Kerr Neilson is an Australian billionaire hedge fund manager with a net worth of $1.1 billion. Born in South Africa in 1950, he completed his bachelor’s in commerce from the University of Cape Town in 1973. In 1983, Neilson moved from Johannesburg to Sydney to work as retail funds management head for Bankers Trust of Australia and left the bank in 1993 after steering it through the uncertainty following the market crash of 1987. He co-founded Platinum Asset Management in 1994 with the financial support of George Soros. The hedge fund has assets under management (AUM) of $15.55 billion as of 2020.
Neilson showed a knack for investment management at a very early age and picked his first stock at the age of 13. He has a long-term value-based contrarian investment strategy that does not take into account the uncertainty in the short run and aims to achieve high absolute returns in the long run. This strategy has helped Mr. Neilson in picking up high-performing stocks in his portfolio consistently. People in the financial world have compared Neilson with Warren Buffett due to his interest in stocks at a young age, along with his investment strategy.
According to Platinum Asset Management’s annual report 2021, Platinum’s strategies produced positive absolute investment returns, with the company’s flagship International and Asian stock funds all returning around 26% for the year ending 30 June 2021. Some of the notable names in Neilson’s portfolio are Gilead Sciences, Inc. (NASDAQ:GILD), Alibaba Group Holding Limited (NYSE:BABA), and Alphabet Inc. (NASDAQ:GOOG).
Kerr Neilson of Platinum Asset Management
Our Methodology
In this article, we will be going over the top 10 dividend stocks to buy according to billionaire Kerr Neilson. The stocks have been picked from the Q3 portfolio of Kerr Neilson. These 10 stocks take up 20.67% of Platinum Asset Management’s portfolio as of Q3 2021.
Investor letters, analyst ratings, and growth catalysts have been analyzed for each stock. In addition to this, the hedge funds sentiment discussed is based on the 867 hedge funds tracked by Insider Monkey at the end of Q3 2021.
Dividend Stocks to Buy According to Billionaire Kerr Neilson
10. Cisco Systems, Inc. (NASDAQ:CSCO)
Platinum Asset Management’s Stake Value: $1,943,000
Percentage of Platinum Asset Management’s 13F Portfolio: 0.05%
Dividend Yield as of January 7: 2.46%
Cisco Systems, Inc. (NASDAQ:CSCO) is a manufacturer and seller of networking hardware, software, telecommunications equipment, and other hi-tech products and services to the IT industry globally. Kerr Neilson held 35,700 shares in Cisco Systems, Inc. (NASDAQ:CSCO) at the end of Q3 2021, worth $1.94 million. Platinum Asset Management initiated a position in the stock in the second quarter of 2011.
For Q2 FY22, the company anticipates adjusted EPS of 80 cents to 82 cents, compared to the consensus forecast of 82 cents. The Q1 FY22 results disclosed the biggest backlog of orders in the history of the company, which is expected to remain around the same level during Q2 2022 and expected to decline in the second half of 2022, according to Cisco Systems Inc.’s (NASDAQ:CSCO) CEO Chuck Robbins.
On November 18, Meta Marshall at Morgan Stanley kept an Equal Weight rating on Cisco Systems, Inc. (NASDAQ:CSCO) with a $59 price target.
ClearBridge Investments shared its stance on Cisco Systems, Inc. (NASDAQ:CSCO) in its Q2 2021 investor letter. Here’s what the firm said:
“Also in IT, we added Cisco Systems, which provides IT and networking services in the form of network security, software development and cloud computing. Cisco continues to derive over 50% of its sales from on-premise deployments of its products of enterprise and small and midsize customers, while recurring revenues from software are becoming a larger part of the mix. Return-to-office enterprise spending should offer upside to its core campus business. Cisco was an early technology leader in sustainability over two decades ago, through its Internet-connecting capabilities which supported live concerts in partnership with the United Nations Development Program to raise awareness and funds to fight poverty. Cisco has very strong environmental standards (including driving lower energy consumption in IT departments through new product innovations and a longstanding goal to reduce emissions and reliance on non-renewable energy sources). Its data privacy and supply chain management policies are best in class.”
Apart from Cisco Systems, Inc. (NASDAQ:CSCO), Gilead Sciences, Inc. (NASDAQ:GILD), and Alibaba Group Holding Limited (NYSE:BABA), Neilson also has a stake worth $63.1 million in Alphabet Inc. (NASDAQ:GOOG) as of Q3 2021.
