In this article, we will discuss value investor Joel Greenblatt’s top 12 dividend picks.
Joe Greenblatt is one of Wall Street’s most famous value investors. He founded Gotham Capital in 1985, which delivered an annualized return of 50% from 1985 to 1994. In 2008, Greenblatt created Gotham Asset Management as the successor to his previous fund. He is currently serving as the Managing Principle and Co-Chief Investment Officer of the firm.
Greenblatt is mainly known for his ‘Magic Formula’ investing technique, which he introduced in his book ‘The Little Book that Still Beats the Market’. This technique takes its inspiration from Buffett/Graham’s value approach. According to this strategy, investors should focus on high-quality companies with cheap valuations and strong fundamentals. The strategy further elaborates that through return on capital employed (ROCE) and earnings yield investors can find a great combination of quality and cheap value stocks.
Over the years, Joel Greenblatt’s investment technique has resulted in his hedge fund delivering solid returns to shareholders. Over the past three years, Gotham Large Value Fund (GVALX) has gained 10.6%, compared with a 9.88% return of the S&P 500.
As of the close of Q4 2022, Gotham Asset Management holds a 13F portfolio value of over $3.5 billion, compared with $3.3 billion in the previous quarter. The fund has investments in several sectors, with technology, services, healthcare, and finance dominating the portfolio. The hedge fund has also invested widely in dividend stocks. Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL) are some of the prominent holdings of Greenblatt in Q4. In this article, we will focus on Joel Greenblatt’s top 12 dividend picks.
Joel Greenblatt of Gotham Asset Management
Our Methodology:
For this list, we selected top dividend stocks from Gotham Asset Management’s 13F portfolio, as of Q4 2022. The stocks are ranked in ascending order of their stake value in the portfolio.
Value Investor Joel Greenblatt’s Top 12 Dividend Picks
12. Walmart Inc. (NYSE:WMT)
Gotham Asset Management’s Stake Value: $13.6 million
Dividend Yield as of February 15: 1.54%
Walmart Inc. (NYSE:WMT) is an Arkansas-based multinational retail corporation that operates chains of hypermarkets and grocery stores. Gotham Asset Management has been investing in the company since the fourth quarter of 2011 and currently owns stakes worth over $13.6 million. The company represented 0.38% of value investor Joel Greenblatt’s portfolio. It is one of the most important holdings of the fund alongside Alphabet Inc., Microsoft Corporation, and Apple Inc..
Walmart Inc. currently pays a quarterly dividend of $0.56 per share and has a dividend yield of 1.54%, as of February 15. The company has been rewarding shareholders with increased dividends for the past 49 years.
In February, Gordon Haskett upgraded Walmart Inc. to Accumulate with a $155 price target. The firm mentioned that the company is well-positioned to benefit from its improving margin flow.
As of the end of Q3 2022, 68 hedge funds tracked by Insider Monkey were bullish on Walmart Inc., compared with 67 in the previous quarter. The collective value of stakes owned by these hedge funds is over $4.08 billion.
Leaven Partners mentioned Walmart Inc. in its Q3 2022 investor letter. Here is what the firm has to say:
“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Walmart (NYSE:WMT), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6%[2] from 7.2% in early August and slashing full-year profit growth to 4.5%.”
11. Chevron Corporation (NYSE:CVX)
Gotham Asset Management’s Stake Value: $13.7 million
Dividend Yield as of February 15: 3.58%
Chevron Corporation (NYSE:CVX) is an American multinational energy company that specializes in petroleum refineries. The company pays a quarterly dividend of $1.51 per share, having raised it by 6.3% in January. This was the company’s 36th consecutive year of dividend growth. As of February 15, the stock has a dividend yield of 3.58%.
Chevron Corporation has been a part of Gotham Asset Management’s portfolio since the fourth quarter of 2011. In Q4 2022, the firm owned CVX stakes worth over $13.7 million, which made up 0.38% of value investor Joel Greenblatt’s portfolio.
Truist raised its price target on Chevron Corporation in January to $179 with a Hold rating on the shares, appreciating the company’s recently announced share repurchase program.
