In this article, we discuss 10 dividend stocks to buy according to Kenneth Tropin’s Graham Capital Management.
Kenneth Tropin founded Graham Capital Management in 1994. The hedge fund’s investment philosophy involves quantitative and discretionary trading to enhance shareholder returns. The firm’s investment strategies cater to a broad range of markets, including currencies, commodities, global interest rates, and equities. As of April, the firm’s total assets under management stood at $17 billion, with discretionary assets under management amounting to $5 billion.
Kenneth Tropin has always paid attention to several aspects of risk management. According to Tropin, his hedge fund follows the trends that work in unstable markets and carries out fundamental analysis of investments. This was demonstrated during the financial crisis of 2008 when the firm’s all 13 programs delivered positive returns, while its flagship fund’s returns were two times more than that of its peers, as reported by Wall Street Journal.
Tropin was also one of Wall Street’s top earners in 2009, earning over $150 million. The fund’s performance declined in 2017, with 13 of its 14 strategies delivering negative returns. However, the fund bounced back after losses and in 2021, as its Tactical Trend Fund gained 11.4% through February, while its Quant Macro fund surged 4.7% during the same period, according to a report by Financial Times.
As of the end of Q1 2022, Graham Capital Management holds a 13F portfolio value of nearly $2.9 billion, up from $2.34 billion in the previous quarter. Some of the hedge fund’s prominent holdings for the quarter are Tesla, Inc. (NASDAQ:TSLA), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:META).
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Our Methodology:
In this article, we discuss 10 dividend stocks in Kenneth Tropin’s portfolio. For this list, we took data from Graham Capital Management’s 13F portfolio as of Q1 2022.
Dividend Stocks to Buy According to Kenneth Tropin’s Graham Capital Management
10. Dollar General Corporation (NYSE:DG)
Dividend Yield as of June 22: 0.92%
Graham Capital Management’s Stake Value: $44,526,000
Dollar General Corporation (NYSE:DG) engages in the chain of merchandise stores. The Tennessee-based company offers consumable items, seasonal items, apparel, and home products. On June 16, Morgan Stanley called DG the most defensive and counter-cyclic stock as it has outperformed the market year-to-date, gaining 1.35%, as of the close of June 22. The firm raised its price target on the stock to $250, while upgrading it to Overweight.
In May, Dollar General Corporation (NYSE:DG) declared a quarterly dividend of $0.55 per share, in line with its previous dividend. The company raised its quarterly dividend for the 7th consecutive year in March. As of June 22, the stock’s dividend yield stood at 0.92%.
Graham Capital opened its position in Dollar General Corporation (NYSE:DG) during the fourth quarter of 2010, with shares worth $4.2 million. During Q1 2022, the hedge fund purchased additional 10,000 DG shares, taking its total stake in the company to over $44.5 million. The company accounted for 1.53% of Kenneth Tropin’s portfolio.
As per Insider Monkey’s Q1 2022 database, 53 hedge funds presented a bullish stance on Dollar General Corporation (NYSE:DG), up from 44 in the previous quarter. The collective value of these stakes is over $2.2 billion. Orbis Investment Management owned the largest stake in the company in Q1, valued at $520 million.
In addition to DG, Tesla, Inc. (NASDAQ:TSLA), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:META) are some other major holdings of Graham Capital in Q1.
LRT Capital Management mentioned Dollar General Corporation (NYSE:DG) in its Q3 2021 investor letter. Here is what the firm has to say:
“Executive Summary
At LRT Capital Management we are continuously searching the market for great investment opportunities. Our favorite finds are companies with moats and growth opportunities that justify a higher price than what the stock is trading for. One of our holdings (approximately 1.5% of our long exposure) is Dollar General (DG), so today, we wanted to tell you a bit about this great company.
Company Overview
Dollar General is a discount retailer with the largest brick-and-mortar presence in the United States by store count. The company’s largest concentration of stores can be found in the southern, southwestern, midwestern, and eastern parts of the United States.10 Dollar General was founded in 1939 by J.L. Turner, who originally named the company “J.L. Turner and Son, Wholesale”. As the name suggests, the company began its life as a wholesaler, but quickly turned to a retailer of general store goods. By the early 1950s, the company had annual sales of $2 million per year,12 which is the equivalent of $22.95 million in 2021 dollars when adjusted for inflation.
