In this article we take a look at the 10 best dividend stocks to buy based on billionaire David Tepper’s Q1 portfolio.
Currently ranked as the 258th richest person in the world, billionaire David Tepper heads Appaloosa Management LP, based in Florida. The American billionaire and businessman also owns the Carolina Panthers of the National Football League. His educational career lists a bachelor’s degree in Economics from the University of Pittsburgh, which is completed in 1978, alongside an MBA from Carnegie Mellon University. Carnegie Mellon also happens to have named their business school after Tepper, who donated $67 million to the university in 2013.
In 2012, Institutional Investor’s Alpha ranked Tepper’s $2.2 billion paycheck as the world’s highest for any hedge fund manager. Tepper also ranked third on Forbes’ “The Highest-Earning Hedge Fund Managers 2018,” by virtue of his annual earnings worth $1.5 billion. His success in life has translated into the same being true when it comes to his fund’s fortune.
After Appaloosa Management’s establishment, by 2001 he had generated 61% in returns by simply prioritizing distressed bonds. Tepper’s distress investment strategy seems to be riskier than most in the field, as he has a track record for buying shares in shaky companies like MCI Inc., Mirant, and Conseco. Tepper apparently likes to “keep the market on the edge,” and believes that investors should not go off of what’s being said in the news about risky stocks, as both markets and people adapt. Tepper’s fund focuses mostly on global public equity and fixed income markets.
Appaloosa Management made $7 billion through the purchase of distressed financial stocks in 2009, profiting from their recovery. The fund’s portfolio value stands at $6.9 billion, and as of the end of the first quarter of 2021, its major holdings include big-name companies like Micron Technology, Inc. (NASDAQ: MU), Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. (NASDAQ: FB), and Alphabet Inc (NASDAQ: GOOG).
Tepper increased his stake in Amazon.com, Inc. (NASDAQ: AMZN) as of Q420 by 40%, and the stock now takes up 8.26% of Appaloosa Management’s portfolio. Appaloosa Management also has a $536 million stake in Facebook, Inc. (NASDAQ: FB) as of the end of the first quarter. Micron Technology, Inc. (NASDAQ: MU) is the biggest holding of David Tepper as of the first quarter, as his hedge fund has a $642 million stake in the chips company. The hedge fund also owns a $478 million stake in Alphabet Inc (NASDAQ: GOOG).
Tepper is an exception in an industry that is reeling from losses. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
But apart from these four above, Appaloosa Management has also shown a tendency of investing in dividend stocks, with quite a few of its holdings being dividend-yielders. Notable examples include HCA Healthcare, Inc. (NYSE: HCA), Emerson Electric Co. (NYSE: EMR), and Energy Transfer LP (NYSE: ET). Based on Tepper’s investment strategy and current holdings, we have managed to thus create a list of the 10 best dividend stocks to buy according to billionaire David Tepper, which includes names like HCA Healthcare, Inc. (NYSE: HCA), among others. The stocks have been selected from Tepper’s 13F holdings of Q1 and ranked on the basis of their dividend yield. To go through our entire list of the best dividend stocks to invest in as of now, read ahead.
Best Dividend Stocks to Buy According to Billionaire David Tepper
10. HCA Healthcare, Inc. (NYSE: HCA)
Tepper’s Stake Value: $178,923,000
Percentage of David Tepper’s 13F Portfolio: 2.56%
Dividend Yield: 0.92%
No. of Hedge Fund Holders: 62
HCA Healthcare, Inc. (NYSE: HCA) ranks 10th on the list of billionaire David Tepper’s top 10 dividend stock picks. This American for-profit healthcare company has worked with healthcare facilities since 1968. It is based in Nashville, Tennessee, and as of last year had a revenue of $51.53 billion.
HCA Healthcare, Inc. (NYSE: HCA) has gained 28.25% year to date and has a market cap of $69 billion. HCA Healthcare, Inc. (NYSE: HCA) has a dividend yield of 0.92% or $1.92 per share.
