In this article, we discuss 10 dividend stocks in Robert Pitts’ portfolio.
Robert Pitts Jr. is one of the Tiger Cubs who started working with Julian Robertson’s Tiger Management before launching his independent hedge fund. In 1997, he founded Steadfast Capital Management, a New York-based privately owned investment management firm. It is a long-short equity firm that focuses on fundamental bottom-up research to create value for investors. The hedge fund invests in both public and private markets and provides services in venture capital and financial management.
Working under Robertson’s tutelage, Pitts inherited his philosophies and strategies for creating a top-scoring hedge fund. Over the years, his fund generated stable returns for the shareholders, maintaining the tiger cub tradition. From 1997 to 2019, the firm’s average annual return stood at 12.04%.
Robert Pitts always keeps his portfolio diverse, with his investments scattered around various sectors. As of the end of the first quarter, the fund has a 13F portfolio valued at $5.8 billion, down from $5.9 billion in the previous quarter. As tech stocks are tumbling in 2022 and NASDAQ is down 32.7% year-to-date as of June 16, the fund reduced its position in major tech stocks, such as Microsoft Corporation (NASDAQ:MSFT) and Amazon.com, Inc. (NASDAQ:AMZN) by 1% and 35%, respectively.
Photo by Dan Dennis on Unsplash
Our Methodology:
In this article, we discuss 10 dividend stocks in Robert Pitts’ portfolio. For this list, we considered data from Steadfast Capital’s 13F portfolio as of Q1 2022.
10. The Mosaic Company (NYSE:MOS)
Steadfast Capital’s Stake Value: $38,426,000
Dividend Yield as of June 16: 1.17%
Number of Hedge Fund Holders: 66
The Mosaic Company (NYSE:MOS) is a Florida-based agricultural company that mines phosphate and potash and collects urea for fertilizer. The company is one of America’s largest producers of potash and phosphate fertilizers. Though the company reported earnings miss on various accounts in Q1, its quarterly revenue showed a 71.2% year-over-year growth at $3.92 billion. Moreover, potash and phosphate operating earnings stood at $563 million and $493 million, respectively.
On May 19, The Mosaic Company announced a quarterly dividend of $0.15 per share, up 33.3% from the previous dividend. The stock’s dividend yield came in at 1.17%, as of the close of June 16. In its May investors’ note, Piper Sandler mentioned that The Mosaic Company can benefit from elevated grain prices and lifted its price target on the stock to $85, with an Overweight rating on the shares.
The Mosaic Company is one of the latest acquisitions of Steadfast Capital. The hedge fund started building its position in the company with 577,840 shares, valued at over $38.4 million. The company represented 0.65% of Robert Pitts’ portfolio.
At the end of March 2022, the number of hedge funds tracked by Insider Monkey holding stakes in The Mosaic Company jumped to 66, from 46 in the previous quarter. The consolidated value of these stakes is over $1.53 billion. Soroban Capital Partners held the largest stake in the company, worth $328.3 million.
Unlike blue-chip tech stocks, such as Apple Inc. (NASDAQ:AAPL), Microsoft Corporation, and Amazon.com, Inc., The Mosaic Company is up 26.7% year-to-date due to the growing demands for fertilizers.
Ariel Investments mentioned The Mosaic Company in its Q4 2021 investor letter. Here is what the firm has to say:
“We continue to believe recent aggressive fiscal and monetary policy will drive high levels of intransient (rather than transitory) inflation. Recent inflation numbers have exceeded our hawkish predictions. While we believed the Consumer Price Index might rise +4% in 2021, double the Fed target of +2%; it rose +7%, the highest level in forty years. Ariel Focus Fund has been well positioned for this environment as natural resource and material companies such as The Mosaic Company (MOS) which returned +72.15% for the year. This was one of our two largest holdings at year-end and have performed well very early into 2022.”
