The Bank of New York Mellon Corporation (BNY) manages over $78bn in equities through its investment arm BNY Mellon Asset Management. The firm follows both value and growth investment style with an inclination towards value investing. It holds stocks for long term and has a low turnover ratio for its positions. The following is a list of top high yielding stocks BNY Mellon is holding according to their most recent 13F filing with SEC.
Shares Held as on 12/31/2011
General Electric Co.
Altria Group Inc.
Merck & Co, Inc.
My favorite stocks among above are Abbott, Pfizer and Merck. However, one stock in the above list which I would like to avoid is General Electric.
Abbott Laboratories is a global diversified pharmaceutical and healthcare product company. It engages in the discovery, development, manufacture and sale of healthcare products worldwide. The company's drug portfolio includes Humira, Norvir, Depakote and Synthroid. Abbott is also a leading player in nutritional supplements and diagnostic systems.
I like Abbott because of the announced spin-off of its pharmaceutical business. This move is likely to create more value for the shareholders through focused execution and better use of capital. The spin-off is expected to occur by the end of this year.
From the fundamental perspective also, Abbott's business is seeing good trends. Abbott reported strong 4Q 2011 results ahead of street's estimates and provided a healthy 2012 guidance driven by organic growth and higher gross margins. Going forward, Abbott is expected to continue delivering solid earnings results as Humira is likely to continue to post strong sales with market gains in underpenetrated markets and Abbott's recent global expansion in emerging markets. Abbott management also noted that they will resume share buyback in 2012 hinting that its stock is currently undervalued.
Pfizer's stock price has seen a good 20% appreciation in last 6 months, and I expect it to continue its upward trend going forward. I am bullish on Pfizer because of management's commitment to enhancing shareholder value through dividend and buybacks, and the company's improving product pipeline. Pfizer increased its quarterly dividend by 10% to $0.22 from $0.20 in Q4 and authorized an additional $10 billion share repurchase program with $5 billion in repo expected for 2012. Pfizer is likely to generate ~$20B in free cash flow in 2012, so even with the dividend of ~$6.5B and share buyback of $5B there is still plenty of room for inorganic growth through M&A. In addition, Pfizer entering an interesting new product launch cycle with four $1+ bn opportunities including Xalkori, Eliquis, tofacitinib, and Prevnar 13 adult which could provide organic growth catalysts for the company.
I also like Merck given the defensive nature of its business and its low valuations. The stock has outperformed S&P 500 (SPY) in the last 6 months gaining over 22%. I believe this outperformance will continue going forward as investors realize the significant discount company is trading at versus other large cap pharma names.
One stock in the above list where I am not too positive is General Electric. GE is likely to see headwinds from weak pricing, a difficult European environment and decelerating growth in emerging markets. Hence I recommend a sell on the stock.