In this article, we present the list of 10 Dividend Stocks to Buy Now According to Billionaire Leon Cooperman.
Devon Energy Corporation (NYSE:DVN), Cigna Corporation (NYSE:CI), and Ashland Global Holdings Inc. (NYSE:ASH) are among the top dividend stock picks in the 13F portfolio of billionaire money managing icon Leon Cooperman.
Cooperman is the 78-year-old chairman and CEO of Omega Advisors, a hedge fund that managed about $3.6 billion in assets in mid-2018 before it was converted into a family office that now primarily manages Cooperman’s own wealth. That wealth is estimated to be $2.5 billion by Forbes, a figure that Cooperman himself has previously characterized as low. Cooperman plans to give away most of his fortune.
Cooperman got his start at Goldman Sachs, where he worked his way up to becoming the chairman of the firm’s asset management division. He struck out on his own in 1991, launching Omega Advisors, which delivered annualized returns of over 12% during its 27-year run, handily topping those of the S&P 500 during that time.
As of December 31, 2021, Cooperman’s family office had a 13F portfolio valued at $1.99 billion, which marked the seventh straight quarter that the portfolio has advanced in value, more than doubling in that span. Omega Advisors was most heavily invested in the finance sector, including several high-yielding REITs, and has also made a bigger move into energy stocks in recent quarters, which also tend to boast attractive dividends.
Given that portfolio construction, we decided to take a look at Leon Cooperman’s favorite dividend stock picks heading into 2022 in this article.
Leon Cooperman of Omega Advisors
Our Methodology
We surveyed Leon Cooperman’s long positions as of December 31 based on his latest 13F filing with the SEC. From there, we gathered his ten largest holdings in companies that have dividend yields of at least 1%. The stocks are listed in ascending order based on the size of Mr. Cooperman’s position.
We follow hedge funds like Omega Advisors because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns. All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q4 2021 reporting period.
10 Dividend Stocks to Buy Now According to Billionaire Leon Cooperman
10. Pioneer Natural Resources Company (NYSE:PXD)
Dividend Yield as of March 24: 1.24%
Value of Omega Advisors‘ 13F Position: $25.46 million
Pioneer Natural Resources Company (NYSE:PXD) was one of Leon Cooperman’s top-performing stock picks in 2021, gaining 59.74%. His Q1 2021 entry into the stock was well-timed, as shares have risen at a rapid rate since.
Many other hedge funds have missed out on the gains, as ownership of the stock rose by a modest 20% between mid-2020 and the end of 2021, a period during which the independent oil and gas E&P company’s shares more than doubled in value.
Pioneer Natural Resources Company (NYSE:PXD) announced on February 16 that it would pay out a quarterly base-plus-variable dividend of $3.78 on March 14 to shareholders of record as of February 28. In the prior quarter, the company’s cash variable dividend of $3.02 represented a 100% hike quarter-over-quarter and amounted to nearly 75% of the company’s Q3 free cash flow. PXD is projected to pull in over $7 billion in positive free cash flow in 2022 thanks to soaring commodity prices.
Like Devon Energy Corporation (NYSE:DVN), Cigna Corporation (NYSE:CI), and Ashland Global Holdings Inc. (NYSE:ASH), Pioneer Natural Resources is a compelling dividend stock pick that Leon Cooperman really likes.
Here is what ClearBridge Investments Dividend Strategy had to say about Pioneer Natural Resources Company (NYSE:PXD) in its Q3 2021 investor letter:
“Over the last year we have also added a position in Pioneer Natural Resources, a best-in-class producer in the Permian Basin. We added Pioneer as we anticipated rising commodity prices and sought more direct leverage to that trend. Our overweight to energy has benefited our performance this year, in particular through the first half of the year, and we believe the sector, still less than 3% of the S&P 500, remains underinvested and attractive going forward.”
9. NRG Energy, Inc. (NYSE:NRG)
Dividend Yield as of March 24: 3.76%
Value of Omega Advisors‘ 13F Position: $25.85 million
Leon Cooperman also took a stake in NRG Energy, Inc. (NYSE:NRG) during the first quarter of 2021. The move hasn’t been nearly as profitable as his PXD purchase, however, as NRG shares are virtually flat since the end of 2020.
NRG Energy, Inc. (NYSE:NRG) has lost quite a bit of favor in recent years among the exclusive group of hedge funds tracked by Insider Monkey, as ownership of the energy generation and retail electricity company’s stock has fallen by more than 50% since the middle of 2018.
