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Billionaire George Soros’ Top Dividend Picks

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Dividend stocks sufferred losses in November. Following Donald Trump’s election victory, expectations shifted towards lower taxes, higher growth rates and higher interest rates. Even though lower taxes and higher growth rates are good for dividend stocks, market participants worried that these wouldn’t be enough to ameliorate the negative effects of higher interest rates on the relative attractiveness of dividend stocks. Even though some hedge fund managers mentioned the possibility of 10-year interest rates reaching as high as 6% in the next few years, we believe this is highly unlikely, as there is a surplus of worldwide savings as well as several central banks that are still flooding the markets with cheap money. These forces will keep the long-term interest rates from rising quickly and dramatically. That’s why this may be a good time to get into dividend stocks.

George Soros is one of the most famous hedge fund managers in the world and is known as “The Man Who Broke the Bank of England” because of his successful short sale of $10 billion worth of sterling in 1992. He still has not lost his touch and was ranked as the tenth highest earning hedge fund manager as per Forbes. He is the founder and chairman of Soros Fund Management which earned an astounding $5.5 billion in 2013. The fund has a relatively high 46% concentration in the information technology sector increasing from 34% during the third quarter of 2015. The fund’s 13F portfolio had a value of $3.99 billion and bought 128 new stocks as per its last 13F filing. While hedge funds do not generally follow a strategy of focusing on high dividend yielding stocks, we have analysed George Soros’s portfolio in detail to select some of the high dividend paying stocks. We believe he is long these stocks for their upside potential, not their dividend yields. Below we take a look at some of his largest positions yielding 3% and more.

Imitating hedge funds and other institutional investors can help identify some of the most profitable stocks on the market. However, our extensive research that covered the period between 1999 and 2012, showed that the best approach is to follow these investors into their small-cap stocks. Our backtests showed that the 15 most popular small-cap stocks among hedge funds managed to generate a monthly alpha of 81 basis points, versus an alpha of 0.7 percentage points posted by their top 50 large-cap picks (see more details here).

setting up a hedge fund

Soros Fund Management initiated a new position in Intel Corporation (NASDAQ:INTC) buying 685,500 shares valued at $25.9 million during the third quarter. Intel Corporation (NASDAQ:INTC) constituted 0.65% of the fund’s portfolio at the end of September. The company sports a dividend yield of 3.08% which is one of the highest yields amongst the large cap technology stocks. The company recently paid a dividend of 26 cents per share in December. This semiconductor manufacturer is looking to revive its topline growth by expanding into the Internet of Things (IOT) and anti-virus segments. It reported an operating margin of 28% for its quarter ending October. The stock has returned more than 63% in the last ten years but has fallen by 1.3% over the last one month. This is in line with other technology stocks which have been generally under performing since the election results. Intel Corporation (NASDAQ:INTC) carries a mean analyst estimate of overweight. The aggregate value of hedge fund holding in Intel Corporation (NASDAQ:INTC) increased to $4.88 billion in the third quarter from $3.4 billion in the second quarter.

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