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Is Ken Fisher a Dividend Growth Investor?

Ken Fisher (Trades, Portfolio) has written not one, but seven money management books. He is the son of famous investor Philip Fisher. Ken Fisher (Trades, Portfolio)’s investment firm, Fisher Investments, currently has about $44 billion in assets under management. This article will examine Ken Fisher (Trades, Portfolio)’s top 5 stock holdings by portfolio weight to determine to what degree Ken Fisher (Trades, Portfolio) is a dividend growth investor. Ken Fisher (Trades, Portfolio)’s underlying investment theme is to buy stock in good companies when they are on sale.



“Buying unpopular stocks of good companies. This is the simplest kind of investing to understand – too simple for some folks. Because these stocks are unpopular, their prices are depressed. You get value. Because they are good companies, you can comfortably hold them for a few years or longer. With time, their quality will be more widely recognized and the stocks will become more popular. As that happens, the stocks go up. It’s that simple.”

- Ken Fisher (Trades, Portfolio)



Ken Fisher (Trades, Portfolio)’s Top 5 Stock Picks

Ken Fisher (Trades, Portfolio)’s top 5 stock picks are listed below:

  • American Express (AXP), 2.22% of portfolio
  • Johnson & Johnson (JNJ), 2.21% of portfolio
  • Pfizer (PFE), 2.19% of portfolio
  • United Technologies (UTX), 2.12% of portfolio
  • Wells Fargo (WFC), 1.98% of portfolio
Over the last 5 years, every single one of Ken Fisher (Trades, Portfolio)’s Top 5 holdings has paid increasing dividends.



Source: Ycharts

American Express

American Express is Ken Fisher (Trades, Portfolio)’s largest holding. It has also been continuously raising its dividend payments since 2012. American Express paid a small $0.18 per share dividend each quarter from 2008 through 2011. In 2012, the company increased its quarterly dividend to $0.20 per share, and then to $0.23 in 2013, and finally $0.26 per quarter in 2014. The company now increases its dividend payments each year, and is very likely to continue to do so.

Source: American Express Dividend Information

Although American Express does not have a long history of dividend growth, it has a very long history of per share earnings growth. The company was founded in 1850, 164 years ago. Over the last 16+ decades, the company has grown into the 2nd largest publicly traded credit business in the world with a market capitalization of $97 billion, trailing only Visa.

Johnson & Johnson

Johnson & Johnson is a Dividend Aristocrat; it has paid increasing dividends for over 25 consecutive years without a reduction. The company has paid increasing dividends for 52 consecutive years, one of the longest active streaks of any business.

Johnson & Johnson is the largest publicly traded diversified health care company in the world, with a market capitalization of $288 billion. Johnson & Johnson size is enormous. Not only is it the largest health care business in the world, it is the 6th publicly traded corporation in the world behind only Berkshire Hathaway, Microsoft, Google, Exxon, and Apple.

Pfizer

Pfizer reduced its dividend payments by 50% at the height of the financial crisis in 2009. Since that time, the company has steadily increased its dividend payments each year. Pfizer has a long history of growing dividends, income, and revenues through its ever expanding pharmaceutical portfolio and pipeline.

Source: Pfizer Investor Relations

United Technologies

United Technologies has increased its per share dividend payments for 27 consecutive years, not counting the impact of special one time dividends (which further enhance shareholder return). The company’s long streak of increasing dividend payments shows it has the ability to grow profitably over changing competitive and economic landscapes.

Source: UTX Investor Relations

Wells Fargo

Likfe Pfizer, Wells Fargo had a long history of consecutive dividend increases before the financial crisis. The company reduced its dividend from $0.34 to $0.05 at the bottom of the market in early 2009. Wells Fargo has since recovered, and now pays a dividend of $0.35 per share. The company is likely to continue increasing its dividend each year as the business continues to expand.

Source: Wells Fargo Dividend History

Investing Like Fisher & Buffett

Ken Fisher (Trades, Portfolio)’s style of investing mirrors Warren Buffett (Trades, Portfolio)’s style. Of Ken Fisher (Trades, Portfolio)’s Top 5 holdings, 3 are Top Holdings of Warren Buffett; American Express, Johnson & Johnson, and Wells Fargo. This article gives the impression that Ken Fisher (Trades, Portfolio) only invests in dividend growth stocks. This is not the case. Ken Fisher (Trades, Portfolio)’s 6th largest holding is Amazon (AMZN), which is a classic growth stock; not a steady dividend growth stock. Ken Fisher (Trades, Portfolio)’s investing portfolio is heavily weighted toward dividend growth stocks, as his top 5 holdings are dividend growth stocks.

P/E Ratio of Ken Fisher (Trades, Portfolio)’s Top 5 Stocks

  • American Express (AXP), P/E ratio of 18.24
  • Johnson & Johnson (JNJ), P/E ratio of 18.87
  • Pfizer (PFE), P/E ratio of 18.41
  • United Technologies (UTX), P/E ratio of17.73
  • Wells Fargo (WFC), P/E ratio of 12.74
Of Ken Fisher (Trades, Portfolio)’s top 5 picks, only Wells Fargo appears cheap based on its P/E ratio. American Express, Johnson & Johnson, Pfizer, and United Technologies all appear to be about fairly priced as compared to the S&P 500 which has a P/E ratio over 19 at this time.

Of the stocks in Ken Fisher (Trades, Portfolio)’s portfolio, only Johnson & Johnson is a Top 30 stocks based on the 8 Rules of Dividend Investing. The 8 Rules of Dividend Investing use quantitative metrics to determine relative value, quality, and growth of the 129 businesses with 25+ years of dividend payments without a reduction. American Express, Pfizer, and Wells Fargo are not ranked in the 8 Rules system because they have fewer than 25 years of dividend payments without a reduction. United Technologies is ranked at 38 out of 129.

Final Thoughts

Ken Fisher (Trades, Portfolio) tends to invest in high quality businesses with a sustainable competitive advantage that grow earnings, revenue, and dividends over time. Further, his top 5 holdings all pay dividends and have histories of rewarding shareholders with increasing dividends.

About the author:

Sure Dividend
I run Sure Dividend, a website that finds high quality dividend stocks for long-term investors using the 8 Rules of Dividend Investing

Visit Sure Dividend's Website


Rating: 5.0/5 (1 vote)

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Comments

snowballbuilder
Snowballbuilder - 2 months ago

IF the performance reported in gurufocus are correct Fisher is NOT beating the market at 1, 5, 10 years period .

http://www.gurufocus.com/profile/Ken+Fisher

"Ken Fisher (Trades, Portfolio)’s style of investing mirrors Warren Buffett (Trades, Portfolio)’s style. "

Are you sure ?

Buffet has 45 position with the biggest rapresenting 22% of the portfolio

Fisher has 558 position with the biggest under 3% of the portfolio

Also, looking at insidermonkey , the biggest Fisher position are:

1.) Fi Enhanced Global High Yield

2.)Ishares Trust

3.)Fi Enhanced Europe 50 Etn

Just some thoughts ....

Sure Dividend
Sure Dividend - 2 months ago

Very true, his largest positions are a much smaller percentage of his overall portfolio compared to Buffett. Buffett is a focused investore while Fisher is much more diversified. His Top 3 holdings were not stocks, which is why the article discusses only his top 5 stock holdings. Thanks for reading and commenting, I appreciate it!

Please leave your comment:


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