2 Favorite Dividend Stocks Among Top Managers
Comcast and Bank of America possess wide economic moats.
Each quarter, we take a look at the recent transactions of some of the top money managers around today--who we call our Ultimate Stock-Pickers. Today, we're focusing on the two dividend-paying stocks that are the most widely held among these top managers.
Seventeen of our managers own Comcast. We believe Comcast possesses a wide economic moat, largely resulting from the strength of its core cable business. The majority of U.S. homes today can receive fixed-line Internet access service from only two providers: the traditional cable or phone company. Across nearly half of the U.S., that cable company is Comcast. The cost to enter this market is enormous. While technological developments have made it possible to build more efficient and reliable networks than legacy providers possess, deploying these technologies still requires heavy construction spending, while also overcoming the regulatory hurdles that municipalities often impose. With a network that can be upgraded at modest incremental cost, we expect Internet access share will continue to shift in Comcast's favor, enabling the firm to gain additional scale efficiencies. The high margins on Internet access should offset the decline in the traditional television business, where margins have plunged in recent years. We think Comcast's shares are fairly valued today.
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