| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 12.7% | 5.1% | 22.5% |
| 2025 |
|---|
| 22.5% |
Fidelity Dividend Growth Fund delivered strong Q4 2025 performance with 5.09% returns, outpacing the S&P 500's 2.66% advance. The fund's success was driven by stock selection, particularly in information technology, industrials, and communication services. Key contributors included Alphabet, which gained 29% on AI strategy execution and strong cloud computing growth, and SK Hynix, which surged 83% amid memory chip shortages extending through 2026. The fund maintains conviction in generative AI's transformative potential, comparing its impact to the transistor or World Wide Web. Commercial aviation represents another key theme, with Boeing as the largest overweight given production recovery prospects and strengthened balance sheet. Energy transition positioning includes GE Vernova, benefiting from electrification trends and AI-driven power demand. Detractors included Paycom Software amid AI disruption concerns and an Apple underweight. The portfolio emphasizes companies with sustainable dividend growth prospects while maintaining overweights in AI beneficiaries and cyclical recovery plays. Manager Zach Turner remains optimistic about the opportunity set while watching for defensive positioning opportunities.
The fund seeks capital appreciation through a diversified portfolio of large- and mid-cap dividend-growing stocks, with investment philosophy centered on comparing price and value while believing companies with dividend growth history demonstrate superior risk-adjusted returns over market cycles.
The fund remains optimistic about generative artificial intelligence prospects and anticipates better times for Boeing as production issues resolve. The manager expects continued benefits from global electrification and decarbonization trends while watching for opportunities to reduce underweights in defensive, staples-like stocks.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Feb 8 2026 | 2025 Q4 | 000660.KS, AAPL, ALSN, AMZN, BA, BN, EPD, GEV, GOOGL, LLY, META, MSFT, MU, NFLX, NVDA, ORCL, PAYC, TSLA, TSM, WDC | aerospace, AI, dividends, energy, large cap, semiconductors, technology |
GOOGL 000660 KS PAYC AAPL GEV |
The fund remains optimistic about generative artificial intelligence prospects, believing current breakthroughs in large language models will have massive implications for developed economies. The impact… |
| Nov 5 2025 | 2025 Q3 | - | Dividend Growth, Electrification, energy, industrials, Value Investing | - | The fund maintains an emphasis on high-quality value stocks that consistently grow dividends, supported by disciplined valuation and capital return strategies. Industrial holdings such as… |
| Jul 31 2025 | 2025 Q2 | AAPL, GEV, NFLX | Balance Sheets, capital returns, Dividend Growth, income, Quality | - | The letter focuses on dividend growth as a source of resilient returns amid growth-driven market concentration. Management favors companies with sustainable payout growth, strong balance… |
| Mar 31 2025 | 2025 Q1 | GEV, GOOG, MRVL, TSLA | - | - | - |
| Sep 30 2024 | 2024 Q3 | ALSN, BA, GEV, QCOM | - | - | - |
| Jun 30 2024 | 2024 Q2 | AAPL, NVDA, VST | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
DividendsJapanese companies paid record dividends of ¥18 trillion for fiscal year ending March 2025, a 13.8% year-over-year increase. Many major firms have adopted progressive dividend policies guaranteeing dividends will never be cut, only maintained or increased. |
Progressive Dividend Record Payouts Shareholder Returns Yield Growth | |
Energy TransitionThe portfolio maintains significant exposure to electrification themes through companies like Bloom Energy, which provides clean, reliable power solutions for AI data centers. The energy transition represents a structural opportunity as companies race to build power infrastructure to support growing electricity demands from AI workloads. |
Electrification Clean Energy Power Generation Fuel Cells Grid Infrastructure | |
SemiconductorsMACOM Technology Solutions rose nearly +40% as the company experienced broad-based demand, similar to many semiconductor companies in 2025. The team exited Astera Labs following industry conference presentations that suggested emerging competitive risks and concerns over single customer concentration, while initiating a position in Credo Technology for AI-connectivity exposure. |
Demand Competition Connectivity Customer Concentration | |
SpaceSpaceX is generating significant value through rapid expansion of Starlink broadband service and establishing itself as a leading launch provider with reusable technology. The company is making tremendous progress on Starship, the largest most powerful rocket ever flown, representing a significant leap forward in space exploration capabilities. |