9. UnitedHealth Group Incorporated (NYSE: UNH)
Tepper’s Stake Value: $103,249,000
Percentage of David Tepper’s 13F Portfolio: 1.48%
Dividend Yield: 1.45%
No. of Hedge Fund Holders: 89
UnitedHealth Group Incorporated (NYSE: UNH) is an American for-profit insurance company. It deals in healthcare insurance and is based in Minnetonka, Minnesota. Alongside its insurance policies, UnitedHealth Group Incorporated (NYSE: UNH) offers healthcare products as well. It ranks 9th in our list of best dividend stocks to buy according to billionaire David Tepper.
UnitedHealth Group Incorporated (NYSE: UNH) gained 14.19% year to date and has a market cap of $376 billion. Like Micron Technology, Inc. (NASDAQ: MU), (NASDAQ: AMZN), Facebook, Inc. (NASDAQ: FB) and Alphabet Inc (NASDAQ: GOOG), UnitedHealth Group Incorporated (NYSE: UNH) is one of the best stocks to buy based on billionaire David Tepper’s Q1 portfolio.
8. Kohl’s Corporation (NYSE: KSS)
Tepper’s Stake Value: $94,631,000
Percentage of David Tepper’s 13F Portfolio: 1.35%
Dividend Yield: 1.84%
No. of Hedge Fund Holders: 35
Kohl’s Corporation (NYSE: KSS) ranks 8th on our list of the best dividend stocks to buy according to billionaire David Tepper. It is the owner of Kohl’s department store retail chain, which has stores in every US state except Hawaii.
The company had 14 analysts covering its stock, and giving it a consensus “Buy” rating. This is in spite of the fact that Kohl’s Corporation’s (NYSE: KSS) value fell after its Q121 report was released.
According to Kohl’s Corporation’s (NYSE: KSS) Q121 earnings report, the company saw an adjusted EPS profit of $1.05. The company’s revenues also grew to $3.8 billion and its current market value is $8.4 billion.
7. Emerson Electric Co. (NYSE: EMR)
Tepper’s Stake Value: $81,739,000
Percentage of David Tepper’s 13F Portfolio: 1.17%
Dividend Yield: 2.04%
No. of Hedge Fund Holders: 45
Emerson Electric Co. (NYSE: EMR) is an American manufacturing company. It is a Fortune 500 company that manufactures products and provides engineering services to its customers. It ranks 7th in our list of best dividend stocks to buy according to billionaire David Tepper.
Tepper’s Appaloosa Management reduced its shares in Emerson Electric Co. (NYSE: EMR) in Q121, making it only 1.17% of the fund’s portfolio. Emerson Electric Co. (NYSE: EMR) has a market cap of approximately $58.5 billion and it gained 25.05% year to date. Its dividend yield is currently 2.04% or $2.02 per share. Like Micron Technology, Inc. (NASDAQ: MU), Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. (NASDAQ: FB), and Alphabet Inc (NASDAQ: GOOG), Emerson Electric Co. (NYSE: EMR) is one of the best dividend stocks to buy based on Tepper’s Q1 portfolio.
6. QUALCOMM Incorporated (NASDAQ: QCOM)
Tepper’s Stake Value: $99,443,000
Percentage of David Tepper’s 13F Portfolio: 1.42%
Dividend Yield: 2.05%
No. of Hedge Fund Holders: 73
QUALCOMM Incorporated (NASDAQ: QCOM) is an American semiconductor company. Its headquarters are in San Diego, California, and the company ranks 6th on our list of Tepper’s top 10 dividend stock picks. QUALCOMM Incorporated (NASDAQ: QCOM) manufactures semiconductors, software, and services related to wireless technology.
QUALCOMM Incorporated (NASDAQ: QCOM) is having a bad year, as the stock is down close to 10% year to date. However, it’s a decent stock to buy for long-term gains. Latest reports from TrendForce reveal that Qualcomm (NASDAQ:QCOM) was leading the top IC design (fabless) companies in terms of Q1 revenues as the company saw a 53% in its revenue amid growth in smartphones, RF, IoT, and automotive.
