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10 Best Dividend Stocks to Buy According to Billionaire Mario Gabelli

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·11 min read
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In this article we will take a look at the 10 best dividend stocks to buy according to billionaire Mario Gabelli. You can skip our detailed analysis of Gabelli’s history, investment philosophy, and hedge fund performance, and go directly to the 5 Best Dividend Stocks to Buy According to Billionaire Mario Gabelli.

Mario Gabelli is the founder of GAMCO Investors, one of the first investment companies to focus on value equity. Gabelli’s strategy usually involves scrutinizing a stock’s market value before making an investment decision. GAMCO Investors had a great month in April 2021, during which its share price gained 29%, recovering from the losses it suffered earlier this year. Its market value grew to $11.396 billion in Q1, 2021, from the company’s $10.69 billion market value in the previous quarter. This month, The Gabelli Go Anywhere Trust (NYSE: GGO) declared a $0.50 per share dividend.

GAMCO's portfolio consists of industry heavyweights such as JPMorgan Chase & Co. (NYSE: JPM), whose share price recently reached an all-time high of $163.75. The company recently announced a quarterly dividend of $0.90 per share, which is in line with its dividend payout during the previous quarter. JPMorgan Chase & Co. (NYSE: JPM) is one of the banks that have joined the government-backed initiative to give customers access to deposit account information. The initiative aims to facilitate more access to credit cards.

Bank of America Corporation (NYSE: BAC) is also part of Gabelli’s portfolio. Its CEO Brian Moynihan recently stated during a Fox Business interview that Q1 demonstrated some stabilization in loan decline and that the bank will likely announce a higher dividend to encourage more share buybacks. For April, Bank of America Corporation (NYSE: BAC)'s credit card delinquency rate fell to 1.17% from 1.31% in March.

GAMCO also owns 209,951 shares of Apple Inc. (NASDAQ: AAPL). The Street expects the company to maintain strong dividends supported by strong earnings from the new lineup of M1 devices. It also anticipates growth from other areas such as Apple Music, thanks to the upcoming Spatial Audio launch featuring Dolby Atmos. In April, the stock of Apple Inc. (NASDAQ: AAPL) was upgraded at Goldman Sachs to “Neutral” from “Sell.” The firm raised its price target to $130 from $83.

The Coca-Cola Company (NYSE: KO) is another major dividend paying stock in GAMCO’s portfolio. It recently teamed up with Colgate Palmolive, Unilever, and Anheuser-Busch InBev to develop solutions for sustainability challenges. The Coca-Cola Company (NYSE: KO) recently announced plans to sell shares to Coca-Cola Beverages Africa (CCBA) through an Initial Public Offering. The IPO will take place in the next 18 months.

Investing in dividend stocks has become extremely important in the current age of financial volatility, which isn't sparing even the smart money. On the other hand, Insider Monkey's research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26, 2021, our monthly newsletter's stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017, and they lost 13% through November 16. That's why we believe hedge fund sentiment is a handy indicate that investors should consider. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Billionaire Mario Gabelli's top 10 Stock Picks
Billionaire Mario Gabelli's top 10 Stock Picks

Here are 10 best dividend stocks to buy according to billionaire Mario Gabelli:

Best Dividend Stocks to Buy According to Billionaire Mario Gabelli

10. Marathon Petroleum Corporation (NYSE: MPC)

Gabelli’s Stake Value: $277,000 Percentage of Mario Gabelli’s 13F Portfolio: 0.0024% Dividend Yield: 3.8% Number of Hedge Fund Holders: 46

Marathon Petroleum Corporation (NYSE: MPC) is an energy industry company that deals with oil refinery, marketing and distribution in the U.S. Like JPMorgan Chase & Co. (NYSE: JPM), The Coca-Cola Company (NYSE: KO), Bank of America Corporation (NYSE: BAC) and Apple Inc. (NASDAQ: AAPL), Marathon Petroleum is one of the best dividend stocks in Gabelli’s portfolio.