9. Oracle Corporation (NYSE:ORCL)
Platinum Asset Management’s Stake Value: $2,197,000
Percentage of Platinum Asset Management’s 13F Portfolio: 0.06%
Dividend Yield as of January 7: 1.44%
Oracle Corporation (NASDAQ:ORCL) is the second-biggest software company in the world in terms of market capitalization and revenue. The Austin, Texas-based company has pioneered cloud engineering systems, database software technology, and enterprise software products. Oracle Corporation (NASDAQ:ORCL) develops various customer relationship management (CRM) software, Enterprise Resource Planning (ERP) software, Human Capital Management (HCM) software, and Supply Chain Management (SCM) software.
Oracle Corporation (NASDAQ:ORCL) reported mixed Q1 FY22 results on September 13 as it missed revenue estimates but surpassed EPS prediction on the back of lower costs. Revenue for the period was $9.73 billion, as opposed to the consensus forecast of $9.77 billion. Adjusted EPS for Q1 FY22 was $1.03, six cents higher than the consensus prediction. For Q2 FY22, the company guided that it anticipates EPS to be $1.09 to $1.13, compared to the analysts’ forecast of $1.08. Oracle Corporation (NASDAQ:ORCL) also declared a quarterly dividend of 32 cents per share with a payment date of October 26, 2021.
On November 16, Phil Winslow at Credit Suisse initiated coverage on Oracle Corporation (NYSE:ORCL) with an Outperform rating and a price target of $110. The analyst sees Oracle Corporation (NASDAQ:ORCL) as the third or fourth biggest player in the Platform as a Service (PaaS)/Infrastructure as a Service (IaaS) market and the number two player in the Software as a Service (SaaS) industry.
First Eagle Investment Management mentioned Oracle Corporation (NYSE:ORCL) in its Q3 2021 investor letter. Here’s what the investment management firm said:
“Leading contributors in the First Eagle Global Fund this quarter included Oracle Corporation. Oracle continues to make progress reinventing itself for the cloud-computing environment. Impressively, it has affected this turnaround primarily through organic research & development and smaller, well-priced acquisitions rather than expensive, headline-grabbing mergers. Results in recent quarters have suggested Oracle’s subscription-based model is gaining traction, and we believe the company will be a strong competitor in the huge addressable public cloud market. With a high level of insider ownership and a strong balance sheet, Oracle has been a strong cash flow generator and has historically returned excess cash to shareholders in the form of dividends and share buybacks.”
8. Analog Devices, Inc. (NASDAQ:ADI)
Platinum Asset Management’s Stake Value: $3,039,000
Percentage of Platinum Asset Management’s 13F Portfolio: 0.08%
Dividend Yield as of January 7: 1.60%
Analog Devices, Inc. (NASDAQ:ADI) is a designer, manufacturer, and seller of analog, mixed-signal, and digital signal processing (DSP) integrated circuits (ICs). These circuits convert light, motion, sound, temperature, and other real-life phenomena into electrical signals. The Wilmington, Delaware-based company also provides software and platforms that translate digital signals to analog signals and vice-versa. Analog Devices, Inc. (NASDAQ:ADI) caters to over 100,000 customers belonging to sectors like aerospace, automotive, consumer electronics, instrumentation, and military.
On November 24, Vivek Arya at Bank of America increased the target price on Analog Devices, Inc. (NYSE:ADI) from $210 to $220, while maintaining a Buy rating. The analyst termed the Q4 2021 results as “a solid quarter.” Analog Devices, Inc. (NASDAQ:ADI) reported revenue of $2.34 billion, compared to a consensus prediction of $2.31 billion and EPS of $1.73 as opposed to the analysts’ forecast of $1.70.
Analog Devices, Inc. (NASDAQ:ADI) also provided strong guidance for Q1 FY22 as it anticipates revenue to be around $2.6 billion with a variation of $100 million on either side as opposed to the consensus forecast of $2.49 billion. Meanwhile, the EPS forecast for Q1 FY22 is $1.78 with a 10 cents variation, compared to the analysts’ estimate of $1.70.
Analog Devices, Inc. (NASDAQ:ADI) was mentioned in the Q3 2021 investor letter of Madison Funds. Here’s what the firm had to say about the company:
“At its 2017 investor day, Analog Device’s VP of Automotive, Mark Gill, described how the company’s content on well-equipped electric vehicles was $600 per car compared to $250 per car for the traditional 2017 internal combustion engine car. Since then, Analog has highlighted the success of its EV battery management systems (BMS) product nearly every quarter. The BMS product is hardware and software that manages the power into and out of the battery systems. It’s the brains of the operation. Analog says it’s on its fifth generation BMS product, that it has the no. 1 market share in high voltage products, and that it is on 5 of the top 10 selling EVs. While we think that the BMS product is just 1 to 1.5% of Analog’s product mix, we think that it could add nearly a point of revenue growth per year to the company’s top-line given the expected ramp in EV production. This is a material amount of growth atop an already nicely growing company revenue line.”
