosure. None. 10 Dividend Stocks to Buy According to Joel Greenblatt’s Gotham Asset Management is originally published on Insider Monkey.