The number of hedge funds tracked by Insider Monkey owning stakes in Chevron Corporation grew to 66 in Q3 2022, from 59 in the previous quarter. These stakes have a total value of over $27 billion. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q3.
Diamond Hill Capital mentioned Chevron Corporation in its Q1 2022 investor letter. Here is what the firm had to say:
“Other top contributors in Q1 included multinational energy company Chevron Corp. (NYSE:CVX). The company benefited from increased energy demand as COVID-related economic restrictions eased in tandem with concerns regarding supply interruptions related to Russia’s invasion of Ukraine.”
10. Pfizer Inc. (NYSE:PFE)
Gotham Asset Management’s Stake Value: $13.7 million
Dividend Yield as of February 15: 3.78%
Pfizer Inc. (NYSE:PFE) is a New York-based multinational pharmaceutical industry company that specializes in the production of various drugs. In February, Daiwa upgraded the stock to Outperform with a $51 price target, appreciating the company’s overall performance.
On December 9, Pfizer Inc. declared a 2.5% hike in its quarterly dividend to $0.41 per share. This marked the company’s 13th consecutive year of dividend growth. The stock’s dividend yield on February 15 came in at 3.78%.
In the fourth quarter of 2022, Gotham Asset Management owned 268,688 PFE shares, with a value of over $13.7 million. The company made up 0.38% of Joel Greenblatt’s portfolio.
The number of hedge funds tracked by Insider Monkey owning stakes in Pfizer Inc. stood at 77 in Q3 2022, compared with 70 in the previous quarter. The consolidated value of these stakes is over $2.4 billion.
Diamond Hill Capital mentioned Pfizer Inc. in its Q3 2022 investor letter. Here is what the firm has to say:
“Also among our bottom contributors were health care products manufacturer Abbott Labs, global pharmaceutical company Pfizer Inc. (NYSE:PFE), media and technology giant Alphabet, and insurance company American International Group (AIG). Although Pfizer continues to report strong performance of its core drugs, sales of its COVID vaccine and treatment have likely peaked and sales are expected to decline going forward. We remain optimistic about the company long term as we believe management is taking the company in the right direction, focusing R&D, and making strategic acquisitions with profits generated from COVID vaccine sales.”
9. QUALCOMM Incorporated (NASDAQ:QCOM)
Gotham Asset Management’s Stake Value: $14.8 million
Dividend Yield as of February 15: 2.30%
QUALCOMM Incorporated (NASDAQ:QCOM) is an American multinational semiconductor company, based in California. In Q4 2022, Gotham Asset Management boosted its position in the company by 28%, which took its total stake in the company to over $14.8 million. The company accounted for 0.41% of value investor Joel Greenblatt’s portfolio.
QUALCOMM Incorporated currently pays a quarterly dividend of $0.75 per share and has a dividend yield of 2.30%, as of February 15. The company has been paying regular dividends to shareholders since 2003.
In February, Citigroup lifted its price target on QUALCOMM Incorporated to $132 with a Neutral rating on the shares. The firm expects the company to profit through its handset and IOT business.
As of the close of Q3 2022, 80 hedge funds tracked by Insider Monkey owned stakes in QUALCOMM Incorporated, up from 71 a quarter earlier. These stakes are valued at over $2.5 billion collectively.
Madison Investment Management mentioned QUALCOMM Incorporated in its Q4 2022 investor letter. Here is what the firm has to say:
“QUALCOMM Incorporated (NASDAQ:QCOM) continues to be challenged by headwinds in the smartphone supply chain with an expected decline in units for 2022. Despite solid gains in the Internet of Things and Auto segments, Qualcomm’s dominant business remains the smartphone market. We expect to see stabilization of the smartphone market in 2023, including a recovery in China.”
8. Lockheed Martin Corporation (NYSE:LMT)
Gotham Asset Management’s Stake Value: $15.4 million
Dividend Yield as of February 15: 2.51%
Lockheed Martin Corporation (NYSE:LMT) is a Maryland-based aerospace company that specializes in arms, defense, and information security. Credit Suisse upgraded the stock to Outperform in February with a $510 price target. The firm showed confidence in the company’s growth inflection.
