In this article, we will take a look at 7 dividend stocks to buy according to Gilchrist Berg’s Water Street Capital.
Gilchrist Berg is the President and Founder of Water Street Capital, a Florida-based investment management firm that focuses on both long and short equities. Mr. Berg graduated from Princeton University in 1973 with a bachelor’s degree in Economics. Upon graduation, Mr. Berg initiated his career with the Barnett Winston Company in real estate finance. He left Barnett Winston in 1978 and joined Kidder Peabody, where he served as vice president until 1987. It was during his time at Kidder Peabody that he acquired Bluefield Supply, a public company. In July 1987, with Tiger Management as his initial investor, Mr. Berg left his position as Kidder Peabody to found his hedge fund, Water Street Capital.
Water Street Capital operates as a private investment company that focuses on investing in publicly traded companies across all industries, with an emphasis on the healthcare industry. According to the firm itself, its investments primarily lie in fields related to “medical and diagnostic products, specialty distribution, outsourced healthcare services, and specialty pharmaceutical products.” The company serves customers throughout the US. As of September 30th, 2021, Mr. Berg manages over $945.13 million in 13F securities through his hedge fund, Water Street Capital.
Other than high-yielding dividend stocks, Water Street Capital’s investment portfolio also features popular stocks such as Alphabet Inc (NASDAQ:GOOG), NVIDIA Corporation (NASDAQ:NVDA), Twitter, Inc (NYSE:TWTR), Costco Wholesale Corporation (NASDAQ:COST), and Netflix, Inc. (NASDAQ:NFLX).
Read on to learn about the dividend stocks that caught the attention of the veteran investor, Gilchrist Berg.
Photo by Vitaly Taranov on Unsplash
Our Methodology
We scoured Water Street Capital’s 13F portfolio to find the stocks that pay dividends. We narrowed our selection down to stocks that yielded more than 2% and compiled them. These stocks were ranked according to Water Street Capital’s investment portfolio at the end of the third quarter of 2021. For each stock, we included the hedge fund sentiment to assist our readers in their investment decisions.
Without further ado, let’s take a look at the 7 dividend stocks to buy according to Gilchrist Berg’s Water Street Capital.
7 Dividend Stocks to Buy According to Gilchrist Berg’s Water Street Capital
7. Canadian Natural Resources Limited (NYSE:CNQ)
Stake Value of Water Street Capital: $3,767,000
Percentage of Water Street Capital’s 13F Portfolio: 0.39%
Number of Hedge Fund Holders: 27
Dividend Yield as of December 5: 4.68%
Canadian Natural Resources Limited (NYSE:CNQ) acquires, explores for, develops, produces, markets, and sells crude oil, natural gas, and natural gas liquids (NGLs). The stock has gained 14.52% over the past 6 months, and 66.29% year to date. Canadian Natural Resources Limited was incorporated in 1973 and is headquartered in Calgary, Canada.
On November 5th, TD Securities analyst Menno Hulshof raised his price target on Canadian Natural Resources Limited to C$61 from C$58 and reiterated a Buy rating on the shares.
For the fiscal third quarter of 2021, Canadian Natural Resources Limited reported earnings per share of $1.25 and beat on revenue. The company’s quarterly revenue has grown by 79.31% year over year and came out at $6.19 billion, up from $3.45 billion, beating estimates by $148.20 million. The stock has a forward yield of 4.68% and a PE ratio of 8.57 as of December 5th, 2021.
By the end of the third quarter of 2021, 27 hedge funds out of the 867 elite funds tracked by Insider Monkey, held stakes in Canadian Natural Resources Limited. The total value of these stakes was roughly $956.98 million, up from $777.12 million in the previous quarter with 27 positions.
