This nearly 150-year-old fund hasn’t cut its dividend since 1938. Here are the stocks it likes, and four it doesn’t.

“It might be easier to list what remains constant rather than what has changed since then, but amongst other things those three Empires and those of Britain and Japan have passed into history, as have the Third Reich and the USSR. There have been two world wars, a cold war, hyperinflation, a depression and numerous financial crashes, and immeasurable human suffering, much of it arising from conflict, famine and disease,” fund managers James Dow and Toby Ross said Friday in presenting its annual results.

“Yet over these one hundred and fifty years the world has made immense progress, in everything from the advent and spread of modern democracy, to a dramatic increase in life expectancy and the many benefits of human and technological progress.”

The fund’s returns were negative last year, -3.7%, though all manner of assets similarly slumped. And while the dividend growth didn’t match U.K. inflation, its dividends have surpassed inflation over the last decade. They said the share price declines in its holdings appear to be short term. “We have already seen energy prices fall in the past few months, to the point that, remarkably, the European gas price has now declined below its level before the invasion of Ukraine. China has started ‘unlocking’ and its government has begun a stimulus program,” the managers say.

Its top investment is Novo Nordisk
NVO,
-0.73%,
the Danish maker of insulin. The fund highlighted the potential of semaglutide as a weight-loss medication. “Future earnings growth from this innovation could be considerable, and shares in the company have risen accordingly. We are mindful of the higher valuation of the shares following this strong period of performance, but believe we are still early in the multi-year opportunity for Novo Nordisk to change people’s lives for the better, while growing the company’s earnings and dividends,” the fund says.

The managers also highlighted investments in PepsiCo
PEP,
+1.13%
and Coca-Cola
KO,
-0.26%.
“Over the past several years these companies have delivered solid growth but, candidly, the rate of growth has not always been particularly inspiring. However in 2022, with input costs rising sharply, for example due to transportation costs, and with considerable ongoing investments to reduce their packaging impact and improve their nutritional impact, these companies have been able to pass on cost inflation to consumers seeking improved products,” the fund said.

The fund said it’s been a long-term investor in Albemarle
ALB,
-2.27%,
the leading lithium producer. “We believe the market for green metals will continue to expand dramatically over the decade ahead. We expect the environmental benefits that lithium enables will lead to strong growth in capital and dividends,” the managers said.

The fund made three new investments last year: accounting and tax software maker Intuit
INTU,
-2.37%,
cosmetics giant L’Oreal
OR,
-0.91%,
and Cognex
CGNX,
-1.59%,
a maker of machine vision products. On Intuit, they highlighted the potential to build out its product range into areas like payroll and HR. They highlighted L’Oreal’s long record of innovation and steady ownership of the Bettencourt family, and the potential for Cognex’s software to check labels and find faults in all manner of products.

They got rid of four. They said Silicon Valley start-ups are disrupting the truck brokerage business of C.H. Robinson
CHRW,
+0.54%
; they said Kimberly-Clark de Mexico
KCDMY,
-0.12%
is facing sustained pressure on input costs, with limited success in gaining market share while facing currency depreciation; they say GSK spinoff Haleon’s
HLN,
-0.93%
market position is not particularly strong and isn’t likely to have strong volume growth; and they say insurer Hiscox
HSX,
-1.15%
isn’t a resilient payer of dividends.

The markets

The big move in markets was in the yen
USDJPY,
-0.13%,
which rallied after the Nikkei reported the Bank of Japan would pick an economist most haven’t heard of to lead the central bank. U.S. stock futures
ES00,
-0.10%

NQ00,
-0.61%
slumped. Oil prices
CL.1,
+1.72%
rose as Russia announced a 500,000 barrels per day production cut.

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The buzz

The economics calendar includes the University of Michigan’s consumer sentiment index and a speech from Fed Gov. Christopher Waller, who on Wednesday said interest rates would need to remain high for some time.

Tesla
TSLA,
-4.65%
has nudged the price of its Model Y car in China higher, after recent price cuts.

Lyft
LYFT,
-35.99%
shares tanked after a worse-than-forecast revenue forecast from the loss-making ride-share company.

Expedia
EXPE,
-8.27%
shares fell as the travel booking platform missed earnings expectations. Yelp
YELP,
+7.15%
offered sales guidance slightly above Wall Street estimates even as earnings missed expectations.

PayPal
PYPL,
+2.33%
announced that CEO Dan Schulman would retire at the end of the year as the payments company forecast earnings above Wall Street expectations.

Best of the web

Meet the top shareholder at Goldman Sachs
GS,
-0.19%,
who heads a home-improvement lender the bank purchased.

How Google fell behind in the AI boom.

Investors are reducing their holdings of Chinese government bonds, which outperformed last year.

Top tickers

Here were the most active tickers on MarketWatch as of 6 a.m. Eastern.

The chart

Analysts had been saying that the terrible returns last year for both stocks and bonds made the attractiveness of the traditional 60/40 portfolio start to look better. Analysts at Bank of America point out the 60/40 portfolio is off to its best start of the year since 1991. Only 11 more months to go.

Random reads

This Pokemon trading card’s asking price is about $1.5 million.

Cannabis will no longer be permitted in Amsterdam’s red-light district.

No more Crisco: What Philadelphia is using to keep fans from climbing poles if the Eagles win the Super Bowl.

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