9. Baker Hughes Company (NASDAQ:BKR)
Steadfast Capital’s Stake Value: $61,981,000
Dividend Yield as of June 16: 2.40%
Number of Hedge Fund Holders: 39
Baker Hughes Company (NASDAQ:BKR) is one of the world’s largest oil field services companies, deploying technological advancements in its operations to provide energy and industry-related services to its consumers. In the first quarter of 2022, the company reported a 51% year-over-year growth in its orders at $6.8 billion. However, its EPS of $0.15 missed market estimates by $0.05.
On June 8, Barclays lifted its price target on Baker Hughes Company to $47, with an Overweight rating on the shares, noting that the global energy demands are expected to increase. The firm further mentioned that the company can face supply chain issues due to the ongoing geopolitical situation. On May 17, Baker Hughes Company declared a quarterly payout of $0.18 per share, with a dividend yield of 2.40%, as of June 16’s close. The company hasn’t been able to increase its dividend for quite some time now but managed to sustain its payouts over the years.
Steadfast Capital initiated its position in Baker Hughes Company during Q1 2022, purchasing over 1.7 million shares, worth roughly $62 million. The company represented 1.06% of Robert Pitts’ portfolio.
According to Insider Monkey’s Q1 2022 database, 39 hedge funds reported owning stakes in Baker Hughes Company, valued at $936.1 million. In the previous quarter, 35 hedge funds held a $747.8 million worth of stake in the Texas-based company.
Sound Shore Management mentioned Baker Hughes Company in its recently published investor letter. Here is what the firm has to say:
“Energy was the best performing sector which was reflected in our top contributors. Energy technology provider Baker Hughes finished higher, driven by stronger than expected order growth in its liquid natural gas (LNG) turbo-machinery segment and increasing global rig count. Both companies have strong balance sheets with little debt and are returning capital via dividends and stock repurchases. Soaring energy prices and Europe’s unfortunate reliance on Russian supply reinforced our belief that low cost natural gas is both a strategic and economic advantage for the United States. Over the last several years, the pandemic, supply disruptions and lack of investment, along with extreme weather conditions had already driven prices higher. Still, natural gas is expected to play a critical role in the transition to renewable energy sources and these two investments benefit from the increased demand.
Baker is the dominant player in LNG projects and its growing backlog is a positive indicator of how this business may drive future earnings. They are also a leader in carbon capture technology and the development of hydrogen as a clean, alternative fuel source. Carbon capture technology is considered critical to delivering CO2 reductions needed to meet global climate and net-zero emissions targets. Applicable to both the energy and industrial sectors, carbon capture is among the most promising de-carbonization solutions for both existing facilities and new greenfield projects. We were able to purchase the stock at a below normal valuation and an attractive 8% free cash flow yield and we remain positive on its future prospects.”
8. CSX Corporation (NASDAQ:CSX)
Steadfast Capital’s Stake Value: $67,647,000
Dividend Yield as of June 16: 1.38%
Number of Hedge Fund Holders: 72
CSX Corporation (NASDAQ:CSX) is an American rail transportation company that provides rail, intermodal, and rail-to-truck services and solutions to its consumers. On May 10, the company announced a quarterly dividend of $0.10 per share, increasing it by 7.5% in February. In the past 10 years, the company has raised its dividend at a CAGR of 11%. As of June 16, the stock’s dividend yield was 1.38%.
In the first quarter of 2022, CSX Corporation remained popular among elite funds, as 72 hedge funds tracked by Insider Monkey were bullish on the company, up from 56 in the previous quarter. The consolidated value of these stakes is nearly $6.3 billion. Ken Griffin, Ken Fisher, and Dan Loeb were some of the prominent stakeholders of the company in Q1.
In its Q1 results, CSX Corporation reported solid growth post-pandemic, posting an EPS of $0.39, which surpassed estimates by $0.02. The company’s revenue also showed a 21.4% year-over-year growth at $3.4 billion and also beat consensus by $100 million. In view of its earnings beat, Argus raised its price target on CSX Corporation in April, maintaining a Buy rating on the shares. The firm further mentioned that the company’s recovering profits should continue to improve in 2022-2023 due to its strong pricing power.
