Will Colgate Spin Off Pet Food Biz? This Hedge Fund Hopes So, Plus 2 Dividend Stocks It Trades

Activist investor Dan Loeb recently aired, and retracted, his statements on whether Walt Disney Co. DIS should spin off ESPN.

Now, the founder and hedge fund manager of Third Point Management has directed his attention towards Hill’s Pet Nutrition, the pet food subsidiary of Colgate-Palmolive Company CL.

Loeb believes that Hill's could deliver faster growth and better margins, achieving a valuation near $20 billion on its 2023 numbers, if the firm was a stand-alone business.

See Also: Activist Investor Starboard Discloses Stake In Salesforce, Shares Soar

Since Colgate’s fastest-growing segment has been its pet food business, Loeb says Colgate should explore a spinoff. Here's a look at New York-based Colgate and two other dividend stocks in his portfolio: 

• Colgate-Palmolive is offering a dividend yield of 2.57% or $1.88 per share annually, making quarterly payments, with a dividend king-like track record of increasing its dividends for 58 consecutive years. Colgate-Palmolive has grown to become a leading global consumer product company, and also owns specialty pet food maker Hill's, which sells its products through veterinarians and specialty pet retailers. Third Point opened a new position in Colgate over the course of the second quarter of about 1.98 million shares, bringing the fund's stake to 3.8%.
• Cenovus Energy Inc. CVE is offering a dividend yield of 1.82% or 31 cents per share annually, utilizing quarterly payments, with an inconsistent track record of increasing its dividends. The Canada-based company develops oil sands assets and engages in the production of conventional crude oil as well as natural gas liquids. It held 6.7 billion (boe) of proven and probable reserves as of 2020. Loeb purchased more than 5.2 million shares during the second quarter, bringing the hedge fund's stake to 3.3%.
• EQT Corporation EQT is offering a dividend yield of 1.43% or 60 cents per share annually, using quarterly payments, with an inconsistent track record of increasing its dividends. The natural gas production company has operations in the Appalachian Basin. Loeb reduced his position in EQT during the second quarter selling more than 1.4 million shares. The fund's stake in the firm is roughly 6.1%.

See Also: Credit Suisse Hopes On Colgate-Palmolive's Underlying Strength Despite FX Risk