5. ViacomCBS Inc. (NASDAQ: VIAC)
Tepper’s Stake Value: $155,370,000
Percentage of David Tepper’s 13F Portfolio: 2.23%
Dividend Yield: 2.27%
No. of Hedge Fund Holders: 89
ViacombCBS Inc. (NASDAQ: VIAC) is an American mass media company that ranks 5th on our list of the 10 best dividend stocks to buy according to billionaire David Tepper. The company was formed from a merger of CBS Corporation and Viacom in 2019.
ViacombCBS Inc. (NASDAQ: VIAC) has a market cap of $27 billion and the stock gained 14.23% year to date. Its dividend yield is 2.27% so far, or $0.96 a share. Like Micron Technology, Inc. (NASDAQ: MU), Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. (NASDAQ: FB), and Alphabet Inc (NASDAQ: GOOG), ViacombCBS Inc. (NASDAQ: VIAC) is a good stock pick from Appaloosa Management’s portfolio.
4. Sysco Corporation (NYSE: SYY)
Tepper’s Stake Value: $91,142,000
Percentage of David Tepper’s 13F Portfolio: 1.3%
Dividend Yield: 2.37%
No. of Hedge Fund Holders: 42
Sysco Corporation (NYSE: SYY) is an American wholesale company. It ranked 4th on our list of Tepper’s top 10 dividend stock picks, and works on marketing and distributing food products, small wares, kitchen equipment, and tabletop items. Sysco Corporation (NYSE: SYY) mostly works on selling the above products to restaurants, healthcare, and educational institutions.
The stock has gained 9.14% year to date and has a market cap of $40.4 billion. Despite this, Appaloosa Management reduced its stake in Sysco Corporation (NYSE: SYY) in Q121, making the stock 1.3% of the hedge fund’s portfolio.
3. Chesapeake Energy Corporation (NASDAQ: CHK)
Tepper’s Stake Value: $161,788,000
Percentage of David Tepper’s 13F Portfolio: 2.32%
Dividend Yield: 2.48%
No. of Hedge Fund Holders: 42
Chesapeake Energy Corporation (NASDAQ: CHK) is a gas industry company based in the US. The company works in hydrocarbon exploration and is headquartered in Oklahoma. It ranks 3rd on our list of the top 10 dividend stock picks of David Tepper.
2. Energy Transfer LP (NYSE: ET)
Tepper’s Stake Value: $175,260,000
Percentage of David Tepper’s 13F Portfolio: 2.51%
Dividend Yield: 5.62%
No. of Hedge Fund Holders: 25
Energy Transfer LP (NYSE: ET) is a gas industry company with headquarters in Dallas, Texas. The company ranks 2nd on our list of the 10 best dividend stocks to buy according to billionaire David Tepper.
Energy Transfer LP (NYSE: ET) gained 81.07% year to date and currently has a market value of approximately $29.9 billion.
1. Enterprise Products Partners L.P. (NYSE: EPD)
Tepper’s Stake Value: $71,253,000
Percentage of David Tepper’s 13F Portfolio: 1.02%
Dividend Yield: 7.23%
No. of Hedge Fund Holders: 26
Enterprise Products Partners L.P. (NYSE: EPD) is a US-based midstream natural gas and crude oil pipeline company. The company acquired GulfTerra in 2004 and ranked 105th in the 2018 Fortune 500 list of the largest American corporations by total revenue. Enterprise Products Partners L.P. (NYSE: EPD) ranks 1st on our list of the top 10 dividend stock picks by David Tepper.
Enterprise Products Partners L.P. (NYSE: EPD) released its last earnings report a month ago, and since then its shares had added 3.9% as of June 2nd. The stock thus managed to outperform the S&P 500 and currently has 12 ‘By’ recommendations from trading analysts.
Enterprise Products Partners L.P. (NYSE: EPD) gained 29.57% year to date and has a market value of $54.6 billion.
See also: 10 Best Dividend Stocks Under $20 and 10 Best Healthcare Dividend Stocks.
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Disclosure: None. 10 Best Dividend Stocks to Buy According to Billionaire David Tepper is originally published at Insider Monkey.