NRG Energy, Inc. (NYSE:NRG) was forced to slash its dividends payments by 80% in 2016 as the company’s debt mounted. After a lengthy restructuring campaign that lead to improved financial health, NRG announced in late 2019 that it would boost its quarterly dividend 10-fold to $0.30 beginning in 2020, which represented a 100% increase over 2016 levels.
The company has plans to continue to raise it by 7-9% annually going forward, which it met with its latest dividend increase, an 8% hike in January that lifted its quarterly payouts to $0.35.
8. Motorola Solutions, Inc. (NYSE:MSI)
Dividend Yield as of March 24: 1.36%
Value of Omega Advisors‘ 13F Position: $27.17 million
Motorola Solutions, Inc. (NYSE:MSI) was another big performer for Leon Cooperman last year, gaining 61.84%. The billionaire money manager has owned a stake in the telecommunications equipment provider since Q2 2020. Cooperman owns 100,000 MSI shares as of December 31, unchanged from a quarter earlier.
Motorola Solutions, Inc. (NYSE:MSI) has raised its annual dividend payments for ten consecutive years and announced in the middle of February that its next quarterly dividend payment, due April 14, would be $0.79 per share, in line with previous. Motorola continues to grow its market share and boost its income, which bodes well for its dividend going forward.
Saturna Capital Amana Funds likes Motorola’s value potential in a market characterized by rising interest rates and inflation. Here is what the fund had to say about Motorola Solutions, Inc. (NYSE:MSI)
in its Q4 2021 investor letter:
“Given the likelihood of rising inflation and interest rates ahead, we anticipate adjustments to the portfolio to reduce exposure to highly valued stocks dependent on low interest rates to support terminal year valuations, while seeking investments in companies more correlated with a return to economic normalcy. Motorola Solutions is a recent addition to the portfolio and has done well.”
7. Arbor Realty Trust, Inc. (NYSE:ABR)
Dividend Yield as of March 24: 8.70%
Value of Omega Advisors‘ 13F Position: $42.92 million
Hedge fund ownership of Arbor Realty Trust, Inc. (NYSE:ABR) has been volatile over the past two years, cratering by 73% during the first two quarters of 2020 before returning to those previous levels by the end of Q1 2021. There’s been another 36% decline in ownership of the stock since then, however, with Cooperman being one of 14 money managers bullish on the REIT.
Arbor Realty Trust, Inc. (NYSE:ABR) has grown its dividend for nine consecutive years, boosting its quarterly payouts by more than 350% during that time. In February, it announced another 2.8% hike to its quarterly dividend, lifting it to $0.37 per share and pushing the yield on its shares even closer to 9%.
Arbor Realty Trust, Inc. (NYSE:ABR) is another company that will benefit from a rising interest rate environment, as the bulk of its loans has short durations, with a weighted average maturity of just two years. The company grew its balance sheet portfolio by 122% last year to $12.2 billion and produced $0.62 per share in distributable earnings in Q4, well below its current dividend payouts.
6. Chimera Investment Corporation (NYSE:CIM)
Dividend Yield as of March 24: 10.72%
Value of Omega Advisors‘ 13F Position: $51.34 million
Chimera Investment Corporation (NYSE:CIM) is another REIT with an attractive dividend yield that Leon Cooperman likes, as well as being one of his better-performing stock picks last year, gaining 53.45%. Unlike his newer dividend positions in companies like Devon Energy Corporation (NYSE:DVN), Cigna Corporation (NYSE:CI), and Ashland Global Holdings Inc. (NYSE:ASH), Chimera is also the second-oldest holding in Cooperman’s 13F portfolio, dating back to the middle of 2012.
Despite its attractive yield, Chimera Investment Corporation (NYSE:CIM)’s $0.33 quarterly dividend payments stand well below the company’s historical average. Between 2012 and 2019, those payments fell in the $0.45 to $0.50 range and even topped $0.80 more than a decade ago.
Chimera Investment Corporation (NYSE:CIM) has been able to greatly improve its balance sheet in recent years, pushing its leverage down to historically low levels. With plenty of cash on hand, the company is now in a prime position to grow its portfolio in 2022 and further boost its net income, which came in at $2.44 per share on a GAAP basis in 2021.
5. Energy Transfer LP (NYSE:ET)
Dividend Yield as of March 24: 7.07%
Value of Omega Advisors‘ 13F Position: $57.61 million
There was a nearly 25% spike in hedge fund ownership of Energy Transfer LP (NYSE:ET) during Q4 as money managers are increasingly taking note of the natural gas midstream, transportation, and storage company. Cooperman has owned a stake in ET since the middle of 2017.