Steadfast Capital started reinvesting in CSX Corporation during the first quarter of 2022, after selling off its entire shares in the company a year ago. The hedge fund owned over 1.8 million CSX shares at the end of March 31, valued at $67.6 million. The company represented 1.16% of Robert Pitts’ portfolio.
ClearBridge Investments mentioned CSX Corporation in its Q4 2021 investor letter. Here is what the firm has to say:
“On a regional basis, the U.S. and Canada was the top contributor to quarterly performance, of which U.S. rail operators CSX was among the lead performers. CSX is one of five leading North American rail companies, with over 21,000 miles of rail, covering 23 states and 40+ ports. CSX is engaged in the transportation of rail freight in the Southeast, East, and Midwest via interchange with other rail carriers, to and from the rest of the U.S. and Canada. CSX performed well during the quarter after the company beats market expectations on its third-quarter results. The beats were largely driven by strong pricing, which could be hitting record highs, and healthy commodity/coal volume driven by the current energy crisis.”
7. Union Pacific Corporation (NYSE:UNP)
Steadfast Capital’s Stake Value: $68,201,000
Dividend Yield as of June 16: 2.51%
Number of Hedge Fund Holders: 89
Union Pacific Corporation (NYSE:UNP) is a railroad holding company that provides freight transportation services in 23 US states. After delivering solid Q1 results, the company expects to achieve an improvement in its operating ratio in FY22 as compared to 2021 but also showed concerns due to higher fuel prices and other cost inflation.
In Q1 2022, Union Pacific Corporation reported a 17% year-over-year growth in its operating revenue to $5.9 billion. Moreover, the company’s business volumes were up 4% from a year-ago period. On May 10, Union Pacific Corporation announced a 10% hike in its quarterly dividend to $1.30 per share. The company has been a dividend payer for the past 123 years. As of June 16, the stock’s dividend yield was recorded at 2.51%.
In April, Goldman Sachs gave a positive stance on Union Pacific Corporation, expecting a second-half volume recovery as the company showed improvement in its services. The firm lifted its price target on the stock to $276, with a Buy rating on the shares.
Steadfast Capital first invested in Union Pacific Corporation during the fourth quarter of 2019 and dumped off its entire stake in the company at the end of FY20. The hedge fund resumed its position in the business in Q1 2022, with shares worth over $68.2 million. The company made up 1.17% of Robert Pitts’ portfolio.
Of the 912 elite funds tracked by Insider Monkey, 89 hedge funds owned stakes in Union Pacific Corporation, up from 59 in the previous quarter. The total value of these stakes is over $7 billion. Chris Hohn’s TCI Fund Management was the company’s leading shareholder in Q1, owning stakes worth over $1.4 billion.
ClearBridge Investments mentioned Union Pacific Corporation in its Q4 2021 investor letter. Here is what the firm has to say:
“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. These consistent growers were complemented by solid contributions from structural holdings including Union Pacific.”
6. CF Industries Holdings, Inc. (NYSE:CF)
Steadfast Capital’s Stake Value: $82,182,000
Dividend Yield as of June 16: 1.77%
Number of Hedge Fund Holders: 67
CF Industries Holdings, Inc. (NYSE:CF) is a North American agricultural company that manufactures and distributes agricultural fertilizers and also operates nitrogen plants. Earlier this year, the company said that nitrogen fertilizer is expected to remain expensive for at least two more years as the war in Ukraine put a strain on nitrogen production. However, the company does not see a decline in the product’s demand, which bodes well for its future earnings.
On April 27, CF Industries Holdings, Inc. announced a 33.3% increase in its quarterly dividend to $0.40 per share. This was the company’s first quarterly growth since 2014, however, it has been paying stable dividends to shareholders for over a decade. As of June 16, the stock’s dividend yield stood at 1.77%.
