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

Packaging Corp of America (NYSE:PKG) is a producer of containerboard and corrugated products. Vinik made an almost 300% share increase in the stock last quarter, to put Packaging Corp as the 29th largest position in his 13F portfolio. An ongoing economic recovery should help boost demand for corrugated packaging and drive high single-digit revenue growth over the next two years. Growth of 7.5% is expected by the end of 2012, followed by growth of 7.2% next year. Although Packaging Corp trades near the high end of the container packaging industry at 25x earnings, its forward P/E of 13x makes it a solid value investment, not to mention the food safety company’s 2.7% dividend yield.

Foot Locker, Inc. (NYSE:FL) is one of the largest shoe retailers in the U.S., and pays a 2% dividend yield. After a 200% share increase last quarter, Foot Locker now holds the 18th spot in Vinik’s 3Q 13F. The shoe company trades in line with its major peers at 15x earnings and has solid growth prospects that are expected to drive five-year EPS by 12% annually. Ken Griffin, the founder of Citadel Investment Group, was the top fund owner of Foot Locker in 3Q (check out Ken Griffin’s newest picks).

To recap: Cameco looks like a unique investment in a niche industry, and International Paper is a solid dividend payer, having paid a dividend since 1987. Foot Locker is executing on a solid turnaround strategy to close unproductive stores and grow internationally, and SK can take advantage of the growing demand for telecommunications and wireless mobile devices. Packaging Corp is yet another niche market play, and offers investors growth opportunities in addition to its income capabilities. On the whole, Jeffrey Vinik has proven that his stock picking strategy is great at discovering some of the market’s truly hidden dividend gems.