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Donald Yacktman’s Top Dividend Stock Picks for 2016

#3 The Coca-Cola Co (NYSE:KO)

– Shares Owned by Yacktman Asset Management (as of December 31): 19.92 million

– Value of Holding (as of December 31): $855.68 million

The Coca-Cola Co (NYSE:KO)’s stock has been resilient to the decline in the broader market this year, trading flat on a year-to-date basis. Like Cisco Systems, Inc., The Coca-Cola Co (NYSE:KO) also jumped a spot quarter-over-quarter in Yacktman Asset Management’s equity portfolio, despite the firm reducing its stake in the company by 19% during the fourth quarter. On February 9, the beverage giant reported its fourth quarter earnings, declaring EPS of $0.38 on revenue of $10 billion slightly ahead of analysts’ expectations of EPS of $0.37 on revenue of $9.96 billion. After the company made its all-time high recently, a few investors were quick to point out how the stock took over 17 years to break its all-time high and has provided little to no return to its shareholders during this period. However, that is a flawed analysis, as they excluded the aggregate dividend payout of $13 (split-adjusted) per share that the company has made since mid-1998. At The Coca-Cola Co’s current market price, the $0.33 quarterly dividend the company pays translates into an attractive annual dividend yield of 3.06%.

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#2 PepsiCo, Inc. (NYSE:PEP)

– Shares Owned by Yacktman Asset Management (as of December 31): 14.36 million

– Value of Holding (as of December 31): $1.44 billion

PepsiCo, Inc. (NYSE:PEP) was another beverage giant in which Yacktman Asset Management reduced its stake by 19% during the third quarter and which still remained among the fund’s largest equity holdings. Like The Coca-Cola Co, PepsiCo, Inc. (NYSE:PEP)’s stock has also remained fairly resilient to the recent slump in equities, trading marginally down for the year, by 1.48%. Although PepsiCo, Inc.’s stock did suffer a minor setback after the company reported its fourth quarter numbers on February 11, it recouped all of those losses the next day. The company declared EPS of $1.06 on revenue of $18.59 billion for the quarter, largely in-line with analysts’ estimates of EPS of $1.06 on revenue of $18.54 billion. Even though shares of PepsiCo, Inc. have appreciated by over 50% during the last five years, owing to the consistent hikes in its dividend, the stock currently sports an annual dividend yield of 2.85%. Billionaire Ken Griffin‘s Citadel Investment Group more than halved its stake in PepsiCo, Inc. (NYSE:PEP) during the fourth quarter,  to 1.7 million shares.

#1 Procter & Gamble Co (NYSE:PG)

– Shares Owned by Yacktman Asset Management (as of December 31): 21.85 million

– Value of Holding (as of December 31): $1.73 billion

Finally, Procter & Gamble Co (NYSE:PG) remained Yacktman Asset Management’s top dividend pick and its largest equity holding at the end of the fourth quarter, despite the fund decreasing its stake in the company by 21% during that period. Shares of Procter & Gamble Co (NYSE:PG) have been on a consistent upward march since mid-September of last year and are currently trading up by 2% in 2016. Though this rise has driven down the annual dividend yield of the stock to 3.27%,we feel it’s still at respectable levels. 14 of the 26 prominent analysts who report on Procter & Gamble Co have a ‘Hold’ rating on it with an average price target of $83.57, very close to where the stock is currently trading. Most analysts feel that for the stock to rise in the long-term, the company  needs to improve its organic sales growth instead of just focusing on improving its profitability through supply chain enhancements and cost cuts. Procter & Gamble Co was another company in which Fisher Asset Management increased its stake during the fourth quarter, by 1% to 7.94 million shares.

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Disclosure: None

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