One of the richest men in the world, George Soros, and his aptly named fund Soros Fund Management, is an important firm to keep an eye on. At Insider Monkey, it’s no secret that we track billionaires like Soros, Warren Buffett and David Einhorn, but most coverage is devoted to their favorite stock picks, or their new investments from quarterly 13F filings.
In Soros’s case, that means Apple Inc. (NASDAQ:AAPL) or Google Inc (NASDAQ:GOOG) from the tech universe (see his favorite tech trades), for example. Now, one underrated area that we can also track hedge fund sentiment is in the world of dividend-paying stocks; let’s take a look at a few that yield above 4% and are loved by Soros. Discover the secrets of piggyback investing here.
In order of income attractiveness, first up is Seadrill Ltd (NYSE:SDRL)’s dividend yield of 8.26%. Soros Fund Management reported ownership of 361,212 shares, worth $13.4 million last quarter. Though it doesn’t get quite the press as larger deepwater players like Transocean LTD (NYSE:RIG) or Noble Corporation (NYSE:NE), and this space as a whole doesn’t get quite the respect as LNG peers in the energy sector, Seadrill Ltd (NYSE:SDRL) is an attractive investment from multiple standpoints.
Obviously, the dividend is one of the best in the oil and gas drilling industry as a whole, and unlike many equities with booming yields, Seadrill Ltd (NYSE:SDRL)’s stock price has been appreciating as of late; shares are up more than 12% year-to-date and 18.4% over the past year.
An intriguing aspect of Seadrill Ltd (NYSE:SDRL) is its ability to attain rig leases that are slightly longer than industry norms. According to the company itself, Seadrill Ltd (NYSE:SDRL) has an average contract length of 26 months, which is lengthier than the long-term averages of most peers, though Noble, for example, sports an average contract length of just over 39 months; generally, longer leases are something the industry is trending toward. This, in turn, leads to an increased certainty of future operations, which allows companies like Seadrill Ltd (NYSE:SDRL) to use debt to fund growth and stimulate shareholder value.
S&P, for example, believes that deepwater rig counts in the Gulf of Mexico will continue to increase, from 33 before the Macondo spill and 37 by the end of last year, “to the mid-40s by 2013 year end.” The ratings agency cites the Gulf’s “importance to the nation's future energy security” as a key reason to be bullish on this space over the long-term, and there’s no harm in LNG investors also taking a look here when thinking about their energy portfolios as well.