7. LyondellBasell Industries N.V. (NYSE:LYB)
Platinum Asset Management’s Stake Value: $6,269,000
Percentage of Platinum Asset Management’s 13F Portfolio: 0.17%
Dividend Yield as of January 7: 4.70%
LyondellBasell Industries N.V. (NYSE:LYB) is one of the biggest chemicals, plastics, and refining companies globally. Products and materials manufactured by the Dutch company are critical to food safety through food packaging and films, ensuring longer shelf-life and water purity through strong and long-lasting pipes and filters used for water transportation and processing.
Of the 867 hedge funds being tracked by Insider Monkey, 39 held stakes in LyondellBasell Industries N.V. (NYSE:LYB) at the end of Q3 2021, down from 41 in the preceding quarter. Kerr Neilson has owned a stake in the company since the third quarter of 2020.
Michael Sison at Wells Fargo maintained an Overweight rating on LyondellBasell Industries N.V. (NYSE:LYB) with a target price of $120 in his note to investors on November 2. The analyst thinks that LyondellBasell Industries N.V. (NYSE:LYB) is in a position to counter the near-term increase in costs compared to its competitors globally due to its US Gulf advantage. LyondellBasell Industries N.V. (NYSE:LYB) is expected to generate strong free cash flows that can be employed in repurchasing its stock in 2022.
6. FedEx Corporation (NYSE:FDX)
Platinum Asset Management’s Stake Value: $20,674,000
Percentage of Platinum Asset Management’s 13F Portfolio: 0.58%
Dividend Yield as of January 7: 1.13%
FedEx Corporation (NYSE:FDX) is a provider of transportation, e-commerce, and business services. The Memphis, Tennessee-based company has a workforce of over 650,000 employees globally. FedEx Corporation (NYSE:FDX) is renowned throughout the world for its air delivery service FedEx Express. On November 19, the company announced its quarterly dividend of 75 cents per share.
Since the start of the year, the stock price of FedEx Corporation (NYSE:FDX) has declined by more than 5%, as opposed to the S&P 500 Index’s rise of 22%. Brian Ossenbeck at JPMorgan provided an analysis of stock price underperformance in a research note issued to investors on December 3. He sees the relative discount of FedEx stock to United Parcel Service, Inc. (NYSE:UPS) at a record level. The analyst highlighted the risk of labor availability but thinks that the company can cater to it properly as there was a 23% decline in job posting compared to the peak experienced in early November.
FedEx Corporation (NYSE:FDX) can be expected to become a beneficiary as its competitor UPS will enter a negotiation with its labor union. The negotiation with Teamsters is considered to be the most crucial since the 1997 negotiation when UPS had to face a 15-day stop in operations.
Investment management firm East 72 mentioned FedEx Corporation (NYSE:FDX) in its Q3 2021 investor letter. Here’s what the firm said:
“It has been some considerable time that the variables which contribute to profit growth estimation have been so volatile; not just the strictly financial aspects but the impact on timing of pandemic delays, consequent labour shortages, port and shipping delays (and costs) and resultant inefficiencies in the supply chain. Christmas stock arriving in January isn’t much use – and for some unlucky folks, that will be the case.
As a good example, FedEx Q1FY22 results reported a $450million increase in “costs due to a constrained labour market which impacted labour availability, resulting in network inefficiencies, higher wage rates, and increased purchased transportation expenses. This was partially offset by higher package and freight yields, increased international export express shipments and a favourable net fuel impact”3. If all of the costs were labour related, that would be around a 6% “inefficiency” increase. No inflation, don’t forget….”
In addition to FedEx Corporation (NYSE:FDX), Neilson also has a stake in companies like Gilead Sciences, Inc. (NASDAQ:GILD), Alibaba Group Holding Limited (NYSE:BABA), and Alphabet Inc. (NASDAQ:GOOG) as of Q3 2021.