6. Lamar Advertising Company (NASDAQ:LAMR)
Stake Value of Water Street Capital: $6,720,000
Percentage of Water Street Capital’s 13F Portfolio: 0.71%
Number of Hedge Fund Holders: 30
Dividend Yield as of December 5: 3.60%
Lamar Advertising Company (NASDAQ:LAMR) is an outdoor advertising company that operates billboards, logo signs, and transit displays in the United States and Canada. The stock has a forward dividend yield of 3.60% and a forward price-to-earnings ratio of 29.44 as of December 5th. Lamar Advertising Company became a real estate investment trust (REIT) in 2014.
Lamar Advertising Company reported its third-quarter earnings this September. The company’s EPS was reported to be $1.05 for the fiscal third quarter of 2021. Moreover, Lamar Advertising Company generated revenues of $476.89 million, up 23.51% year over year from $386.11 million, and beat revenue estimates by $17.94 million.
We, at Insider Monkey, track data for 867 hedge funds as of the third quarter of 2021. We were able to find Lamar Advertising Company among 30 investment portfolios by the end of the third quarter of 2021. The total stakes that these hedge funds had in the company were in excess of $445.46 million, up from $387.99 million in the prior quarter.
Like Alphabet Inc, NVIDIA Corporation, Twitter, Inc, Costco Wholesale Corporation, and Netflix, Inc., Lamar Advertising Company is a stock among Mr. Berg’s top stock picks.
5. Newmont Corporation (NYSE:NEM)
Stake Value of Water Street Capital: $7,748,000
Percentage of Water Street Capital’s 13F Portfolio: 0.81%
Number of Hedge Fund Holders: 48
Dividend Yield as of December 5: 4.02%
Newmont Corporation (NYSE:NEM) is involved in the production and exploration of gold, along with copper, silver, zinc, and lead. The company has operations in the United States, Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia, and Ghana. This November, Newmont Corporation announced its collaboration with Caterpillar Inc. (NYSE:CAT) to develop an automated mining system that will produce net-zero emissions. Newmont Corporation plans to invest $100 million in the project, to set the initial automation and electrification goals for surface and underground mining infrastructures and haulage fleets at the company’s mining sites in Colorado and Australia.
For the fiscal third quarter of 2021, Newmont Corporation generated revenues of up to $2.90 billion and reported earnings per share of $0.60. The stock’s forward dividend yield is 4.02% and its PE ratio is 18.22 as of December 5th.
This September, KeyBanc analyst Adam Josephson initiated coverage of Newmont Corporation and rated the stock as Sector Weight without giving it a price target.
By the end of the third quarter of 2021, 48 hedge funds held stakes in Newmont Corporation. The total value of these stakes was roughly $774.45 million. As of September 30th, Water Street Capital’s stake in the company is $7.74 million, which accounts for 0.81% of the fund’s 13F portfolio.
First Eagle Investment Management, an investment management firm, published its third-quarter 2021 investor letter in which it mentioned Newmont Corporation. Here’s what they said:
“The largest gold miner in the world, Newmont shares lost ground in what was a volatile and ultimately down quarter for the price of gold. The Colorado-based company has continued to execute well in what has been a challenging environment. The company recently reaffirmed its full-year 2021 production guidance, but indicated that it was likely to come in at the mid to low point of the range provided as a result of disruptions from Covid-19 as well as severe weather events. It also noted that inflation pressures were likely to push its costs higher in 2021. None of this changes our opinion of the stock, which has historically offered steady production anchored in good jurisdictions, a good pipeline of organic projects, a strong balance sheet and proven management.”
4. FirstEnergy Corp. (NYSE:FE)
Stake Value of Water Street Capital: $9,937,000
Percentage of Water Street Capital’s 13F Portfolio: 1.05%
Number of Hedge Fund Holders: 38
Dividend Yield as of December 5: 4.02%
FirstEnergy Corp. (NYSE:FE) operates as an electric utility that generates, transmits, and distributes electricity in the United States. The company operates through two primary segments: Regulated Distribution and Regulated Transmission. FirstEnergy Corp. has gained 31.80% over the past twelve months, and 31.62% year to date. The company is based in Ohio.