CF Industries Holdings, Inc. is one of the latest holdings of Steadfast Capital as the hedge fund started its position with 797,420 CF shares, worth over $82 million. The company constituted 1.41% of Robert Pitts’ portfolio. In June, Barclays initiated its coverage on CF Industries Holdings, Inc. with an Equal Weight rating and a $103 price target, raising concerns about supply chain issues that can continue for another year.
In addition to CF, analysts are also hopeful about the recovery of tech stocks, such as Apple Inc., Microsoft Corporation, and Amazon.com, Inc..
As per Insider Monkey’s data, 67 hedge funds presented a bullish stance on CF Industries Holdings, Inc. in Q1 2022, up from 58 in the previous quarter. These stakes hold a consolidated value of over $1.53 billion.
5. UnitedHealth Group Incorporated (NYSE:UNH)
Steadfast Capital’s Stake Value: $199,976,000
Dividend Yield as of June 16: 1.45%
Number of Hedge Fund Holders: 103
UnitedHealth Group Incorporated (NYSE:UNH) provides healthcare coverage and benefits to its consumers and also specializes in software and data consultancy services. The company is also expanding its telehealth services to cut costs and meet the needs of its patients.
In Q1 2022, UnitedHealth Group Incorporated reported revenue of $80.1 billion, up 14% from the same period last year. The company’s EPS of $5.49 surpassed Street estimates by $0.14. Moreover, due to the Covid pandemic, the company’s medical care ratio jumped to 82%, from 80.9% last year.
On June 8, UnitedHealth Group Incorporated hiked its quarterly dividend by 14% for the 12th consecutive year. The company currently offers a quarterly payout of $1.65 per share, with a dividend yield of 1.45%, as of the market close of June 16. In June, Loop Capital mentioned UnitedHealth Group Incorporated in its investors’ note, stating the company’s leading positions in commercial and government benefit markets. The firm initiated its coverage of the stock with a Buy rating and a $575 price target.
At the end of March 2022, 103 hedge funds in Insider Monkey’s database reported owning roughly $13 billion worth of stakes in UnitedHealth Group Incorporated. In comparison, 96 funds held stakes in the company in the previous quarter, valued at $13.6 billion. Among these hedge funds, Eagle Capital Management owned roughly 3 million UNH shares, worth $1.48 billion, becoming the company’s largest stakeholder in Q1.
At the end of Q1 2022, Steadfast Capital owned 392,133 UNH shares, valued at roughly $200 million. The hedge fund sold shares worth $65,700 during the quarter, slashing its position in the company by 26%. The insurance company accounted for 3.43% of Robert Pitts’ portfolio.
Baron Funds mentioned UnitedHealth Group Incorporated in its Q1 2022 investor letter. Here is what the firm has to say:
“UnitedHealth Group Incorporated is a leading diversified health and well- being company whose divisions include insurance arm United Healthcare and Optum, which offers care delivery and other services. Shares increased on a fourth quarter beat and a reaffirmation of what is likely conservative guidance for 2022. We believe UnitedHealth leads the health care industry in innovation and execution, as evidenced by its strong value proposition leading to Medicare Advantage share gains, strong cost controls, and its leadership position in the shift to value-based care.”
4. Global Payments Inc. (NYSE:GPN)
Steadfast Capital’s Stake Value: $244,656,000
Dividend Yield as of June 16: 0.93%
Number of Hedge Fund Holders: 64
Global Payments Inc. (NYSE:GPN) is an American fintech company that provides payment technology and software solutions and also processes payments made through credit cards and other digital channels. In Q1 2022, the company posted an EPS of $2.07, which beat estimates by $0.03. The company’s revenue for the quarter fell in line with the consensus at $1.95 billion.
Steadfast Capital started investing in Global Payments Inc. during the second quarter of 2019, with shares worth roughly $42 million. At the end of Q1 2022, the hedge fund owned nearly 1.8 million GPN shares, worth over $244.6 million. The company represented 4.19% of Robert Pitts’ portfolio. Global Payments Inc. currently offers a dividend of $0.25 per share every quarter. The stock’s dividend yield was recorded at 0.93%, as of June 16.