The first Dollar General store opened on June 1st, 1955 in Springfield Kentucky. The simple concept was that no item in the store would cost more than one dollar. The company changed its name to Dollar General Corporation in 1968 when Dollar General became publicly traded. At the time of its initial public offering, the business generated more than $40 million in annual sales. The company’s common stock was publicly traded from 1968 until July 2007, when it was taken private by KKR. The company went public again in November 2009, under the ticker DG.
Today, Dollar General is an evolved, and phenomenal business with more room for growth. Annual sales reached a record $33.7 billion in fiscal year 2021 after consecutively growing the top line for many years. The company’s main products are every-day necessities and consumables purchased by lower income consumers on tight budgets…”
9. CME Group Inc. (NASDAQ:CME)
Dividend Yield as of June 22: 1.92%
Graham Capital Management’s Stake Value: $18,826,000
CME Group Inc. (NASDAQ:CME) is one of the world’s leading derivatives marketplaces. Its exchanges offer a wide range of global benchmarks across all major asset classes. In May, the company reported an 18% year-over-year growth in its average daily volume (ADV) to 24.3 million contracts. This was the company’s highest-ever May ADV.
CME Group Inc. (NASDAQ:CME) currently offers a quarterly payout of $1.00 per share, with a yield of 1.92%, as of June 22. The company maintains a 12-year track record of consistent dividend growth. In June, Atlantic Equities upgraded CME Group Inc. (NASDAQ:CME) to Overweight, with a $235 price target, highlighting the company’s exceptional trading volumes in May.
At the end of Q1 2022, Graham Capital owned 79,141 CME shares, valued at over $18.8 million. The hedge fund boosted its position in the company by 6% during the quarter, which accounted for 0.64% of Kenneth Tropin’s portfolio.
At the end of March 2022, 58 hedge funds tracked by Insider Monkey owned stakes in CME Group Inc. (NASDAQ:CME), valued at nearly $3 billion. In comparison, 55 hedge funds held positions in the Chicago-based company, with stakes worth over $2.7 billion.
Baron Funds mentioned CME Group Inc. (NASDAQ:CME) in its Q1 2022 investor letter. Here is what the firm has to say:
“CME Group, Inc. (NASDAQ:CME) operates the world’s largest and most diversified derivatives marketplace. Shares rose 4.6%, contributing to results as elevated market volatility and rising interest rates led to higher trading activity on CME’s exchanges. Average daily trading volume increased 19% year-over-year with notable strength in Interest Rates and Equities products. We continue to own the stock due to CME’s strong competitive moats, underpinned by its product breadth and liquidity depth, as well as its sustainable growth characteristics driven by the secular shift from uncleared over-the-counter trading to exchange-traded futures while also benefiting from the rising rate environment.”
8. Lockheed Martin Corporation (NYSE:LMT)
Dividend Yield as of June 22: 2.71%
Graham Capital Management’s Stake Value: $5,753,000
Lockheed Martin Corporation (NYSE:LMT) is an American global security and aerospace company that specializes in the research, development, and integration of advanced technology systems. In May, the company announced its plans to expand its blockchain network in space to build infrastructure that could sustain life in space. According to the company’s management, this step would enhance an emerging space economy.
Graham Capital added Lockheed Martin Corporation (NYSE:LMT) to its 13F portfolio in Q1, buying 13,034 shares, worth over $5.75 million. The company made up 0.19% of the hedge fund’s portfolio. On April 20, Lockheed Martin Corporation (NYSE:LMT) declared a quarterly payout of $2.80 per share, in line with its previous dividend. It is one of the best dividend stocks in Kenneth Tropin’s portfolio as it holds a 19-year track record of dividend growth. The stock’s free cash flow payout ratio stands at 56.7% and its dividend yield came in at 2.71%, as of June 22.
In April, Argus appreciated the business of Lockheed Martin Corporation (NYSE:LMT) which has expanded over the years regardless of national defense spending. The firm further expects the company to benefit from ongoing geopolitical tensions and raised its price target on the stock to $500, with a Buy rating on the shares.
At the end of Q1 2022, Lockheed Martin Corporation (NYSE:LMT) was a popular stock among elite funds, as 56 hedge funds tracked by Insider Monkey owned stakes in the company, up from 42 in the previous quarter. These stakes hold a combined value of over $2.44 billion, compared with $976 million worth of stakes held by hedge funds in the previous quarter.
