In
a
market
where
finding
reliable
passive
income
streams
can
be
challenging,
two
fund
managers
have
shared
their
insights
on
dividend
stocks
that
could
offer
attractive
yields
and
growth
potential.
Matt
Burdett,
portfolio
manager
at
Thornburg
Investment,
looks
for
companies
with
the
ability
and
willingness
to
pay
dividends,
focusing
on
cash
generation
and
resilient
business
models.
Broadcom
One
such
stock
Burdett
highlighted
is
Broadcom
,
a
semiconductor
and
software
company.
Although
its
current
dividend
yield
of
1.6%
may
not
seem
attractive,
Burdett
pointed
out
that
the
company’s
dividend
has
grown
significantly
—
by
double
digits
annually
over
the
past
five
years
—
since
Thornburg
first
invested.
Broadcom’s
diversification
into
software
with
the
acquisition
of
CA
Technologies
in
2018
and,
more
recently,
VMware
in
2023
could
help
reduce
the
cyclicality
of
its
earnings
and
cash
flow,
according
to
Burdett.
The
company
is
also
well
positioned
to
benefit
from
the
generative
artificial
intelligence
trend,
according
to
the
fund
manager,
as
it
designs
application-specific
integrated
circuit
(ASIC)
chips
used
by
major
tech
companies.
Wall
Street
analysts
see
a
consensus
price
target
of
$1,563
for
Broadcom,
implying
a
17%
upside
from
its
current
share
price
of
$1,336.10.
AVGO
1Y
line
Burdett,
who
directs
$12.3
billion
in
assets
tracking
the
Income
Builder
Strategy,
noted
that
the
dividend
culture
is
often
stronger
outside
the
United
States,
leading
his
strategy
to
skew
toward
ex-U.S.
stocks.
Orange
Another
stock
Burdett
finds
compelling
is
Orange
SA
,
a
French
telecommunications
company
with
a
current
dividend
yield
of
6.8%.
The
stock
is
also
traded
in
the
U.S.
While
its
dividend
growth
of
2.9%
may
not
be
spectacular,
Burdett
noted
that
Orange
has
just
gone
through
a
large
capital
expenditure
wave
on
fiber
spend
in
France,
and
the
company
is
now
generating
much
more
operating
free
cash
flow.
Orange
reported
a
7.2%
year-on-year
increase
in
operating
free
cash
flow
in
its
latest
full-year
results.
Orange
has
managed
to
either
grow
its
shareholder
pay
out
or
keep
it
stable
over
the
past
six
years
despite
the
Covid-19
pandemic,
according
to
FactSet
data.
“It’s
a
cash
generation
story
that’s
underappreciated
because
no
one
cares
about
telcos,”
Burdett
told
CNBC
Pro.
In
addition,
a
recent
merger
of
its
Spanish
business
with
MASMOVIL
could
also
provide
a
cash
infusion
that
Burdett
believes
should
be
used
for
share
buybacks.
The
two
companies
said
earlier
this
year
that
the
joint
venture
is
expected
to
generate
more
than
490
million
euros
($533
million)
a
year
in
cost
savings
in
four
years.
ORA-FR
1Y
line
While
the
stock
price
has
remained
relatively
unchanged
this
year,
Wall
Street
expects
it
to
rise
by
25%
to
13.25
euros.
WK
Kellogg
Brian
Leonard,
portfolio
manager
at
Keeley
Teton,
told
CNBC
Pro
that
he
looks
for
high-quality
companies
that
pay
a
dividend
and
trade
at
a
discount
to
their
“intrinsic
value”.
Leonard
highlighted
spin-off
situations
as
an
investment
opportunity.
Such
a
scenario
occurs
when
a
company
separates
a
lower-growth
business
from
its
higher-growth
operations,
creating
an
opportunity
for
the
spun-off
entity
to
improve
margins
and
grow.
Leonard
citied
WK
Kellogg
Co
as
an
example.
The
spun-off
cereal
business
of
Kellogg
Company,
now
known
as
Kellanova
.
With
a
3.1%
dividend
yield
and
a
significantly
lower
valuation
than
its
main
competitor
General
Mills
,
Leonard
sees
potential
for
WK
Kellogg
to
improve
its
operating
margins
and
benefit
from
earnings
growth
and
multiple
expansions.
KLG
1Y
line
The
stock
has
already
gained
58.6%
year-to-date
to
$20.84.
However,
analysts
have
a
consensus
price
target
of
$14,
implying
a
33%
downside
from
its
current
share
price.
This
suggests
the
market
may
have
already
priced
in
much
of
the
anticipated
improvements.