Gotham Asset Management started its position in Lockheed Martin Corporation in the fourth quarter of 2010 with shares worth $701,000. In Q4 2022, the firm raised its stake in the company by 22% to $15.4 million. The company represented 0.43% of value investor Joel Greenblatt’s portfolio.
Lockheed Martin Corporation has been raising its dividends consistently for the past 20 years. The company pays a quarterly dividend of $3 per share and has a dividend yield of 2.51%, as of February 15.
At the end of Q3 2022, 53 hedge funds in Insider Monkey’s database owned stakes in Lockheed Martin Corporation, down from 55 in the previous quarter. The collective value of these stakes is nearly $1.7 billion. With over 1.6 million shares, GQG Partners was the company’s leading stakeholder in Q3.
Vltava Fund mentioned Lockheed Martin Corporation in its Q3 2022 investor letter. Here is what the firm has to say:
“LMT is one of the world’s largest aerospace and defence companies. The war in Ukraine has reminded investors and the wider public just how important these companies are. The aerospace and defence industry in the USA is an established oligopoly. This means that a few large firms play a dominant role. While collectively they comprise an oligopoly, individually they often have monopoly positions in particular narrower segments. Their main counterparty is the US government, a key customer in what is known as a monopsonist position. This is a rather unusual situation, but one that is very advantageous for companies such as LMT. (Click here to see the full text)
7. Exxon Mobil Corporation (NYSE:XOM)
Gotham Asset Management’s Stake Value: $15.5 million
Dividend Yield as of February 15: 3.16%
Exxon Mobil Corporation (NYSE:XOM) is another top dividend stock in value investor Joel Greenblatt’s portfolio. The American energy company currently pays a quarterly dividend of $0.91 per share for a dividend yield of 3.16%, as of February 15. It has grown its payouts for 40 years in a row.
Gotham Asset Management has been investing in Exxon Mobil Corporation since Q4 2011. In the most recent quarter, the hedge fund owned XOM stakes worth over $15.5 million, which made up 0.43% of its 13F portfolio.
Argus expects Exxon Mobil Corporation to increase its production in 2023 due to higher oil prices. In view of this, the firm raised its price target on the stock to $133 in February and maintained a Buy rating on the shares.
As of the close of Q3 2022, 75 hedge funds tracked by Insider Monkey owned stakes in Exxon Mobil Corporation, up from 72 in the previous quarter. The collective value of these stakes is $5.5 billion. GQG Partners owned the largest stake in the company, worth nearly $3 billion.
6. Johnson & Johnson (NYSE:JNJ)
Gotham Asset Management’s Stake Value: $16.1 million
Dividend Yield as of February 15: 2.81%
Johnson & Johnson is a New Jersey-based pharmaceutical company that also deals in a wide range of consumer products. In December, Citigroup raised its price target on the stock to $205 and maintained a Buy rating on the shares.
In Q4 2022, Gotham Asset Management owned 91,201 shares in Johnson & Johnson, with a total value of over $16.1 million. The firm reduced its position in the company by 6% during the quarter. The company constituted 0.45% of value investor Joel Greenblatt’s portfolio and is one of his important holdings in addition to Alphabet Inc., Microsoft Corporation, and Apple Inc..
Johnson & Johnson has a dividend yield of 2.81%, as of February 15. The company has six decades of consecutive dividend increases under its belt.
At the end of Q3 2022, 85 hedge funds in Insider Monkey’s database owned stakes in Johnson & Johnson, up from 83 in the previous quarter. The collective value of these stakes is over $5.4 billion. Among these hedge funds, Fisher Asset Management was the company’s leading stakeholder in Q3.
Here’s what Distillate Capital Partners LLC said about Johnson & Johnson in its Q2 2022 investor letter:
“Johnson & Johnson was among the 2 largest trims at around 1% each. Each stock was up 1% in the quarter compared to the 16% price decline for the S&P 500 and the positions were reduced as the valuations became somewhat less appealing, though still attractive enough to warrant inclusion.”