In May, Goldman Sachs initiated its coverage of Global Payments Inc. with a Neutral rating and a $151 price target, highlighting the company’s greater Server Message Block (SMB) exposure and its software-based approach.
According to Insider Monkey’s Q1 database, 64 hedge funds held stakes in Global Payments Inc., falling slightly from 67 in the previous quarter. The collective value of these stakes is over $3.23 billion.
Oakmark Funds mentioned Global Payments Inc. in its Q1 2022 investor letter. Here is what the firm has to say:
“Global Payments (NYSE:GPN) is a leading provider of merchant acquiring services. The company is also one of the largest providers of payment processing and related technology solutions to credit card issuers. We believe Global Payments’ merchant acquiring business is well positioned given its strength in software-driven payments. This is one of the fastest growing parts of the industry as small business customers are increasingly recognizing the efficiency benefits of having payments seamlessly integrated into the software they use to run their businesses. In addition, Global Payments benefits from the broader secular shift away from cash and toward electronic payment methods. Together, these tailwinds have the potential to drive low-double-digit revenue growth and even faster earnings growth. With this strong outlook and with management returning a significant portion of free cash flow to shareholders via repurchase, we think the stock looks attractive at its current valuation of just 12.5x next year’s expected EPS.
3. Anthem, Inc. (NYSE:ANTM)
Steadfast Capital’s Stake Value: $279,589,000
Dividend Yield as of June 16: 1.13%
Number of Hedge Fund Holders: 69
Anthem, Inc. (NYSE:ANTM) is a health insurance provider, serving over 118 million people in the US. In May, the company was added to Morgan Stanley’s list of stocks that have the potential to weather the bear market due to its earnings growth and stable returns in the past year.
At the end of March 2022, 69 hedge funds in Insider Monkey’s database reported owning stakes in Anthem, Inc., up from 63 in the previous quarter. These stakes hold a consolidated value of over $5.7 billion. First Eagle Investment Management was one of the prominent shareholders of the company in Q1, with stakes worth roughly $1 billion.
Anthem, Inc. has been raising its dividends for the past 11 years consistently. Currently, the company offers a quarterly payout of $1.28 per share, with a dividend yield of 1.13%, as recorded on June 16. In June, Loop Capital called Anthem, Inc. the nation’s largest health insurer in its investors’ note. The firm initiated its coverage on the stock with a Buy rating and a $550 price target, further mentioning that it is in a fit state to achieve organic growth in the coming years.
During the first quarter of 2022, Steadfast Capital increased its position in the company by 1%, taking its total stake to roughly $280 million. The company represented 4.79% of Robert Pitts’ portfolio.
Baron Funds mentioned Anthem, Inc. in its Q1 2022 investor letter. Here is what the firm has to say:
“We initiated a position in Anthem, Inc. (NYSE:ANTM) (which recently announced plans to change its name to Elevance Health), one of the largest health benefits companies in the U.S. in terms of medical membership, serving more than 45 million medical members through its affiliated health plans. Anthem serves its members through the Blue Cross and Blue Shield brand name. Similar to many managed care peers, Anthem generates its revenue from the U.S. (which avoids risks related to foreign country exposure) and has pricing power (which enables it to more than offset inflation). More specific to Anthem, the company has multiple growth drivers, including its Medicare Advantage business, its in-house pharmacy benefit management business, and its Diversified Business Group, which includes behavioral health, advanced analytics, and complex and chronic care services. Over the long term, management targets 12% to 15% annual EPS growth. We think Anthem is a high-quality growth company trading at a reasonable valuation.”
