NEW YORK (TheStreet) -- The fourth quarter may just be started, but Wall Street analysts are already closing the books on this year and looking ahead to the next. That's just fine, says James McGlynn, fund manager for the Calvert Large Cap Value Fund (CLVAX), because 2011 will be a big year for underappreciated dividend-paying stocks such as Exxon Mobil (XOM - Get Report) and Johnson & Johnson (JNJ - Get Report).

The $86 million fund, which garners three stars from Morningstar ( MORN - Get Report), is up 7% over the past year, putting it in Morningstar's 70th percentile for large-value funds. Over the past decade, the fund has returned nearly 4% annually, better than 70% of its peers.

Welcome to TheStreet.com's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks and views on the market in a five-question format.

Why is large-cap value the place to be in 2011?

McGlynn: Large-cap value has very good dividend yields, and in a market that is not growing by leaps and bounds, I think dividends are going to give you at least half your returns. So there are some very good and safe dividend-yielding stocks out there now.

One stock you like is Exxon Mobil. Why do you like the oil major?

McGlynn: Exxon recently made a big acquisition with XTO, making it the largest natural gas producer in North America. They have one of the best balance sheets and a good and growing dividend yield. Also, energy should do well if inflation comes roaring back.

Johnson & Johnson has been having some quality control problems lately, but you say it's still a quality stock. Tell me why.

McGlynn: Johnson & Johnson is finally addressing their quality issue. They are going to get that behind them. Johnson & Johnson is obviously involved in health care, and health care spending is growing tremendously in this economy. Finally, Johnson & Johnson has a good dividend ... bigger than their bond yield right now, and as an equity investor I think you benefit from that fact.

You are a value manager but you include Google (GOOG - Get Report) in your portfolio. Please explain that one, because a lot of people may find it curious.

McGlynn: Google is now falling in the value camp because it's throwing off a lot of cash. Actually there is a lot of cash on their balance sheet. If you took the cash away, the stock probably has a P/E ratio of less than the market. Google has done very well getting into the handset business. In telephones, they went from zero to being the biggest market share gainer. Just because Google is a technology stock and doesn't have a dividend yield does not mean it's not a value stock.

The Hartford Group (HIG - Get Report) took its lumps during the financial crisis but really has made its way back. Why do you have high expectations for the company?

McGlynn: The Hartford Group really suffered during the financial crisis and was forced to take TARP money. They have started repaying that and actually paid off their warrants. The stock sells at 60% of book value. I think the company will change what got them into the mess. They are also bringing in new management. Now they just have to get a return on equity that's equal to the industry and we think we will get a nice recovery in the stock.

-- Reported by Gregg Greenberg in New York.

>To submit a news tip, email: tips@thestreet.com.

RELATED STORIES:



Follow TheStreet.com on Twitter and become a fan on Facebook.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.