Satellites Launch Broadband Reusable Exploration | |
| 2025 Q3 |
EnergyEnergy plays a central role in the manager's analysis, both as a historical lesson from 2014-15 oil collapse and as a current constraint on AI infrastructure. Data centers have become massive electricity consumers with economics highly sensitive to power pricing and grid reliability. Rising electricity prices in data-center-heavy regions and utility challenges in expanding capacity create physical constraints that complicate AI scalability assumptions. |
Data Centers Grid Utilities Power Infrastructure |
IndustrialsThe fund increased exposure to high-quality industrial businesses with potential for cyclical upturn. Added Quanta Services for AI data center build-out, Hubbell for electrical grid upgrades, Old Dominion for freight cycle recovery, and Waste Connections for secondary market focus. |
Infrastructure Automation Transportation Electrical Equipment Waste Management | |
ValueThe manager continues to find attractive value opportunities despite expensive markets, purchasing undervalued companies like Centene, GlaxoSmithKline, Carrefour and PayPal trading at low multiples with strong fundamentals. |
Undervalued Low Multiples Contrarian Opportunistic | |
| 2025 Q2 |
DividendsJapanese companies paid record dividends of ¥18 trillion for fiscal year ending March 2025, a 13.8% year-over-year increase. Many major firms have adopted progressive dividend policies guaranteeing dividends will never be cut, only maintained or increased. |
Progressive Dividend Record Payouts Shareholder Returns Yield Growth |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Feb 8, 2026 | Fund Letters | Zach C Turner | GOOGL | Alphabet Inc | Communication Services | Interactive Media & Services | Bull | NASDAQ | advertising, AI, cashflow, cloud, monetization | Login |
| Feb 8, 2026 | Fund Letters | Zach C Turner | 000660 KS | SK Hynix Inc | Information Technology | Semiconductors | Bull | New York Stock Exchange | AI, Capacity, Memory, Pricing, semiconductors | Login |
| Feb 8, 2026 | Fund Letters | Zach C Turner | PAYC | Paycom Software Inc | Industrials | Human Resource & Employment Services | Bull | New York Stock Exchange | AI, HCM, Margins, Recurring, Software | Login |
| Feb 8, 2026 | Fund Letters | Zach C Turner | AAPL | Apple Inc | Information Technology | Technology Hardware, Storage & Peripherals | Neutral | NASDAQ | Competition, consumer, Hardware, services, valuation | Login |
| Feb 8, 2026 | Fund Letters | Zach C Turner | GEV | GE Vernova Inc | Industrials | Heavy Electrical Equipment | Bull | New York Stock Exchange | backlog, cashflow, Decarbonization, Electrification, Grid, infrastructure, Margins, services, Turbines | Login |
| TICKER | COMMENTARY |
|---|---|
| 000660.KS | SK Hynix has solidified its leadership in high-bandwidth memory (HBM), emerging as the exclusive HBM supplier for Microsoft's in-house AI accelerator and securing roughly two-thirds of NVIDIA's anticipated HBM4 demand for its next-generation platforms at meaningfully higher price points and margins than prior generations. |
| AAPL | AAPL shares rose in 4Q25 following better-than-feared iPhone 17 sell-through trends and stronger Services momentum. The company reported that early adoption of its on-device AI features exceeded internal expectations, particularly in North America and Europe, where attach rates for Pro models remained elevated. Wearables also returned to growth, helped by new health features and improved battery life. |
| ALSN | Investors lauded Allison Transmission Holdings on its closing of the Dana Off-Highway acquisition; the deal materially expands Allison's addressable markets and improves long-term growth visibility. |
| AMZN | This quarter, we took profits in our hyperscaler portfolio companies (Amazon and Google) and increased our position in NVIDIA. |
| BA | Some of the biggest winners over the past year are also among our biggest positions currently, including names like Boeing, GE Aerospace, and Cameco. |
| BN | Leading asset-rich alternative asset manager with deep domain expertise. Owns 73% of $84bn publicly-listed asset manager (Brookfield Asset Management) with significant value derived from asset-light, recurring management fee streams. We believe that deep domain expertise and best-in-class returns position Brookfield to benefit from multi-trillion-dollar wave of AI-related infrastructure investment. |
| EPD | There should be a free cash flow (FCF) inflection in 2026. EPD increased its buyback authorization to $5 billion from $2 billion. |