2. Microsoft Corporation (NASDAQ:MSFT)
Steadfast Capital’s Stake Value: $340,745,000
Dividend Yield as of June 16: 1.01%
Number of Hedge Fund Holders: 259
Microsoft Corporation is a leading technology company working to expand its cloud-based solutions to provide consulting and solution support services to consumers. The company gained 0.06% on June 14 when it announced the acquisition of cyber threat analysis and research company, Miburo. However, the stock is down 26.8% for 2022 so far.
On June 14, Microsoft Corporation declared a quarterly dividend of $0.62 per share, with a dividend yield of 1.01%, recorded on June 16. Though the stock offers a relatively low yield, it maintains a 15-year track record of consistent dividend growth. Appreciating the company’s Intelligent Data Platform, Jefferies set a $320 price target on Microsoft Corporation with a Buy rating on the shares. The firm further viewed the company as a diversified business that should sustain double revenue growth for ‘the foreseeable future’.
Microsoft Corporation has been a part of Steadfast Capital’s portfolio since the fourth quarter of 2010. At the end of Q1 2022, the hedge fund reduced its stake in the company by 1%, owning over 1.1 million shares worth $340.7 million. The company accounted for 5.84% of Robert Pitts’ portfolio.
As per Insider Monkey’s database for the first quarter, 259 hedge funds owned stakes in Microsoft Corporation, down from 262 in the previous quarter. These stakes hold a consolidated value of over $65.6 billion. With stakes worth roughly $8.6 billion, Fisher Asset Management held the largest position in the company in Q1.
Baron Funds mentioned Microsoft Corporation in its Q1 2022 investor letter. Here is what the firm has to say:
“Shares of mega-cap software company Microsoft Corporation (NASDAQ:MSFT) pulled back with the broader software sector. The company posted another solid quarter, highlighted by total revenues increasing 20% and Microsoft Cloud revenues, now 45% of total revenues, growing 32%. These results were driven, in large part, by strong demand for large Azure contracts. We believe Microsoft can compound revenue in the low double digits for the next three years, underpinned by its expansion in its total addressable market and market share gains.”
1. Fidelity National Information Services, Inc. (NYSE:FIS)
Steadfast Capital’s Stake Value: $407,293,000
Dividend Yield as of June 16: 2.07%
Number of Hedge Fund Holders: 68
Fidelity National Information Services, Inc. (NYSE:FIS) is an American payment service provider. The company provides services in credit and debit card processing, electronic banking, and check risk management. On June 13, Evercore ISI upgraded the stock to Outperform and increased its EPS estimates for the company to $7.36 in FY22, up from $7.32.
In Q1 2022, Fidelity National Information Services, Inc. posted an EPS of $1.47, exceeding expectations by $0.01. The company’s revenue of $3.49 billion also topped analysts’ estimates by $50 million. Fidelity National Information Services, Inc. currently pays a quarterly dividend of $0.47 per share, increasing it by 21% in January. The company did not raise its dividends in 2020 due to the pandemic-related financial clampdown. As of June 16, the stock’s dividend yield stood at 2.07%.
At the end of Q1 2022, Fidelity National Information Services, Inc. was the second-largest holding of Steadfast Capital. The hedge fund increased its position in the company by 19% during the quarter, taking its total stake to over $407.2 million. The company accounted for 6.99% of Robert Pitts’ portfolio.
According to Insider Monkey’s Q1 database, 68 hedge funds reported owning stakes in Fidelity National Information Services, Inc., down from 75 in the previous quarter. The consolidated value of these stakes is roughly $4 billion.
ClearBridge Investments mentioned Fidelity National Information Services, Inc. in its Q4 2021 investor letter. Here is what the firm has to say:
“Several encouraging macro trends are emerging in support of two areas outside tech: consumer spending and industrial production. Unlike in past recessions and recoveries, consumer balance sheets have actually improved dramatically since the onset of the pandemic. This should feed through to increased spending on services like travel, which should benefit companies tied to the reopening like Fidelity National Information Services. We expect the supply chain constraints contributing to inflation and goods shortages will begin to lessen with an ambitious rebuilding of inventories.”
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This article is originally published at Insider Monkey.