5. Accenture plc (NYSE:ACN)
Gotham Asset Management’s Stake Value: $16.5 million
Dividend Yield as of February 15: 1.58%
Accenture plc (NYSE:ACN) is an Irish-American information technology company that deals in related services and consulting. On December 16, the company announced a quarterly dividend of $1.12 per share, which was in line with its previous dividend. The company has been raising its dividends consistently for the past 17 years. Its shares have a yield of 1.58%, as of February 15.
In Q4 2022, Gotham Asset Management owned nearly 62,000 shares in Accenture plc (NYSE:ACN), worth over $16.5 million. The company represented 0.46% of value investor Joel Greenblatt’s portfolio.
In January, Wells Fargo initiated its coverage of Accenture plc (NYSE:ACN) with an Equal Weight rating and a $289 price target, presenting a positive view of the company’s platform and services.
At the end of Q3 2022, 58 hedge funds in Insider Monkey’s database owned stakes in Accenture plc (NYSE:ACN), down from 61 in the previous quarter. The collective value of these stakes is over $3.47 billion.
Distillate Capital Partners LLC mentioned Accenture plc (NYSE:ACN) in its third-quarter 2022 investor letter. Here is what the firm has to say:
“The largest new purchases includes Accenture plc (NYSE:ACN). Accenture modestly lagged the market last quarter and became similarly attractive enough to warrant ownership. Similar to our prior presentations, one way to visualize the current portfolio and note recent changes versus the benchmark is to look at scatter plot of all of Distillate’s FSV holdings versus those in the benchmark with valuation on the vertical axis and free cash ϲow stability on the horizontal axis.”
4. Cisco Systems, Inc. (NASDAQ:CSCO)
Gotham Asset Management’s Stake Value: $16.8 million
Dividend Yield as of February 15: 3.20%
Cisco Systems, Inc. (NASDAQ:CSCO) is an American multinational digital communications and software company, headquartered in California. The company is one of the top dividend stocks of value investor Joel Greenblatt as his hedge fund owned CSCO stakes worth nearly $16.8 million in Q4 2022. The company made up 0.47% of Gotham Asset Management’s portfolio.
Cisco Systems, Inc. currently offers a quarterly dividend of $0.38 per share and has a dividend yield of 3.20%, as of February 15. In 2022, the company raised its payout for the 11th consecutive year.
In February, Evercore ISI added Cisco Systems, Inc. to its “Tactical Outperform” list as the firm sees an upside potential in the company’s performance. The firm maintained an Outperform rating with a $58 price target on the stock.
Cisco Systems, Inc. was a part of 68 hedge fund portfolios in Q3 2022, compared with 63 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a total value of over $2.78 billion. Among these hedge funds, Two Sigma Advisors was the company’s leading stakeholder.
Carillon Tower Advisers mentioned Cisco Systems, Inc. in its Q1 2022 investor letter. Here is what the firm has to say:
“Cisco Systems (NASDAQ:CSCO) traded lower as investors weighed how supply chain concerns would impact sales growth. The company has been upgrading its switching and routing offerings, which should lead to strong demand as on-site locations upgrade infrastructure.”
3. Merck & Co., Inc. (NYSE:MRK)
Gotham Asset Management’s Stake Value: $19.4 million
Dividend Yield as of February 15: 2.70%
An American multinational pharmaceutical company, Merck & Co., Inc. is next on our list of top dividend stocks in value investor Joel Greenblatt’s portfolio. In Q4 2022, Gotham Asset Management owned MRK stakes worth over $19.4 million, which represented 0.54% of its 13F portfolio.
Credit Suisse raised its price target on Merck & Co., Inc. to $125 with an Outperform rating on the shares, appreciating the company’s ongoing research on its drugs.
On January 24, Merck & Co., Inc. announced a quarterly dividend of $0.73 per share, which was in line with its previous dividend. The company maintains a 12-year streak of consistent dividend growth and has a dividend yield of 2.70%, as of February 15.
