By Aubrey Tabuga
Fisher Asset Management is an independent money management firm managed by Ken Fisher. Ken Fisher is one of industry's most influential people. He had published best-selling books on money management. Fisher Asset Management manages billions of dollars of high-net-worth individuals and foundations. As of the end of September, the asset management firm had $35.076 billion worth of assets under management. Its portfolio is focused on financial (20.69%), technology (19.7%), services (13.86%), healthcare (11.54%), and consumer/non-cyclical (10.71%).
I analyzed the dividend stocks of Fisher to direct income-seeking investors to stocks that will likely provide a steady stream of dividend income. These are companies which do not only have high yield but with impressive growth performances. These are HSBC Holdings plc (HBC), GlaxoSmithKline plc (NYSE:GSK), Wells Fargo & Company (NYSE:WFC), Schlumberger Limited (NYSE:SLB), and Qualcomm Incorporated (NASDAQ:QCOM). I looked at each stock from a fundamental perspective, focusing on yield, ability to produce dividends, earnings growth, and profitability.
% of Portfolio
EPS growth this year
Wells Fargo & Company
Sources: whalewisdom.com & finviz.com
Annualized Dividend Payment
HSBC Holdings plc
Wells Fargo & Company
HSBC Holdings plc
Fisher had bought additional 55% of HSBC shares in the latest quarter bringing the share held to 12.769 million or 1.64% of its total portfolio. The firm initiated its stake in HBC only in the previous quarter. HSBC Holdings plc is a banking and financial products and services company based in London. The company operates in 85 countries and territories around the world. The company is currently on the hot seat and is due to pay of $1.92 billion to the US government, the priciest fee among many settlements, for its failure to impose controls to prevent money laundering. In the meantime, the company has replaced almost all of its senior management officials and deferred, either fully or partially, compensation bonuses to some officers in concerned units.
HSBC stock had gained an outstanding 42.05% year-to-date. Its earnings per share had leaped by 25.31% this year. The double-digit growth is expected to continue next year. The giant bank company enjoys a profit margin of 20.24%. The company has been paying its investors stable and increasing dividends since 2009. With its impressive earnings trend, the company's ability to generate dividends has significantly improved. The payout ratio went down to 58.17% from a historical level of 89.15%.
GlaxoSmithKline has been on the 13F Filing of Fisher in at least the last 9 quarters. The money manager recently added a few more shares to its stake in the latest quarter. The total holding as of the end of September was at 11.796 million or 1.51% of Fisher's portfolio. GlaxoSmithKline plc is a global company that engages in the production and marketing of pharmaceutical and other health-related products around the world. The Brentford, United Kingdom-based company has recently partnered with The University of Texas' M.D. Anderson Cancer Center to develop new therapeutic antibodies to fight cancer. GSK is granted the worldwide rights to commercialize the antibodies. The deal could net an estimated $335 million.
The stock had gained 1.74% from the previous year. This year, the EPS had tripled. Investors can also expect a growth of 8.01% in the following year. The company's profit margin is currently at 19.55%. GSK has been enjoying a double-digit net margin for 7 quarters in a row now. Dividend-seeking investors favor this stock for the high yield of 5.28% and stable dividend payments. The pharmaceutical company has shown improved capacity to raise dividends. Its payout ratio went down from 89.13% to 77.44%.
Wells Fargo & Company
Fisher significantly increased its position in Wells Fargo in the latest quarter. The 69% increase brought its shares held to 18.598 million or 1.77% of its total portfolio. Wells Fargo & Company engages in the provision of retail, commercial, and corporate banking services. The company maintains offices in 35 countries and is headquartered in San Francisco, California. Wells Fargo had recently dropped to No.2, behind JPMorgan Chase in customer satisfaction rating based on the American Customer Satisfaction Index released this week. Wells was down three points from 2011 while JPMorgan is up by six points.
WFC stock had gained a robust 23.92% year-to-date. The company's EPS had swelled by 27.71% during the current year. Investors can also look forward to a growth of 8.36% come 2013. Wells is a highly profitable company with a net margin of 21.54%. The quarterly net margin has been in the double-digit in the last 11 consecutive quarters. That for the end of the third quarter was 15% higher than the margin in 2011's third quarter. WFC has a decent yield of 2.65% and has been paying its investors stable dividends for many years now. The bank had shown better capacity to produce dividends through its improved payout ratio of 24.21%, which is lower than the previous ratio of 57.64%.
The asset manager maintained its stake in Schlumberger. It added some 85,131 shares to its holding in the latest quarter. As of the end of September, the WFC holding formed 1.62% of Fisher's total portfolio. Schlumberger Limited is a supplier of technology, management services, and information solutions to the oil and gas industries around the world. The Houston-based company had just gone ex-dividend last month with a payment of $0.275, higher by roughly 10 percent from that of the same period last year. The company also got a rating of "buy" from TheStreet Ratings for its growth in earnings, net income, and revenues, among others.
The stock had gained 7.85% from a year ago. The company's EPS had grown by 3.82% this year. This is poised to grow rather more robustly next year than this year, at 15.84%. In fact, this is estimated to grow by 16.51% each year in the long term. SLB has an outstanding record of double-digit profit margin in 34 consecutive quarters including the latest quarter. It has a yield of 1.52% and a good record of dividend payment. Meanwhile, SLB's payout ratio had slightly risen to 26.07% from a historical ratio of 23.65%. The difference, however, was somewhat negligible.
Fisher slightly decreased its position in Qualcomm in the third quarter. Nonetheless, the total shares remained at over 9 million. It is recalled that the asset manager added a significant amount, at 63%, in the previous quarter.
Qualcomm is a digital telecommunications company based in San Diego, California. The company recently announced that it will make an investment worth $121 million in the Japanese company Sharp. Qualcomm will buy 30.12 million shares and will further increase its stake in the future. Meanwhile, Qualcomm Atheros, subsidiary of Qualcomm Inc. had just launched the industry's first SMB Unified High Port-Count Gigabit Ethernet Switch family.
The stock price had increased by 16.57% year-to-date. The company's EPS is growing robustly. This year, it has grown by 13.27. It is expected to grow annually at a rate of 14.28% in the next 5 years. Qualcomm is a solid profit generator. Since June 30, 2009, the company enjoys an impressive quarterly profit margin of not lower than 25%. The dividend yield is currently at 1.59%. The company has been paying its happy investors stable and increasing dividends since 2004. Qualcomm had shown an improved ability to raise dividends. The payout ratio went down from 38.7% to 30.23%.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: EfsInvestment is a team of analysts. This article was written by Aubrey Tabuga, one of our equity researchers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.