On November 2nd, Wells Fargo analyst Neil Kalton upgraded FirstEnergy Corp. to Equal Weight from Underweight and raised his price target on the company to$42, from $40.
FirstEnergy Corp. reported its earnings for the fiscal third quarter of 2021, and beat on EPS and revenue. The company generated $3.12 billion in revenues for the quarter, up from $3.02 billion last year, and beat revenue estimates by $12.51 million. Moreover, FirstEnergy Corp. reported earnings per share of $0.85, beating EPS estimates by $0.06. The stock’s forward price-to-earnings ratio as of December 5th stood at 14.96.
Water Street Capital was one of the 38 hedge funds that held stakes in the company by the end of the third quarter of 2021. The total value of these 38 funds’ stakes in FirstEnergy Corp. was valued at approximately $1.47 billion.
FirstEnergy Corp. is a stock that caught the attention of Water Street Capital. Other popular stocks part of the fund’s 13F portfolio are Alphabet Inc, NVIDIA Corporation, Twitter, Inc, Costco Wholesale Corporation, and Netflix, Inc..
3. ConocoPhillips (NYSE:COP)
Stake Value of Water Street Capital: $10,339,000
Percentage of Water Street Capital’s 13F Portfolio: 1.09%
Number of Hedge Fund Holders: 49
Dividend Yield as of December 5: 2.59%
ConocoPhillips (NYSE:COP) is engaged in hydrocarbon exploration and production. The company explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG), and natural gas liquids worldwide. The stock has a forward yield of 2.59% as of December 5th.
ConocoPhillips beat on EPS and revenue in its earnings report for the fiscal third quarter of 2021. The company reported an EPS of $1.77, beating expert estimates by $0.25, and generated revenues of $11.62 billion. The company’s revenue has grown by 165.21% year over year from $4.38 billion and has beaten estimates by $1.36 billion.
This November, Mizuho analyst Silvio Micheloto raised his price target on ConocoPhillips to $101 from $99 and reiterated a Buy rating on the shares.
By the end of the third quarter of 2021, ConocoPhillips was present in 49 hedge fund portfolios. The total stakes of these 49 positions in the company were reported to be more than $1.37 billion, up from $1.15 billion in the prior quarter when ConocoPhillips was a part of 50 investment portfolios.
ClearBridge Investments, an investment management firm, published its first-quarter 2021 investor letter in which it shared its insights on ConocoPhillips. Here’s ClearBridge Investments’ take on the stock:
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names (including) ConocoPhillips. We are positive on the company’s strong balance sheets, competitive positions and exposure to an economic recovery.”
2. Marathon Petroleum Corporation (NYSE:MPC)
Stake Value of Water Street Capital: $11,619,000
Percentage of Water Street Capital’s 13F Portfolio: 1.22%
Number of Hedge Fund Holders: 43
Dividend Yield as of December 5: 3.76%
Marathon Petroleum Corporation (NYSE:MPC) engages in refining, marketing, retailing, and transporting petroleum products primarily in the United States. It operates in two segments: Refining & Marketing, and Midstream. As of December 5th, 2021, the stock’s forward dividend yield sits at 3.76% and its price-to-earnings ratio is 34.66.
Marathon Petroleum Corporation generated $32.61 billion in revenues for the fiscal third quarter of 2021. The company beat on revenue by $10.44 billion and saw a year-over-year increase of 85.85%, up from $17.55 billion in the third quarter of 2020. Marathon Petroleum Corporation also reported an EPS of $0.73, beating estimates by $0.03.
Insider Monkey identified 43 positions for Marathon Petroleum Corporation by the end of the third quarter of 2021. The total stakes of these hedge funds in the company were over $2.68 billion, up from $2.61 billion in the prior quarter when the stock was present in 48 hedge fund portfolios.
On 15th November, Wells Fargo analyst Roger Read raised his price target on Marathon Petroleum Corporation to $87 from $73 and reiterated an Overweight rating, in light of the analyst’s beliefs of bullishness surrounding the refining business in 2022.