At the end of Q3 2022, 82 hedge funds tracked by Insider Monkey presented a bullish stance on Merck & Co., Inc., up from 79 in the previous quarter. The stakes owned by these hedge funds have a total value of over $4.7 billion.
Baron Funds mentioned Merck & Co., Inc. in its Q4 2022 investor letter. Here is what the firm has to say:
“Merck & Co., Inc. (NYSE:MRK) is a large-cap pharmaceutical company with a deep heritage in drug discovery. Share gains were led by the continued growth of key asset Keytruda, the leading immune oncology agent used to treat a variety of cancers. Shares also benefited from increased investor interest as Merck proves its ability to scale its Gardasil vaccine that had previously been constrained by supply issues. We retain long-term conviction, as we expect Keytruda to solidify its position as the best-selling biopharmaceutical drug of all time.”
2. Apple Inc. (NASDAQ:AAPL)
Gotham Asset Management’s Stake Value: $46.7 million
Dividend Yield as of February 15: 0.60%
Apple Inc. ranks second on our list of top dividend stocks according to value investor Joel Greenblatt. On February 2, the company declared a quarterly dividend of $0.23 per share, which was consistent with its previous dividend. The company maintains a 9-year streak of consistent dividend growth. The stock’s dividend yield on February 15 came in at 0.60%.
In the fourth quarter of 2022, Gotham Asset Management increased its position in Apple Inc. by 4% and owned a $46.7 million stake. The company made up 1.31% of the firm’s 13F portfolio. The hedge fund has been investing in the company since Q2 of 2011.
In Q3 2022, 140 hedge funds in Insider Monkey’s database owned stakes in Apple Inc., up from 128 in the preceding quarter. These stakes are valued at over $144 billion.
Distillate Capital mentioned Apple Inc. in its Q4 2022 investor letter. Here is what the firm has to say:
“The largest new purchase was Apple Inc., which after underperforming saw its valuation improve significantly. Over the course of the last year, Apple’s consensus estimated forward free cash flows rose modestly, while its enterprise value fell by around 30%. Apple ranks below the 25th most attractive name in the portfolio and so its weight is capped at 4% vs. 6% for names in the top quartile.”
1. Microsoft Corporation (NASDAQ:MSFT)
Gotham Asset Management’s Stake Value: $50 million
Dividend Yield as of February 15: 1.01%
Microsoft Corporation was the fifth-largest holding of Gotham Asset Management in the fourth quarter of 2022. The hedge fund increased its position in the company by 4%, which took its total MSFT stake to over $50 million. The company represented 1.4% of value investor Joel Greenblatt’s portfolio.
Microsoft Corporation pays a quarterly dividend of $0.68 per share for a dividend yield of 1.01%, as of February 15. The company holds a 16-year track record of consistent dividend growth.
Microsoft Corporation was the most popular stock among hedge funds in Q3 2022, as 269 funds in Insider Monkey’s database owned stakes in the company, compared with 258 in the previous quarter. The consolidated value of these stakes is over $61 billion.
Polen Capital mentioned Microsoft Corporation in its Q4 2022 investor letter. Here is what the firm has to say:
“In the case of Microsoft Corporation (NASDAQ:MSFT), the company is performing very well. Azure now represents nearly 25% of the total business and continues to compound at a higher rate. Although growth is moderating a bit recently (as it is for AWS and Google Cloud Platform as well), these three platforms collectively generated more than $140 billion in revenue during the last 12 months and are still growing at a healthy rate. Further, Microsoft Cloud, or commercial cloud (which includes Azure and other cloud services, Office 365 Commercial, the commercial portion of LinkedIn, Dynamics 365, and other cloud properties) continues to grow roughly 30% and is now about half the business. Mathematically, commercial cloud could decelerate to 20% growth with all other segments decelerating to zero growth and total company revenue growth would still be at least double digits. We believe Microsoft is positioned to compound underlying earnings per share at a midteens rate over the next five years. At 22x earnings, we felt the valuation was attractive and that it should be a large position.”
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This article is originally published at Insider Monkey.
