Dividend Stock Portfolio: 5 Stock Picks by Hedge Funds

3. Citigroup Inc. (NYSE:C)

Number of Hedge Fund Holders: 87

Dividend Yield as of November 10: 3%

Citigroup Inc. (NYSE:C) is one of the leading names in the financial sector offering investment banking and financial services. The company is increasing its focus on the six metropolitan cities in the US, despite pursuing a digital-first mindset. The bank believes that customers still value the branch for high-value transactions like mortgages or loans for a small business. On the other hand, the company wound up its consumer banking arm in South Korea and booked a $1.5 billion charge on its financial statements. The bank trades at a relative discount against its industry peers due to its weaker retail consumer division but the management is now focused on exiting non-profitable markets and refocusing the investment towards businesses that earn higher returns.

Citigroup Inc. (NYSE:C) has been increasing its dividend since Q3 2019. The company’s dividend payout ratio is 21%. Analysts see a possibility of an increase in dividend along with a special one-time dividend that can be paid out by the company in the coming quarters.

In mid-October, James Fotheringham at BMO Capital increased the price target on Citigroup Inc. (NYSE:C) by $2 to $86. This reflects a potential upside of more than 25% from the current stock price. Fotheringham termed Citi as “the top pick by far” amongst the banks due to its valuation. The analyst anticipates the company to report a higher Return on Average Tangible Common Shareholder’s Equity (RoTCE) in March.