The company announced earlier this month that it signed a deal with One Energy Enterprises LLC for the installation of five wind turbines that will generate 2.3 megawatts of renewable energy at its renewable diesel plant in North Dakota. The wind turbines will help reduce MPC’s carbon footprint. For Q1 2021 the company reported a net loss of $(0.37) compared to a net loss of $(14.25) in Q1 2020. Marathon Petroleum Corporation (NYSE: MPC) board of directors recently declared a Q1 dividend of $0.58 per share.

In May, the stock was rated as “Outperform” at Credit Suisse, with a price target of $74. In April, the stock was upgraded to “Strong Buy” from “Market Perform” at Raymond James, with a price target of $69.

9. Chevron Corporation (NYSE: CVX)

Gabelli’s Stake Value: $4,776,000 Percentage of Mario Gabelli’s 13F Portfolio: 0.0419% Dividend Yield: 4.87% Number of Hedge Fund Holders: 41

Chevron Corporation (NYSE: CVX) that engages in integrated energy, chemicals, and petroleum announced a week ago that it completed the acquisition of Noble Midstream Partners LP (NASDAQ: NBLX). The latter will now exist as a Chevron subsidiary. Chevron declared a $1.34 per share Q1 dividend towards the end of April. The dividend payout represents a $0.05 gain from the previous quarter dividend. Like JPMorgan Chase & Co. (NYSE: JPM), The Coca-Cola Company (NYSE: KO), Bank of America Corporation (NYSE: BAC) and Apple Inc. (NASDAQ: AAPL), Chevron is one of the best dividend stocks in Gabelli’s portfolio.

In April, Goldman Sachs’ analyst Neil Mehta downgraded the stock of Chevron Corporation (NYSE: CVX) to “Neutral” from “Buy,” lowering the price target to $113 from $117. Mehta sees better potential in Chevron’s rival Exxon Mobil Corporation (NYSE: XOM).

Nelson Capital Management, in its Q1 2021 investor letter, mentioned Chevron Corporation (NYSE: CVX). Here is what Nelson Capital Management has to say about Chevron Corporation in its letter:

"In the energy sector, we bought a position in Chevron (tkr: CVX). As interest rates have increased, we have witnessed a rotation out of growth and momentum stocks and into value stocks. We think this trend could continue, which would be advantageous for Chevron . Additionally, we anticipate an uptick in oil and gas demand as more people get vaccinated and air travel picks up . Higher oil prices coupled with increased demand should lead to better earnings results for Chevron, which will enable it to support (or perhaps grow) its Large 5% dividend.”

8. FirstEnergy Corp. (NYSE: FE)

Gabelli’s Stake Value: $1,893,000 Percentage of Mario Gabelli’s 13F Portfolio: 0.0166% Dividend Yield: 4.41% Number of Hedge Fund Holders: 51

FirstEnergy Corp. (NYSE: FE) is one of the energy company that generates, transmits, and distributes electricity. The stock ranks 8th in the list of best dividend stocks to buy according to Mario Gabelli. The company recently finalized the construction of its 69-kilovolt power lines designed to boost the reliability of its electricity distribution services for Ohio Edison customers in Morrow County. The construction featured the updating of equipment and the installation of new poles. Like JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corporation (NYSE: BAC) and The Coca-Cola Company (NYSE: KO), FE is one of the best dividend stocks in Gabelli’s portfolio.

FirstEnergy Corp. (NYSE: FE) recently introduced a new Amazon Alexa feature that lets customers use the digital assistant to keep tabs on their electric bills. FirstEnergy Corp. (NYSE: FE) recently committed $2.5 million to equipment upgrades for the North Star BlueScope Steel substation in Delta. It also spent an additional $700 million to expand its capacity to meet the high electricity needs of the North Star BlueScope Steel area.

In April, KeyBanc’s analyst Sophie Karp upgraded the stock of FirstEnergy Corp. (NYSE: FE) to “Overweight” from “Sector Weight,” and now has a price target of $42. Earlier in March, BofA Securities also upgraded the stock to “Buy” from “Neutral,” with a price target of $37.

