In this article, we discuss the 10 best dividend stocks to buy according to Noam Gottesman’s GLG Partners. You can skip our detailed analysis of the hedge fund and its past performance, and go directly to read 5 Best Dividend Stocks to Buy According to Noam Gottesman’s GLG Partners.
Noam Gottesman is a British-American investor, mainly known for cofounding the investment firm GLG Partners. The firm was founded in 1995 and was acquired by Man Group 15 years later for $1.6 billion. Gottesman stepped down as the CEO of the firm at the time of the sale. Man Group utilized quantitative investing strategies and wanted to add discretionary hedge fund ideas to its portfolio.
According to analysts, merging the two hedge funds proved to be beneficial for both firms. Over the course of years, Man Group has substantially grown its quant business, raising billions of dollars for its long-only funds. The hedge fund realized the importance of quant in the investment world, especially trade execution. Exploring more, the firm further diversified its capital by adding private marketing businesses, such as real estate. Through the use of these strategies, Man Group’s flagship quantitative strategy, AHL, managed to increase its assets by 40% to about $30 billion between 2010 and 2020, as reported by Financial Times.
However, even though the quantitative division of Man Group has expanded, the fund underperformed over the years due to the patchy performance of GLG Partners. In a recent development, to increase its relevance in today’s world, Man Group announced the launch of a new sustainability-focused equity hedge fund, which will invest in stocks that are in line with UN Sustainable Development Goals.
As of Q1 2022, GLG Partners holds a 13F portfolio value of over $28.7 billion, down from $31.1 billion in the previous quarter. The hedge fund made major investments in the tech sector, along with finance, healthcare, and services. Some of the notable holdings of the hedge fund include Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN).
Our Methodology: In this article, we discuss the 10 best dividend stocks in Noam Gottesman’s portfolio. For this list, we collected data from GLG Partners’ 13F portfolio as of Q1 2022.
Noam Gottesman of GLG Partners
Best Dividend Stocks to Buy According to Noam Gottesman’s GLG Partners
10. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 83
Dividend Yield as of May 20: 0.69%
GLG Partners’ Stake Value: $116,687,000
Pfizer Inc. (NYSE:PFE) is an American multinational pharmaceutical and biotech company, based in New York. The company widely grabbed the attention of investors during the pandemic due to its vaccine shots.
Pfizer Inc. (NYSE:PFE) currently pays a quarterly dividend of $0.40 per share, after raising its annual dividend by 2.6% in December 2021. This was the company’s 12th consecutive annual dividend raise. In the past three years, Pfizer Inc. (NYSE:PFE) has increased its dividend at a CAGR of 6.01%. Though the stock’s dividend yield is relatively low, the consistent dividend payments make it one of the most reliable dividend stocks. The dividend yield of 0.69% was recorded on May 20.
GLG Partners increased its position in Pfizer Inc. (NYSE:PFE) by 293% during the first quarter of 2022.
In May, Wells Fargo expressed its concerns regarding the core business of Pfizer Inc. (NYSE:PFE), apart from its Covid business, and is hopeful about the operational growth of the company. The firm set a $55 price target on the stock, with an Overweight rating on the shares.
At the end of December 2021, 83 hedge funds tracked by Insider Monkey held stakes in Pfizer Inc. (NYSE:PFE), up from 74 in the previous quarter. These stakes hold a consolidated value of over $5 billion, up significantly from $2.6 billion in Q3 2021. Among these hedge funds, AQR Capital Management was one of the company’s largest shareholders in Q1 2022, holding shares worth over $554.1 million.
“While the level of general turnover abated as we progressed through 2021, it remained high in one area: post-COVID-19 recovery plays. The concept behind this investment thesis was, and still is, straightforward: with the advent of effective vaccines, the path from pandemic to endemic is just a matter of time. As this transition occurs, the estimated excess savings of over $2 trillion built up on U.S. consumer balance sheets will unlock dramatic pent-up demand for experiences, especially global travel. This investment case seemed especially compelling when the Pfizer vaccine positively surprised markets in November 2020. As a result, we made post-COVID-19 stocks (which were trading well below our estimate of recovery value) a sizable theme within the portfolio. We understood this to be a more aggressive tilt in positioning because it required a major improvement in demand to catalyze fundamentals and drive price toward higher business values. While we accepted that recovery would not be smooth and that it would take time to deploy vaccines both domestically and globally, we decided that recovery was the logical path of least resistance and we were being well compensated for these risks.