1. Fidelity National Financial Inc (NYSE:FNF)
Stake Value of Water Street Capital: $18,897,000
Percentage of Water Street Capital’s 13F Portfolio: 1.99%
Number of Hedge Fund Holders: 32
Dividend Yield as of December 5: 3.46%
Fidelity National Financial, Inc (NYSE:FNF) provides various insurance products in the United States. The company operates through the following segments: Title, F&G, and Corporate and Other. On November 2nd, Fidelity National Financial, Inc raised its quarterly dividend by 10% to 44 cents from 40 cents per share. The dividend will be payable by December 31st to stockholders of record as of December 17th. Fidelity National Financial, Inc is based in Jacksonville, Florida.
This September, Fidelity National Financial, Inc reported its third-quarter earnings for 2021. The company beat revenue estimates by $705.11 million and generated revenues of $3.89 billion for the quarter, up 30.78% year over year from $2.98 billion. Fidelity National Financial, Inc also beat EPS by $0.48 for the quarter and reported earnings per share of $2.12.
We, at Insider Monkey, monitor and track data for 867 elite hedge funds as of the third quarter of 2021. Of these 867 funds, 32 held stakes in Fidelity National Financial, Inc which amounted to over $1.39 billion, up from $1.30 billion and 34 positions in the second quarter of 2021.
Here’s what Merion Road Capital Management had to say about Fidelity National Financial, Inc in their first quarter 2021 investor letter:
“During the period I added to our position in Fidelity National Financial (“FNF”). FNF is the nation’s largest title insurer with 33% market share. It was built over the last 30 years by Bill Foley, who revolutionized the industry with his emphasis on eliminating bureaucracy, utilizing technology to streamline operations, and maximizing customer service. He is well-regarded as a savvy investor and consummate deal-maker having acquired and divested multiple entities both in title and ancillary fields. He continues to serve as the chairman of FNF with a personal stake in the company worth hundreds of millions.
While title insurance is technically insurance, it is a bit of a unique animal. Being that the insurer writes a policy based on past events, not unknowns in the future, losses are relatively small and predictable. The more data an insurer can analyze, the less likely they are to experience a claim; and the more efficiently they can analyze the data and process the application, the lower their costs will be. FNF has invested in automating its work stream through their ownership of NextAce (automated search), SoftPro (document production and closing), and multiple other cloud-based platforms. Due to these investments, FNF boasts industry leading margins and is able to attract more third party agents who can leverage their service offering.
Last year FNF acquired the outstanding interest in FGL Holdings (“F&G”), a fixed indexed and fixed rate annuity provider. Though this appears to be a financial rather than strategic acquisition, there should be some opportunities to grow the combined business. Notably, the acquisition afforded F&G an improved credit profile which has led to ratings upgrades. These upgrades allow F&G to address new distribution lines, such as in the bank market where FNF has strong relationships through their title and escrow business. The company announced that since launching in July 1st it had already achieved $500mm of sales in this channel (vs. full year sales of ~$4bn).
FNF is likely over-earning right now based on the recent spike in mortgage activity. Looking out to 2022 I estimate that earnings should step down to something a little shy of $5.00/sh. At current prices we are collecting a double digit earnings yield for a business with strong market positioning and a superb capital allocator. Last year they repurchased a bunch of stock in Q1 at depressed prices and have announced their intent to acquire another $500mm over the next 12 months.”
You can also take a look at Aquamarine Capital’s Top 10 Stock Picks and 10 Best Stocks Under $10 to Buy Right Now
[Daily-Newsletter][/Daily-Newsletter]
Follow Insider Monkey on Twitter
Suggested Articles:
- 15 Best Financial Stocks to Buy Now
- Top 10 Stock Picks of Eli Samaha’s Madison Avenue Partners
- 10 Best Dividend Stocks to Buy According to Billionaire Howard Marks
This article is originally published at Insider Monkey.
