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Why We Like Dodge & Cox Stock

This is a great offering for patient, long-term investors.

Gold Medalist Illustration
Securities In This Article
Microsoft Corp
Fiserv Inc
Dodge & Cox Stock I
Occidental Petroleum Corp

Key Morningstar Metrics for Dodge & Cox Stock

  • Morningstar Medalist Rating: Gold
  • Process Pillar: High
  • People Pillar: High
  • Parent Pillar: High

Exceptional personnel and a proven, faithfully followed approach earn high marks for Dodge & Cox Stock DODGX.

A group of managers gives this fund stability. Seven veteran investors serve on Dodge & Cox’s US equity investment committee, including CIO David Hoeft and director of research Steven Voorhis. Its structure helps the fund benefit from different perspectives and address team changes with relative ease (as it has in the past). Talented as it is, the committee relies heavily on an impressive unit of global industry analysts who perform the extensive research that’s key to this strategy.

The process requires expert hands such as these. Dodge & Cox Stock seeks an edge on out-of-favor, cheap stocks. Analysts scrutinize companies’ competitive strengths, growth opportunities, and leadership. They discuss firms’ merits first in specialized sector committees; promising prospects then go before the investment committee. The managers try to take advantage of what they believe are temporary troubles to buy and add to these stocks.

Such an approach courts risk. Dodge & Cox has improved its risk management in recent years, building in-house tools to help its investment teams better understand portfolio traits and risks facing their holdings. Managing risks hasn’t necessarily tempered the fund’s returns—they’re typically quite lumpy over short periods—but the managers’ calm demeanor and the analysts’ vigilance often turn that volatility to investors’ advantage over time.

Dodge & Cox Stock: Performance Highlights

Indeed, the fund has an impressive long-term record. From longest-tenured manager David Hoeft’s January 2002 start through April 2024, Dodge & Cox Stock’s I share class gained 9.2% annualized. That beat 97% of peers in the fund’s large-value Morningstar Category as well as the 7.8% gain of the Russell 1000 Value Index category benchmark.

Stock-picking, rather than allocations to certain sectors or geographies, typically defines performance. That’s been true in the three years through April 2024, when the fund’s 7.2% annualized return outpaced the Russell 1000 Value Index by 2 percentage points. Although the portfolio invested more in technology stocks than the index during the period, it was picks such as Microsoft MSFT and financial technology firm Fiserv FI that made the difference. In one of their boldest calls, the managers traded energy firm Occidental Petroleum OXY rather prudently, sticking with it through the company’s expensive acquisition of Anadarko in 2019 and the lows of the coronavirus pandemic to see a huge rally in the share price in ensuing years.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

Morningstar Investment Management LLC is a Registered Investment Advisor and subsidiary of Morningstar, Inc. The Morningstar name and logo are registered marks of Morningstar, Inc. Opinions expressed are as of the date indicated; such opinions are subject to change without notice. Morningstar Investment Management and its affiliates shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, the information, data, analyses or opinions or their use. This commentary is for informational purposes only. The information data, analyses, and opinions presented herein do not constitute investment advice, are provided solely for informational purposes and therefore are not an offer to buy or sell a security. Before making any investment decision, please consider consulting a financial or tax professional regarding your unique situation.

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About the Author

Tony Thomas

Associate Director
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Tony Thomas is associate director of equity strategies for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers domestic-equity funds across the capitalization spectrum.

Before joining Morningstar in 2016, Thomas was the dean of arts, sciences, and basic education at Wenatchee Valley College in Washington. Prior to that, he was an instructor of philosophy at Kishwaukee College in Illinois, where he was the founding director of the college’s honors program.

Thomas holds a bachelor’s degree in philosophy from Utah State University, a master’s degree in philosophy from Northern Illinois University, and a doctorate in philosophy from the University of Missouri.

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