What we did not account for, however, was vaccine hesitancy and the risk of further infection waves. As a result, the first variant wave, Delta, was a negative surprise to both the market and our team. When the risk surfaced, we immediately updated our probability-driven models and debated how we should react. The resulting conclusion was that the recovery would be delayed and that we should reduce our exposure quickly, subsequently targeting the most aggressive recovery stocks such as cruise lines. We again acted swiftly and decisively to the positive surprise that Pfizer had delivered a high-efficacy antiviral COVID-19 pill. This pill should greatly reduce COVID-19 severity risks globally, increasing the probability of a global travel recovery in 2022. While this is still true, the emergence of the highly mutated Omicron variant set off another infection wave which spurred us to again act quickly and further reduce our risk exposure. This back-and-forth may sound exhausting, but it highlights our compulsion to act if we determine a surprise has a large enough impact on the probabilities that power our valuation-driven investment cases.
9. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 96
Dividend Yield as of May 20: 1.21%
GLG Partners’ Stake Value: $229,146,000
UnitedHealth Group Incorporated (NYSE:UNH) is an American healthcare and insurance company, based in Minnesota. The company also offers medical and related products to its consumers.
In June 2021, UnitedHealth Group Incorporated (NYSE:UNH) announced a 16% hike in its annual dividend to $1.45 per share. This marked the company’s 11th annual dividend raise. Moreover, the company hasn’t had a dividend cut for almost 30 years. The stock’s dividend yield stood at 1.21%, as of the close of May 20. As UnitedHealth Group Incorporated (NYSE:UNH) has expanded its value-based care initiative and generated solid results for Q1 2022, in April, BMO Capital lifted its price target on the stock to $600, with a Market Perform rating on the shares.
As per Insider Monkey’s Q4 2021 database, 96 hedge funds held stakes in UnitedHealth Group Incorporated (NYSE:UNH), with a collective value of over $13.6 billion. In comparison, 95 hedge funds held positions in the company in the previous quarter, with stakes valued at $11.7 billion.
GLG Partners started reinvesting in UnitedHealth Group Incorporated (NYSE:UNH) in 2018, after selling off its entire stake in the company in 2017. In Q1 2022, the hedge fund increased its position in the company by 90%, holding stakes worth roughly $230 million. The company represented 0.79% of Noam Gottesman’s portfolio.
Baron Funds mentioned UnitedHealth Group Incorporated (NYSE:UNH) in its Q1 2022 investor letter. Here is what the firm has to say:
“UnitedHealth Group Incorporated (NYSE:UNH) is a leading diversified health and wellbeing company whose divisions include insurance arm, United Healthcare and healthcare services arm, Optum, which offers care delivery and other services. Shares increased 1.8% on good fourth quarter results with revenues up 12.5% year-over-year, operating margins of 7.5% and EPS up 78% while also reaffirming its 2022 guidance. 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.”
8. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 75
Dividend Yield as of May 20: 2.30%
GLG Partners’ Stake Value: $122,929,000
QUALCOMM Incorporated (NASDAQ:QCOM) is a California-based multinational corporation that specializes in the manufacturing of semiconductors and wireless technology. The company remained famous among the elite funds during Q4 of 2021, as 75 hedge funds tracked by Insider Monkey held stakes in the company, valued at over $4.8 billion. In comparison, 70 hedge funds had positions in QUALCOMM Incorporated (NASDAQ:QCOM), with $3.5 billion worth of stakes.
In Q1 2022, GLG Partners held shares worth approximately $123 million in QUALCOMM Incorporated (NASDAQ:QCOM), after increasing its position by 34%. The company represented 0.42% of Noam Gottesman’s portfolio. In May, Tigress Financial appreciated the diversification of QUALCOMM Incorporated (NASDAQ:QCOM), as it expands the production of connected devices. The firm raised its price target on the stock to $238, while maintaining a Buy rating on the shares.
QUALCOMM Incorporated (NASDAQ:QCOM) has been paying dividends to its shareholders since 2003 and has increased its dividend at a CAGR of about 6% in the past five years. In March, the company raised its annual dividend by 10% to $0.75 per share, with a dividend yield of 2.30%, as of the close of May 20.
