My 5 largest Dividend Holdings in US Portfolio
AuthorDavid Fourie Stephens
In light of the recent drawdown, I thought it would be transparent to share my top dividend holdings in my US portfolio.
The last few weeks have been tough, but hopefully that will change sooner rather than later.
I will give a give summary of the stocks I own and why I own them.
1. Kinsale Capital
My top dividend holding as well as portfolio holding is Kinsale Capital. The company pays a very small dividend, only 0.2%. However, the dividend is growing fast and they have a lot of room for future increases.
Kinsale Capital is a specialty insurance company insuring items that most other insurance companies won't insure. To be honest, it is more of a growth company than a dividend company given that revenues have skyrocketed the last few years.
It is one of the few companies that has a positive year-to-date return. The company is quite fairly valued so waiting for a buying opportunity might be wise.
2. T Rowe Price
My second biggest holding, T Rowe Price is a global investment management company that offers a host of financial and investment services.
This is a true dividend company with a hefty 4.4% yield and a fast growing dividend. The company is a 'dividend aristocrat' given that it has paid a growing dividend for more than 25 years.
T Rowe is down more than 40% year-to-date and it might continue to struggle for a bit since its business is linked to the growth of assets under management or AUM. However, this is a high quality company trading at a very reasonable price to start a position.
MPLX is a midstream energy company with linkages to Marathon Petroleum. A midstream energy company is mainly involved in the transportation and storage of oil. This means that it's less volatile to changes in the oil price. MPLX have held up pretty well in 2022 so far and is only down -0.7% year-to-date.
The allure of MPLX is its whopping 9.5% dividend which is well covered by its distributable cash flow. Besides its dividend safety, the company has also bought back quite a bit of shares and they should be able to further increase their dividend in the near future. The company is quite fairly valued or slightly undervalued so this investment is more for income investors.
Abbvie is a pharmaceutical giant with some blockbuster drugs like Humira, Skyrizi and Rinvoq.
The company's share price struggled the last few years before 2022 because of patent expirations on their drugs. However, the company is in the green so far in 2022 and is doing better, in my opinion, than what the market expected in terms of product diversification. Abbvie also has a good dividend yield at 3.95% and the dividend is growing at a fast pace. Another great feature of the company is that its producing a lot of free cash flow which it can use to pay of their acquisition debt.
I would say that the stock is currently fairly valued to slightly undervalued.
5. Nextstar Media
The last company on this list is Nextstar Media, a diversified media/broadcasting company. They own the largest number of TV stations in the United States of America and although it might seem like a dying industry given streaming threats, its actually quite a good business people like local news and sports.
The other thing I like about Nextstar is its ability to generate a lot of cash which can be used to fund projects, pay off debt, pay a growing dividend and buyback more shares. At the moment, Nextstar is paying a 2.2% dividend and the good news is that this dividend is growing very fast.
*Note, the above is not buy recommendations.