Terence “Terry” Smith founded Fundsmith, a London-based investment management company, in 2010. Smith has been referred to as the “English Warren Buffett” for his strategy of buying and holding shares in a limited number of stocks that have growth opportunities.
Since Fundsmith’s inception, the fund has provided an annualized return of 15.5% as of Nov. 11, 2022.
Here are three dividend stocks Fundsmith has increased or initiated a stake in during the third quarter.
Philip Morris International Inc. PM offers a forward dividend yield of 4.92% or $5.08 per share annually, conducting quarterly payments with a stellar track record of increasing its dividends for 13 consecutive years.
The Philip Morris portfolio of international and local brands is led by Marlboro, the world’s bestselling international cigarette since 1972. Philip Morris products are sold in more than 175 markets and owns five of the top 15 international brands in the world, holding the No. 1 or No. 2 positions by market share in many of these areas.
Fundsmith increased its stake in Philip Morris by more than 10,000 shares to over 16.4 million shares or 6.5% of the total portfolio, the second-largest position.
Otis Worldwide Corp OTIS offers a forward dividend yield of 1.48% or $1.16 per share annually, utilizing quarterly payments with a decent track record of increasing for two consecutive years.
Otis Worldwide is the largest global elevator and escalator supplier by revenue. Over the decades, Otis has built more than 2 million elevators, making it a top original equipment manufacturer.
In the third quarter, Fundsmith initiated a new stake in Otis worth more than 6.2 million in shares or 1.9% of the total portfolio.
Estée Lauder Companies Inc. EL is offering a forward dividend yield of 1.14% or $2.64 per share annually, making quarterly payments with a track record of increasing its dividends once in the past year.
Estée Lauder is the world leader in the global prestige beauty market, operating in at least 150 countries, with 26% of fiscal 2022 revenue stemming from the Americas; 43% from Europe, the Middle East and Africa; and 31% from Asia-Pacific.
During the third quarter, Fundsmith increased its stake in Estée Lauder by roughly 4,678 shares or 6.1% of the total portfolio, making it the third-largest position.
About Fundsmith: The company has at least Euro 22.2 billion in assets under management and its approach is to be a long-term investor, typically in 20 to 30 stocks, with nearly 70% of stocks being U.S.-based firms.
The Fundsmith has a list of criteria the stock must meet before investing in it, including:
• High-quality businesses that can sustain a high return on operating capital employed.
• Businesses with advantages that are difficult to replicate.
• Businesses that don't require significant leverage to generate returns.
• Businesses with a high degree of certainty of growth from reinvestment of their cash flows at high rates of return.
See Also: Click here to find more about other companies' dividends
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