In this article, we discuss 10 dividend stocks to buy according to John Allison’s Unio Capital. If you want to read our detailed analysis of the hedge fund’s investment philosophy and Allison’s investment career, go directly to read John Allison’s Unio Capital Portfolio: 10 Dividend Stocks.
5. Fastenal Company (NASDAQ:FAST)
Dividend Yield as of July 3: 2.49%
Unio Capital’s Stake Value: $781,000
Fastenal Company (NASDAQ:FAST) is a Minnesota-based company that specializes in the wholesale distribution of industrial and construction supplies globally.
At the end of Q1 2022, Unio Capital owned 172,137 shares in Fastenal Company (NASDAQ:FAST), valued at $781,000. The hedge fund reduced its position in the company by 5% during the quarter. The company represented 4.13% of John Allison’s portfolio.
On April 12, Fastenal Company (NASDAQ:FAST) declared a quarterly dividend of $0.31 per share, having raised it by 11% in February. The company started paying annual dividends in 1991 and shifted to quarterly payouts in 2011. As of July 3, the stock’s dividend yield was 2.49%.
As of the quarter ended in March 2022, Fastenal Company (NASDAQ:FAST) was a part of 29 hedge fund portfolios, the same as in the previous quarter. The stakes held by these funds are valued at $1.04 billion. With over 7.3 million shares, Select Equity Group held the largest position in the company in Q1.
Nomadic Value Partners mentioned Fastenal Company (NASDAQ:FAST) in its Q2 2021 investor letter. Here is what the firm has to say:
“In mid-June we completely sold out of Fastenal (FAST). Although we had been using FAST as a source of liquidity for a few months already, it still feels bad to say an official goodbye to such an amazing company. However, we must stay focused on the math and the math concludes a difficult task to get our return hurdle going forward. The last time FAST traded at a forward P/E ratio of 34x (the multiple at our exit), the year was 2012. The company had been growing at 20% per year, and the US was about to embark on a shale oil boom, sustaining a low-teens growth trajectory. Today, FAST’s sales growth could turn anemic as the surge for COVID safety products is waning and heavy construction and resources customers are slow to return. An investor must have an optimistic view towards 5+ years of strong real GDP growth as well as sustained inflation. If one lowers the growth assumption to a more likely outcome, then the implicit bet is that low to negative real interest rates will persist and the forward P/E multiple will stay elevated4. I do not want to make such a strong macro bet as the justification for owning a stock. Fastenal is a cyclical business with a growth model proven to take market share secularly, but the time to buy FAST (the stock) will be when we are in the depths of an industrial recession. Stay tuned.”