5. Louisiana-Pacific Corporation (NYSE:LPX)
Platinum Asset Management’s Stake Value: $83,428,000
Percentage of Platinum Asset Management’s 13F Portfolio: 2.34%
Dividend Yield as of January 7: 0.94%
Louisiana-Pacific Corporation (NYSE:LPX) is a manufacturer and seller of building products for the construction, remodeling, and repair of houses and other outdoor structures. The Nashville, Tennessee-based company has mastered the production of oriented strand board (OSB) panels and engineered wood building products in the US. The company is the world’s biggest producer of OSB.
Louisiana-Pacific Corporation (NYSE:LPX) reported its Q3 2021 results on November 2. The company reported revenues of $1.22 billion as opposed to the estimate of $1.11 billion. Meanwhile, the adjusted EPS for the quarter was $3.87, compared to the analysts’ forecast of $3.42.
L1 Capital shared its stance on Louisiana-Pacific Corporation (NYSE:LPX) in its Q3 2021 investor letter. Here’s what the firm said:
“We reinvested the proceeds from the partial sale of Eagle Materials by increasing the Fund’s position in Louisiana-Pacific Corporation. We expect the company to deliver strong earnings and cashflow over coming years, and the company remains undervalued at its current share price.”
4. Intercontinental Exchange, Inc. (NYSE:ICE)
Platinum Asset Management’s Stake Value: $86,203,000
Percentage of Platinum Asset Management’s 13F Portfolio: 2.42%
Dividend Yield as of January 7: 0.98%
Intercontinental Exchange, Inc. (NYSE:ICE) was founded in 2000 and is an operator of 12 regulated exchanges and six clearing houses for commodity, equity, financial, and fixed income markets globally. The Atlanta, Georgia-based company accommodates nearly two-third of the traded crude oil futures and also houses the leading natural gas markets.
Earlier in January 2021, Intercontinental Exchange, Inc. (NYSE:ICE) announced that it would spin off its cryptocurrency exchange Bakkt Holdings, Inc. (NYSE:BKKT) and publicly list it on the NYSE through a merger with a special purpose acquisition company (SPAC). On the first day of trading on October 26, the stock price of Bakkt skyrocketed 234%.
Intercontinental Exchange, Inc. (NYSE:ICE) announced a Q4 2021 dividend of 33 cents per share on October 28. The quarterly dividend reflected a 10% increase from the same period last year. In a research note issued on November 2, Richard Repetto at Piper Sandler termed the Q3 2021 results as outstanding and shared that the outperformance was due to its under-stress segment Mortgage Technology. The analyst also highlighted the upward movement of Bakkt Holdings and believed that it is not fully priced into the fundamentals of Intercontinental Exchange stock. Repetto kept an Overweight rating on Intercontinental Exchange, Inc. (NYSE:ICE) with a price target of $145.
Oakmark Funds shared its views on Intercontinental Exchange, Inc. (NYSE:ICE) in its Q2 2021 investor letter. Here’s what the fund said:
“Intercontinental Exchange is one of the largest and, in our view, most successful financial exchange operators in the world. The company was created through a series of shrewd acquisitions executed by their founder and CEO Jeff Sprecher. Sprecher is one of the more capable CEOs we’ve evaluated, having demonstrated a long history of astute capital allocation and a willingness to act and adapt rapidly to new opportunities and competitive threats. Today, Intercontinental Exchange competes in three primary business segments: exchanges, fixed income/data services and mortgage technology. We believe each of these businesses exhibits attractive economic characteristics and that each should grow earnings well in excess of GDP over the long term. Despite this favorable long-term outlook, the company currently trades at a P/E ratio that is roughly in line with the S&P 500. We believe a business with Intercontinental Exchange’s strong competitive position, excellent management team and attractive growth outlook deserves to trade well above a market multiple. We like buying great businesses at average prices and believe Intercontinental Exchange represents a compelling opportunity to do just that.”
3. Gilead Sciences, Inc. (NASDAQ:GILD)
Platinum Asset Management’s Stake Value: $101,892,000
Percentage of Platinum Asset Management’s 13F Portfolio: 2.86%
Dividend Yield as of January 7: 3.93%
Gilead Sciences, Inc. (NASDAQ:GILD) is a biotech company that is focused on discovering, developing, and selling innovative medicines to cater to unmet medical needs across the globe. These medicines are discovered either through research or via acquisition. The Foster City, California-based company’s antiviral drug Veklury (remdesivir) was one of the first treatments for COVID-19. This has given an impetus to the top line and the bottom line of the company.
