ClearBridge Investments, an investment management company, released its “ClearBridge Dividend Strategy” third quarter 2023 investor letter. A copy of the same can be downloaded here. The strategy underperformed its S&P 500 Index benchmark in the third quarter. The strategy gained from three of the eleven sectors it invested in during the quarter on an absolute basis. Stock selection detracted while sector allocation contributed positively on a relative basis. In addition, please check the fund’s top five holdings to know its best picks in 2023.
ClearBridge Dividend Strategy highlighted stocks like T-Mobile US, Inc. (NASDAQ:TMUS) in the third quarter 2023 investor letter. Headquartered in Bellevue, Washington, T-Mobile US, Inc. (NASDAQ:TMUS) is a mobile communications services provider. On October 10, 2023, T-Mobile US, Inc. (NASDAQ:TMUS) stock closed at $142.41 per share. One-month return of T-Mobile US, Inc. (NASDAQ:TMUS) was 0.64%, and its shares gained 7.12% of their value over the last 52 weeks. T-Mobile US, Inc. (NASDAQ:TMUS) has a market capitalization of $167.54 billion.
ClearBridge Dividend Strategy made the following comment about T-Mobile US, Inc. (NASDAQ:TMUS) in its Q3 2023 investor letter:
“During the quarter we initiated positions in two new names: T-Mobile US, Inc. (NASDAQ:TMUS) and Gilead Sciences. T-Mobile is the best-in-class player in the wireless space, delivering the strongest growth with the lowest cost structure and the best consumer proposition. T-Mobile’s strength is rooted in its advantaged competitive position. Its superior spectrum holdings enable it to provide better wireless service at meaningfully lower cost. T-Mobile’s annual capital expenditures run about $10 billion, on the order of half the amount its peers must spend. Due to its lower cost structure, T-Mobile can undercut its competitors on price while still generating compelling profitability and returns.
This combination — superior service at lower prices — has enabled T-Mobile to outgrow its competition. In the three years since completing its merger with Sprint, T-Mobile has grown its post-paid subscriber base by about 22%. Over the same period, AT&T’s has grown by about 14%, while Verizon’s by less than 5%.
Given the high fixed-cost nature of the wireless business, these steady increases in revenue growth have led to outsize increases in profits and free cash flow. Free cash flow in 2023 is expected to come in around $13.5 billion, up from less than $8 billion last year. In 2024 free cash flow is expected to grow by over 20% to approximately $17 billion — providing a 10% yield based on today’s stock price.
We have long admired T-Mobile, but until recently the stock did not pay a dividend. The company announced its inaugural dividend in September, and we bought the stock shortly thereafter. The initial yield is about 2% and it is expected to grow about 10% per year.”
T-Mobile US, Inc. (NASDAQ:TMUS) is in 25th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 86 hedge fund portfolios held T-Mobile US, Inc. (NASDAQ:TMUS) at the end of the second quarter, which was 89 in the previous quarter.
We discussed T-Mobile US, Inc. (NASDAQ:TMUS) in another article and shared the list of stocks Dumb Money’s Steve Cohen is betting on. In addition, please check out our hedge fund investor letters Q3 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.