Ariel Investments mentioned Lockheed Martin Corporation (NYSE:LMT) in its Q3 2021 investor letter. Here is what the firm has to say:
“Conversely, leading global defense contractor Lockheed Martin Corporation (LMT) was the greatest detractor over the trailing one-year period due to pared back F-35 delivery plans and weaker than expected 2022 sales guidance. Nonetheless, we remain confident in LMT’s positioning as they continue to secure a steady stream of lucrative contracts and benefit from a sizeable backlog. Looking ahead, management is focused on driving innovation, underscored by the pending acquisition of Aerojet Rocketdyne enabling vertical integration in propulsion systems for space and missile defense. At today’s valuation, LMT is currently trading at a 32% discount to our estimate of private market value.”
7. Broadcom Inc. (NASDAQ:AVGO)
Dividend Yield as of June 22: 3.29%
Graham Capital Management’s Stake Value: $3,872,000
Broadcom Inc. (NASDAQ:AVGO) is a California-based semiconductor manufacturing company that also develops infrastructure software products. The stock is down 25.2% year-to-date despite delivering solid fiscal Q2 results. The company reported revenue of $8.1 billion, showing a 23% year-over-year growth and also beating market estimates by $190 million.
Graham Capital sold off its heavy investment worth $10 million in Broadcom Inc. (NASDAQ:AVGO) during Q4 of 2019 and resumed its position in the company recently. The hedge fund purchased 6,150 AVGO shares during Q1, worth nearly $3.9 million. The company represented 0.13% of Kenneth Tropin’s portfolio.
Broadcom Inc. (NASDAQ:AVGO) currently offers a quarterly dividend of $4.10 per share. In December 2021, the company raised its quarterly payout for the 11th consecutive year. In fiscal Q2, it paid out 50% of its free cash flow as dividends. The stock’s dividend yield stood at 3.29% on June 22.
In May, Mizuho raised its price target on Broadcom Inc. (NASDAQ:AVGO) to $725, with a Buy rating on the shares, highlighting the company’s recent acquisition of VMware.
At the end of Q1 2022, Fisher Asset Management was the leading shareholder of Broadcom Inc. (NASDAQ:AVGO), owning shares worth nearly $895 million. Overall, 71 hedge funds tracked by Insider Monkey presented a bullish stance on the California-based company in Q1, up from 62 in the previous quarter. The collective value of these stakes is roughly $5.5 billion.
ClearBridge Investments mentioned Broadcom Inc. (NASDAQ:AVGO) in its Q4 2021 investor letter. Here is what the firm has to say:
“However, ClearBridge portfolio companies are responding by supporting their workforces and showing resilience in adapting and thriving. Semiconductor companies ClearBridge owns and engages with have been successful in advancing vaccinations in their global supply chains. In Malaysia, for example, Broadcom has taken part in PIKAS, a public-private partnership vaccination program focusing on the workforce in critical manufacturing sectors. By the summer of 2021 Broadcom was able to get over 90% of workers in its Penang factory at least one dose of vaccine, and roughly 73% fully vaccinated. Companies in the program also pay the administration cost for vaccinations including cases where the employee is no longer employed by the company before full immunization of the employee.”
6. Avangrid, Inc. (NYSE:AGR)
Dividend Yield as of June 22: 3.98%
Graham Capital Management’s Stake Value: $5,922,000
Avangrid, Inc. (NYSE:AGR) is an energy service and delivery company that operates electric and natural gas utilities and serves over 3.3 million customers in New York and New England.
During Q1 2022, Graham Capital loaded up on AGR shares, boosting its position by 543%. The hedge fund owned 126,721 shares in Avangrid, Inc. (NYSE:AGR) at the end of Q1, valued at roughly $6 million. The company accounted for 0.2% of Kenneth Tropin’s portfolio.
Avangrid, Inc. (NYSE:AGR) has not increased its dividends since 2018 but has been paying regular dividends for the past 21 years consistently. Currently, the company offers a quarterly dividend of $0.44 per share, with a yield of 3.98%, as of June 22.
