FL, PKG, SKM, CCJ, IP: Billionaire Jeffrey Vinik’s Big Dividend Bets

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VINIK ASSET MANAGEMENTDividends are a key part of returns, and we have found five dividend-paying stocks that billionaire Jeffrey Vinik loves. In the mid-nineties, Vinik ran Fidelity’s Magellan Fund, returning 17% annually. Vinik left Fidelity to start Vinik Asset Management shortly thereafter, and following a few years of stellar returns, Vinik returned capital to investors in 2000. He now primarily manages just the assets of close friends and family (check out Jeffrey Vinik’s newest stock picks).

International Paper Company (NYSE:IP) is a global paper company that pays a dividend yielding 3.3%. Although it trades near the high end of the paper industry at 19x earnings, its forward P/E of 11x makes the company very attractive from a valuation standpoint. After a 500% share ownership increase, International Paper is now the 12th largest 13F holding for Vinik. Compared to other top paper company Domtar, International trades well above its peer’s 13x P/E, but International Paper’s dividend yield is more than one full percentage point higher than Domtar’s. Steven Cohen, another hedge fund billionaire, was bullish on International Paper in 3Q, increasing his stake over 200% (see Steven Cohen’s newest picks here).

Cameco Corporation (NYSE:CCJ) is a new pick that now sits at Vinik’s 10th largest 13F holding. The company is a developer, producer and seller of uranium for use in nuclear reactors. Cameco trades at 15x trailing earnings and only 13x forward earnings, making it an interesting play in the mining industry. The uranium company also pays a 2.2% dividend yield. Cameco expects an improvement in the average realized uranium price due to the advantageous mix of its contracts, which should help counter an industry-wide slowing in nuclear reactor construction. Sell-side analysts expect Cameco to grow its earnings at a 10% CAGR over the next half-decade.

SK Telecom Co., Ltd. (NYSE:SKM) is a Korean wireless telecom provider that pays a robust dividend yield of 5.8%. SK was also a new pick for Vinik in 3Q, and is the 24th largest holding in Vinik’s 13F portfolio. SK trades the cheapest amongst its telecom peers at 13x trailing earnings and trades at only 8x forward earnings. After 2% revenue growth in 2011, SK is forecasted to increase revenues by 2.2% this year, and a whopping 4.9% in 2013. This top line expansion will be driven by continued growth of Long Term Evolution (LTE) subscribers, with SK having 6 million LTE customers at the end of October. The company expects to break the 7 million-mark by the end of this year. Beyond its Korean operations, SK has plans to diversify with investments in Greater Asia and North America.

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