In its Q3 2020 investor letter, Heartland Advisors highlighted a few stocks and FirstEnergy Corp (NYSE:FE) is one of them. Here is what Heartland Advisors said:

"The portfolio’s Utility names lagged on a relative basis with the shortfall stemming from a stock-specific issue in the group. FirstEnergy (FE) is a business we’ve owned in the past and sold out of after shares had appreciated following its successful transition to a pure regulated utility through the divestiture of its merchant power unit.

We initiated a new stake in FirstEnergy in March after shares sold off due to concerns that the recession would have an outsized impact on the company’s industrial-oriented client base. Similar to our successful experience in the past, we felt that the company was attractive given its meaningful discount to its peers.

Subsequent to our investment, FirstEnergy was named in an investigation related to $60 million of payments made by the merchant power entity to Ohio politicians. Our initial reaction when news broke was to reduce our exposure to the company, however, we continued our due diligence on the matter and believe that market reaction overestimated the likely fallout from the investigation.

As shares fell in price, we added to our position in the belief that as the matter proceeds, some of the clouds casting a shadow on the business will subside.”

7. AbbVie Inc. (NYSE: ABBV)

Gabelli’s Stake Value: $2,334,000 Percentage of Mario Gabelli’s 13F Portfolio: 0.0205% Dividend Yield: 4.47% Number of Hedge Fund Holders: 72

AbbVie Inc. (NYSE: ABBV) is one of the leading pharmaceutical companies in the world and is on the list of 10 best dividend stocks to buy according to billionaire Mario Gabelli. It recently announced that its pipeline drug, VENCLYXTO (venetoclax), received a positive opinion from the European Medicines Agency’s Committee for Medicinal Products for Human Use (CHMP). The opinion is a response to a filing for the drug as a potential treatment for patients with acute myeloid leukemia (AML), although as a combination treatment with hypomethylating agents. The EMA is expected to reveal its final decision on the drug before the end of the first half of 2021.

AbbVie also announced a definitive deal that will facilitate Allergan Aesthetics’ acquisition of Soliton and RESONICTM. Allergan will pay $22.60 per share as part of the agreement in exchange for each outstanding share of Soliton. The deal is estimated to be worth $550 million. For Q1 2021 the company posted net revenue of $13.01 billion up 51% on a reported basis. The firm raised its FY 2021 EPS guidance to $12.37 to $12.57 from $12.32 to $12.52.

In April, RBC analyst Daniel Bush initiated a coverage on the stock of AbbVie Inc. (NYSE: ABBV), rating it as “Outperform” and set a price target of $135.

6. AT&T Inc. (NYSE: T)

Gabelli’s Stake Value: $34,010,000 Percentage of Mario Gabelli’s 13F Portfolio: 0.2984% Dividend Yield: 6.45% Number of Hedge Fund Holders: 63

AT&T Inc. (NYSE: T) is one of the top four major telecommunications providers in the U.S. It recently announced plans to offload its media operations as part of a deal with Discovery Inc. The deal will allow the company to slash its net debt by $43 billion, thus drawing down its $190 billion debt profile. Like JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corporation (NYSE: BAC) and The Coca-Cola Company (NYSE: KO), T is one of the best dividend stocks in Gabelli’s portfolio.

AT&T Inc. (NYSE: T) plans to roll out its 5G+ at the Seattle soccer stadium through its millimeter-wave spectrum. In April, Frank Louthan, an analyst at Raymond James, upgraded the stock to “Outperform” from “Market Perform,” raising the price target to $33 from $32.

Nelson Capital Management, in its Q1 2021 investor letter, mentioned AT&T Inc. (NYSE: T). Here is what the fund said:

"Nelson Capital stayed busy i n t he first quarter, making several adjustments within our core portfolio. In the communication services sector, we sold AT&T (tkr: T). Over the years, AT&T has made several poor acquisitions, especially in the content realm, leaving the company saddled with debt and unable to change directions.”

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Disclosure: None. 10 Best Dividend Stocks to Buy According to Billionaire Mario Gabelli is originally published on Insider Monkey.