| GEV | The massive data center buildout is leading to a surge in demand for alternative and traditional energy generation, which led Jennison to add GE Vernova to the Fund's Industrials sector. Their natural gas turbine, wind, and electrification businesses, along with a rapidly growing and profitable services backlog, should support strong growth for the next several years. |
| GOOGL | In the third quarter, Google, Kairos Power, and the Tennessee Valley Authority announced a major collaboration centered on a novel power purchase agreement. Google followed this announcement with another significant step forward. On October 27, Google and NextEra Energy announced plans to restart the Duane Arnold Energy Center. |
| LLY | Eli Lilly shares were a top performer in 4Q25 after delivering strong Q3 2025 earnings in October. Revenue rose 54% year-over-year to $17.6 billion, and adjusted EPS of $7.02 beat consensus of $6.02. Growth was driven by its GLP-1 franchises, Mounjaro and Zepbound, where sales more than doubled year-over-year, alongside strength in other therapeutic areas. Management raised full-year guidance for both revenue and earnings, reinforcing investor confidence in the company's growth outlook. |
| META | On January 9, Meta Platforms unveiled a new agreement with Vistra—the largest generator of competitive electricity in the United States—as well as with TerraPower and Oklo. The announcement builds on Meta's agreement last year with Constellation Energy and positions the company to become one of the largest corporate purchasers of nuclear-generated electricity in the United States. |
| MSFT | MSFT was a detractor in 4Q25 following its fiscal first-quarter 2026 earnings report released on October 29. While results were better than expected operationally, investor reaction was driven by guidance and capital expenditure intensity rather than headline performance. Revenue grew 17% year-over-year, exceeding consensus expectations, and Azure revenue increased 39% year-over-year, also ahead of estimates. However, management guided to a sequential deceleration in Azure growth in fiscal Q2, signaling some moderation after a period of exceptional demand. |
| MU | Core gains were led by investments in the Technology sector including Micron |
| NFLX | NFLX was the portfolio's largest detractor in 4Q25 following investor concerns around near-term subscriber growth and rising content spending. While revenue grew approximately 10% year-over-year, management guided to slower net subscriber additions in North America and Europe after recent price increases, and margins were pressured by elevated investment in live sports and international content. |
| NVDA | Capital spending from Google, Microsoft, Amazon, Meta, OpenAI, and more have led to Nvidia becoming the Rrst 5 trillion market cap company. |
| ORCL | Investor enthusiasm for Oracle's stock in calendar year 2025 was initially driven by several multi-billion-dollar contracts it signed with leading AI companies, including OpenAI and Meta. However, in Q4 sentiment for ORCL's growth prospects shifted to skepticism, as investors began to scrutinize the return profile of the substantial capital investments required to support the approximately $500 billion of contracts signed by Oracle. Given the widening range of potential outcomes associated with Oracle's elevated capital needs, we reduced our position in ORCL during Q4. |
| PAYC | Paycom Software was the top detractor during the quarter. The U.S.-headquartered human resources and employment services company's stock price declined alongside peers due to broad underperformance in the application software sector. We continue to believe Paycom has a long runway for future growth and that system-of-record software companies like Paycom will not be replaced by AI. We appreciate management's focus on ramping share repurchases, which we believe will add significant per-share value at today's stock price. |
| TSLA | Under the previous system, companies that produced only electric vehicles—most notably Tesla—generated large quantities of credits that could then be sold to manufacturers falling short of their EV production targets, allowing them to avoid regulatory penalties. |
| TSM | ASML, TSMC, and Arista Networks are key players in the AI build out supply chain. |
| WDC | The fund maintained an overweight position in technology hardware, storage & peripherals company Western Digital. Early in 2025, the company announced a strategic spin-off separating its flash division as SanDisk, while Western Digital focused primarily on the hard disk drive (HDD) market, allowing the company to be valued as a standalone HDD leader. The continued surge in AI infrastructure demand massively boosted the demand for high-capacity HDDs, and Western Digital benefited from an increase in purchase orders from major hyperscalers extending into 2026 and even 2027. |
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