“Market strength continued in the fourth quarter, with only the communication services sector down in the Russell 1000 Value Index. Portfolio returns benefited from the strong performance of semiconductor maker Qualcomm, which has executed exceptionally well in pursuing the transition to 5G, growing both content and share due to its leadership position in cellular technology. The chipmaker recently outlined a number of peripheral growth opportunities outside of mobile markets, including automotive (where it hopes to leverage its strong presence in the automotive infotainment space into advanced driver assistance systems), Internet of Things (including opportunities in the PC market, VR/AR market, and factory automation) and radio frequency (where mmWave adoption globally, including China, would drive substantial upside).”
7. Target Corporation (NYSE:TGT)
Number of Hedge Fund Holders: 49
Dividend Yield as of May 20: 2.35%
GLG Partners’ Stake Value: $150,226,000
Target Corporation (NYSE:TGT) is one of the oldest holdings of GLG Partners, as the hedge fund has been investing in the company since 2010 at regular intervals. In Q1 2022, the firm held shares worth over $150 million in the company, which represented 0.52% of Noam Gottesman’s portfolio.
In Q1 2022, Arrowstreet Capital was the leading shareholder of Target Corporation (NYSE:TGT), with shares worth over $530.5 million. Along with this, 49 hedge funds in Insider Monkey’s Q4 2021 database held stakes in the company, the same as in the previous quarter. The collective value of these stakes stood at roughly $4 billion.
This May, DA Davidson set a $205 price target on Target Corporation (NYSE:TGT), with a Buy rating on the shares, expressing concerns regarding the execution issues of the company. In 2021, Target Corporation (NYSE:TGT) raised its annual dividend by 32.4% to $0.90 per share. In the last decade, the company has raised its dividend by 300%. As of the close of May 20, the stock’s dividend yield was recorded at 2.35%.
Nelson Capital Management mentioned Target Corporation (NYSE:TGT) in its Q2 2021 investor letter. Here is what the firm has to say:
“We added Target (tkr: TGT) to our consumer staples sector. Target offers a broad array of products in owned and known brand items at affordable prices. Its omnichannel fulfilment centers allow customers to receive their items via in-store pickup, curbside pickup, same-day shipping and regular shipping while simultaneously reducing operating costs. With a significantly lower valuation than peers and a unique operating strategy, Target is an attractive holding.”
6. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Dividend Yield as of May 20: 2.60%
GLG Partners’ Stake Value: $170,900,000
Johnson & Johnson (NYSE:JNJ) is an American multinational corporation that specializes in medical devices, pharmaceuticals, and consumer packaged goods. In April, the company announced a 60th consecutive dividend hike of 6.6% to $1.13 per share. Johnson & Johnson (NYSE:JNJ) has increased its dividend at a CAGR of 7% in the past 60 years. As of the close of May 20, the stock’s dividend yield was recorded to be at 2.60%.
In Q1 2022, GLG Partners slashed its position by 36% in Johnson & Johnson (NYSE:JNJ) and held stakes worth roughly $171 million. The company accounted for 0.59% of Noam Gottesman’s portfolio. Along with JNJ, the hedge fund also held positions in Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN). In April, Citigroup saw an improvement in the overall business of Johnson & Johnson (NYSE:JNJ) and raised its price target on the stock to $210, while maintaining a Buy rating on the shares.
According to Insider Monkey’s Q4 2021 data, 83 hedge funds held $7.38 billion worth of stakes in Johnson & Johnson (NYSE:JNJ). In comparison, 88 hedge funds held positions in the company in the previous quarter, with stakes valued at $6.8 billion. In Q1 2022, Arrowstreet Capital was the largest stakeholder of Johnson & Johnson (NYSE:JNJ), with shares worth over $1.17 billion.
“The largest additions in the rebalance, Johnson & Johnson was around 50 and 40 basis points incrementally. J&J underperformed in the quarter while its normalized free cash flows held steady and so its position size was topped off to match the stable cash flows.”
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Disclosure. None. 10 Best Dividend Stocks to Buy According to Noam Gottesman’s GLG Partners is originally published on Insider Monkey.