Manning & Napier Advisors, Inc. is a 100% independent employee-owned investment advisory firm founded by William Manning in 1970. The firm manages ~ $25 bn in the Manning & Napier series of mutual funds in addition to other funds and caters to individuals and institutions. I discussed Manning & Napier Advisors' Top Buys and Top Sells in my previous articles. In addition, for investors seeking yield it is also interesting to have a look at Manning and Napier's top dividend holdings. The following is a list of Manning and Napier's top seven holdings with good dividend yields, as released in their most recent 13F filing with the SEC.
Shares Held as on
Kraft Foods Inc.
Time Warner Inc.
The Coca-Cola Company
United Parcel Service Inc.
The Bank of New York Mellon Corporation
Source: 13F Filing
From the above list, I believe that Kraft Foods and Coca Cola can see a good stock price appreciation in addition to a healthy dividend yield. However, one stock where I am a bit cautious and would like to avoid is United Parcel Service.
Kraft Foods Inc. manufactures and markets packaged food products, including biscuits, confectionery, beverages, cheese, convenient meals and various packaged grocery products. Kraft is trading at a forward PE of 15x. Its EPS forecast for the current year is 2.28 and next year is 2.52. According to the consensus estimates, Kraft's top line is expected to grow 10.50% in the current year and 2.60% next year. Trading at a forward PE of 15, Kraft's valuations are in line with its peers despite its above-average growth rate. I believe this will change going forward as Kraft is planning to split up its high-growth Snacks business and the stable return Grocery business in FY12. This will highlight the above peer growth profile of the global snacks business and hence help the company achieve a better valuation.
Coca-Cola is another good company to have in a portfolio. The company gave a good 11% plus return in 2011. Coca-Cola is a high-dividend-yielding company with a consistent growth rate and stable business. It is a good defensive pick for the current uncertain environment. Its stock price has corrected in the past few months as investors have moved to "risk-on" mode. However, I would recommend long-term investors utilize this recent underperformance as a buying opportunity in this quality company.
United Parcel Service Inc. is a package delivery company, providing transportation and logistics services in the United States and worldwide. It operates in three segments, U.S. Domestic Package, International Package and Supply Chain and Freight. UPS is facing several near term headwinds. Domestic volume growth is getting adversely affected due to unfavorable economic condition. Cost pressures are expected to increase due to rising pension expenses and challenges in productivity realization. Despite significant volume growth in the international package business, recession in the eurozone and unfavorable exchange rates are likely to lead to slower revenue growth. All these factors translate into a lower EPS growth than consensus estimates. The current trading multiple for the stock is also on the higher side of the historical range. With a modest outlook in the medium term, cost headwinds in 2012 and macro uncertainty in Europe, the risk-reward for the stock doesn't seem to be attractive in the near term.