As per Insider Monkey’s Q1 2022 database, 20 hedge funds owned positions in Avangrid, Inc. (NYSE:AGR), up from 12 in the previous quarter. The consolidated value of these stakes is over $67.2 million. Among these hedge funds, GAMCO Investors held the largest position in the Connecticut-based company, with stakes worth nearly $23 million.
Just like major tech stocks, such as Tesla, Inc. (NASDAQ:TSLA), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:META), energy stocks are also fluctuating in 2022 due to price hikes and political tensions.
5. Citigroup Inc. (NYSE:C)
Dividend Yield as of June 22: 4.31%
Graham Capital Management’s Stake Value: $18,907,000
Citigroup Inc. (NYSE:C) is an American investment banking company that also provides financial services to consumers. In May, the company’s delinquency rate decreased to 0.78%, compared with 0.82% in April. However, its net charge-off rate was recorded at 1.39% in May, up from 1.36% in April.
During Q1 2022, Graham Capital sold off 266,313 C shares, worth over $18.5 million, trimming its position in the company by 43%. At the end of March, the hedge fund owned a stake worth nearly $19 million in the company, which represented 0.65% of Kenneth Tropin’s portfolio.
On April 1, Citigroup Inc. (NYSE:C) announced a quarterly dividend of $0.51 per share, in line with its previous dividend. In Q1, the company returned over $4 billion to shareholders through buybacks and dividends. The stock’s dividend yield stood at 4.31%, as of June 22.
Warren Buffett’s Berkshire Hathaway opened its position in Citigroup Inc. (NYSE:C) during Q1 2022, with shares worth nearly $3 billion, becoming the company’s leading shareholder. In addition to this, 88 hedge funds tracked by Insider Monkey owned stakes in the New York-based company, down from 97 in the previous quarter. The consolidated value of these stakes is over $8 billion.
4. Healthcare Realty Trust Incorporated (NYSE:HR)
Dividend Yield as of June 22: 4.74%
Graham Capital Management’s Stake Value: $6,976,000
Healthcare Realty Trust Incorporated (NYSE:HR) is an American real estate investment trust that invests in outpatient medical facilities. Though the company missed Q1 earnings estimates on various accounts, its revenue for the quarter showed a 10% year-over-year growth at $142.8 million. Moreover, its same-store net operating income increased 2.9% from the same period last year.
Graham Capital added Healthcare Realty Trust Incorporated (NYSE:HR) to its portfolio during Q1 2022, purchasing shares worth nearly $7 million. The company represented 0.24% of Kenneth Tropin’s portfolio.
Healthcare Realty Trust Incorporated (NYSE:HR) has been paying regular dividends to shareholders since 1994. The company’s current quarterly payout stands at $0.31 per share, with a dividend yield of 4.74%, as of June 22. Capital One resumed its coverage of Healthcare Realty Trust Incorporated (NYSE:HR) in June, with an Overweight rating and a $33 price target, expecting a rebound in the stock’s shares.
At the end of Q1 2022, Healthcare Realty Trust Incorporated (NYSE:HR) was a part of 28 hedge fund portfolios, up from 21 a quarter earlier. The consolidated value of these stakes is over $328.4 million. Zimmer Partners was the company’s leading shareholder in Q1.
3. Douglas Emmett, Inc. (NYSE:DEI)
Dividend Yield as of June 22: 5.05%
Graham Capital Management’s Stake Value: $3,568,000
Douglas Emmett, Inc. (NYSE:DEI) is a California-based real estate investment trust that owns multiple office buildings and apartment communities in Southern California. In Q1 2022, the company’s FFO fell in line with estimates at $0.50. Moreover, the company also reported an 87.7% growth in its leased rate, and its straight-line rents increased by 9.4% from the same period last year.
On May 27, Douglas Emmett, Inc. (NYSE:DEI) declared its quarterly dividend of $0.28 per share, in line with its previous dividend. The company’s dividend amount has remained the same for the past 10 consecutive quarters due to the pandemic-related financial instability. The stock’s dividend yield of 5.05% has reached its 10-year high, as recorded on June 22.
At the end of Q1 2022, Graham Capital owned 106,783 DEI shares, valued at over $3.56 million. The hedge fund increased its position in the company by 421%, which accounted for 0.12% of Kenneth Tropin’s portfolio.