Gilead Sciences, Inc. (NASDAQ:GILD) announced a quarterly dividend of 71 cents per share following its Q3 2021 results on October 28. The stock’s forward yield as of January 7 is 3.93%. In addition to this, Gilead Sciences, Inc. (NASDAQ:GILD) has a share buyback plan in place as well, which has reduced the total outstanding shares from 1.7 billion to 1.25 billion in the past five years.
On December 6, Salveen Richter at Goldman Sachs initiated coverage on Gilead Sciences, Inc. (NASDAQ:GILD) with a Neutral rating and an $82 price target. The analyst anticipates the company to stay as the dominant player in the HIV area due to its blockbuster HIV treatment Biktarvy. Furthermore, the analyst has highlighted the current evolution of Gilead Sciences, Inc. (NASDAQ:GILD) into a more diversified biopharma company.
2. Barrick Gold Corporation (NYSE:GOLD)
Platinum Asset Management’s Stake Value: $128,839,000
Percentage of Platinum Asset Management’s 13F Portfolio: 3.62%
Dividend Yield as of January 7: 1.94%
Barrick Gold Corporation (NYSE:GOLD) is an explorer, developer, and producer of gold and silver properties. The Toronto, Ontario-based company has projects spread across 13 countries globally and a stable production outlook for the next five to 10 years. Furthermore, there is a potential of increasing production if the company looks further into the possibility of developing the Donlin property in Alaska with NovaGold. Barrick Gold Corporation (NYSE:GOLD) has a 50% stake in the project. Research has shown that the mine has a life of over 30 years with an expected annual production of 1.1 million ounces of gold. The mine is expected to produce 1.5 million ounces of gold annually during the first five years. If the project goes through then, it can add around 30% to Barrick Gold’s current production profile of around 4.5 million ounces of gold. Furthermore, Barrick Gold Corporation (NYSE:GOLD) is intending to bring the Porgera assets back online, which will be a catalyst in future production increases.
Kerr Neilson held over 7.1 million shares in Barrick Gold Corporation (NYSE:GOLD), worth nearly $129 million at the end of Q3 2021. The investment represents 3.62% of the overall portfolio, down from 4.57% in the preceding quarter.
Following the Q3 2021 earnings results, the company announced a nine-cent dividend per share. The stock has a forward dividend yield of 1.94% as of January 7. In addition to this, Barrick Gold Corporation (NYSE:GOLD) announced the third and final tranche of a special dividend of 14 cents per share or $250 million to be paid along with the quarterly dividend. The first two tranches of $250 million were paid in June 2021 and September 2021.
1. Microchip Technology Incorporated (NASDAQ:MCHP)
Platinum Asset Management’s Stake Value: $301,756,000
Percentage of Platinum Asset Management’s 13F Portfolio: 8.49%
Dividend Yield as of January 7: 1.06%
Microchip Technology Incorporated (NASDAQ:MCHP) is a manufacturer of microcontroller and analog semiconductor products for the aerospace, automotive, computing, consumer, defensive, and industrial sectors, catering to more than 120,000 consumers around the world.
For Q3 FY22, Microchip Technology Incorporated (NASDAQ:MCHP) provided strong guidance as it expects revenue to be around $1.71 billion to $1.78 billion. This is higher than the analysts’ estimate of $1.68 billion. Meanwhile, Microchip Technology Incorporated (NASDAQ:MCHP) expects EPS to be around $1.14 to $1.20, which is also higher than the analysts’ forecast of $1.09.
Along with its quarterly results, the company also announced a 6.2% increase in quarterly dividends to 23.2 cents per share, resulting in a forward dividend yield of 1.06%. In addition to that, Microchip Technology Incorporated (NASDAQ:MCHP) boosted shareholder return by announcing a share buyback plan of $4 billion that replaced the previously implemented buyback plan of 30 million shares. Microchip Technology Incorporated (NASDAQ:MCHP) will execute the buyback plan from its cash flow from operations after capital expenditure and dividend payments.
On December 6, Mark Lipacis at Jefferies increased the price target on Microchip Technology Incorporated (NASDAQ:MCHP) stock from $98 to $109 while maintaining a Buy rating. The analyst highlighted the increase in dividends and the announcement of a share buyback plan along with investment-grade ratings received from Fitch and Moody’s in mid-November. Lipacis termed the stock as his top Risk vs. Reward idea.
You can also take a peek at the 10 Stocks to Invest in According to Victor Ho’s Yarra Square Partners and Echo Street Capital Management: Greg Poole’s Top 10 Stock Picks.
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Disclose. None. 10 Dividend Stocks to Buy According to Billionaire Kerr Neilson is originally published on Insider Monkey.