In June, Credit Suisse initiated its coverage of Douglas Emmett, Inc. (NYSE:DEI) with an Outperform rating and a $27 price target, acknowledging the recovery in the company’s occupancy rates.
At the end of March 2022, 23 hedge funds in Insider Monkey’s database owned stakes in Douglas Emmett, Inc. (NYSE:DEI), up from 19 in the previous quarter. These stakes hold a collective value of nearly $463 million. Ken Griffin, Israel Englander, and Ric Dillon were the company’s prominent shareholders in Q1.
2. The Macerich Company (NYSE:MAC)
Dividend Yield as of June 22: 6.76%
Graham Capital Management’s Stake Value: $4,073,000
The Macerich Company (NYSE:MAC) is an American real estate investment trust that invests in shopping centers and other retail buildings. In May, the company announced to add 17 more Cotton On Group to regional town centers, expanding its footprint across the country.
In Q1 2022, The Macerich Company (NYSE:MAC) reported solid earnings, posting an FFO of $0.50, which beat estimates by $0.04. The company’s revenue for the quarter stood at $216.1 million, up 13.5% year-over-year. For FY22, it expects its FFO to fall between $1.85-$2.05, versus the consensus of $1.95.
During Q1 2022, Graham Capital piled up another $3.8 million in The Macerich Company (NYSE:MAC), increasing its position by 1,746%. The hedge fund owned a total stake worth $4.07 million in the company, which represented 0.14% of Kenneth Tropin’s portfolio.
The Macerich Company (NYSE:MAC) slashed its dividend twice in 2020 due to the pandemic and currently pays a quarterly dividend of $0.15 per share. The stock’s dividend yield stood at 6.76% on June 22. In June, Compass Point lowered its price target on The Macerich Company (NYSE:MAC), with a Buy rating on the shares. The firm lowered targets on the mall sector by an average of 18% due to the recent market downswing.
As of the quarter ended in March 2022, 20 hedge funds in Insider Monkey’s database owned a $160.2 million worth of combined stake in The Macerich Company (NYSE:MAC). In comparison, 21 hedge funds held positions in the company in the previous quarter, with stakes valued at $128.8 million.
Smead Capital Management mentioned The Macerich Company (NYSE:MAC) in its Q3 2021 investor letter. Here is what the firm has to say:
“Our poor performers for the quarter were quite eclectic. Macerich (MAC) dropped 7.55% for the quarter and most of that loss was on September 30, 2021… Ironically, some of our best nine-month performers were Q3 losers. Macerich (MAC) gained 61.81% through the end of the quarter and took third place.”
1. Arbor Realty Trust, Inc. (NYSE:ABR)
Dividend Yield as of June 22: 11.70%
Graham Capital Management’s Stake Value: $7,460,000
Arbor Realty Trust, Inc. (NYSE:ABR) is a New York-based real estate investment trust that provides debt capital for multifamily loan and commercial industries. The company delivered strong Q1 results, with its net interest income standing at $84.1 million, up 71.9% from the same period last year. Moreover, its EPS of $0.55 beat market estimates by $0.11.
Arbor Realty Trust, Inc. (NYSE:ABR) holds a 7-year track record of consistent dividend growth. The company offers a quarterly payout of $0.38 per share, up 12% from a prior-year quarter. Its payout ratio stands at 67.2% and the dividend yield came in at 11.70%, as of June 22’s close.
In April, Piper Sandler initiated its coverage of Arbor Realty Trust, Inc. (NYSE:ABR) with an Overweight rating and a $20 price target, highlighting the company’s diversified business model. Graham Capital opened its position in Arbor Realty Trust, Inc. (NYSE:ABR) during the fourth quarter of 2021 and increased its position by 795% in the recent quarter. The hedge fund owned 437,285 ABR shares at the end of Q1, with a total value of over $7.4 million. The company made up 0.25% of Kenneth Tropin’s portfolio.
According to Insider Monkey’s Q1 database, 14 hedge funds owned stakes in Arbor Realty Trust, Inc. (NYSE:ABR), up from 13 in the previous quarter. These stakes hold a consolidated value of over $92.5 million. Marshall Wace LLP was one of the company’s prominent shareholders in Q1.
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Disclosure. None. 10 Dividend Stocks to Buy According to Kenneth Tropin’s Graham Capital Management is originally published on Insider Monkey.