Energy Transfer LP (NYSE:ET) was forced to slash its dividend by 50% in 2020 in an effort to tackle its debt. The company’s been successful on that front, cutting its long-term debt by $6.3 billion in 2021. That success allowed the company to boost its dividend by 15% heading into 2022, with a quarterly payout of $0.175 per share.
Energy Transfer LP (NYSE:ET) is still projecting to take in billions of dollars in excess free cash flow in 2022 after pulling in $13 billion in adjusted EBITDA last year.
4. Trinity Industries, Inc. (NYSE:TRN)
Dividend Yield as of March 24: 2.68%
Value of Omega Advisors‘ 13F Position: $58.89 million
Trinity Industries, Inc. (NYSE:TRN) hasn’t experienced the same boost in hedge fund ownership that ET has, as 31% of the company’s hedge fund shareholders on March 31 had sold off their positions by the end of 2021. Cooperman, who’s also owned TRN since mid-2017 was not one of them, maintaining his position of 1.95 million shares throughout Q4.
Trinity Industries, Inc. (NYSE:TRN), which supplies a wide range of equipment and parts for the railroad, construction, and energy industries, among others, has been one of the most dependable dividend payers among its peers. The company is in the midst of a 32-year run of making dividend payments, as well as an 11-year run of increasing those payments.
Trinity Industries, Inc. (NYSE:TRN) declared a $0.23 per share quarterly dividend earlier this month, to be payable on April 29 to shareholders of record as of April 14. That payout was in line with the previous quarter’s.
3. Ashland Global Holdings Inc. (NYSE:ASH)
Dividend Yield as of March 24: 1.27%
Value of Omega Advisors‘ 13F Position: $93.88 million
Hedge fund ownership of Ashland Global Holdings Inc. (NYSE:ASH) has declined during each of the past six quarters, falling by 42% during that time. Cooperman has held fast to his holding however, which dates back to 2014, as he maintained his position of 871,965 ASH shares throughout Q4.
Ashland Global Holdings Inc. (NYSE:ASH) has been making dividend payments for the past 26 years and declared a $0.30 per share quarterly distribution near the end of January, in line with previous. Its modest 2-year run of annual dividend increases ended in 2020 when its dividend was left at $0.28 for eight consecutive quarters.
In an effort to combat cost inflation, Ashland Global Holdings Inc. (NYSE:ASH) just announced that it will increase prices by as much as 15% across the entire breadth of its products, which serve the life sciences, personal care, and specialty additives industries, among others. Ashland had previously guided for $2.25 to $2.35 billion in revenue in FY 2022, along with between $550 and $570 million in EBITDA.
2. Cigna Corporation (NYSE:CI)
Dividend Yield as of March 24: 1.84%
Value of Omega Advisors‘ 13F Position: $103 million
Hedge fund ownership of Cigna Corporation (NYSE:CI) has dipped by 16% over the past two quarters and stands 32% lower than its all-time high levels reached in early 2018. Cooperman has been a CI shareholder since Q3 2018 and left his position of 450,000 shares unchanged during Q4 2021.
Cigna Corporation (NYSE:CI), which switched from annual dividend payments to quarterly payments beginning last year, has a 31-year run of making distributions to shareholders, though its annual payments for the past 13 years had been a paltry $0.04. Its forthcoming quarterly payment of $1.12, to be made on March 24 to shareholders of record as of March 9, represents a 12% increase over the previous quarter’s.
Cigna Corporation (NYSE:CI) returned $9 billion to shareholders last year in the form of dividends and share buybacks after pulling in $20.47 in adjusted earnings per share, an 11% year-over-year increase. The health services provider is projecting EPS of at least $22.40 in 2022.
Davis Funds, an investment management firm, published its “Davis Opportunity Fund” fourth-quarter 2021 investor letter and mentioned Cigna Corporation (NYSE:CI). Here‘s what the fund said:
“Healthcare is included in the portfolio both for company-specific reasons, as well as big picture trends. At the company level, we hold select companies in pharmaceuticals, healthcare services and health insurance at attractive valuations. This is at a time when the average age of the U.S. population is fast approaching 40, older than Asia-Pacific and a little younger than the aged populations of Europe and Japan. The number of seniors in the U.S.—i.e., 65 years or older— now surpasses 54 million, or about 15% of the population. Seniors, on average, take a much greater number of medications and account for a large and disproportionate share of healthcare spending, and we expect that trend to continue due to both raw demographics and a proliferation in the number of available treatments and services available now, the latter being driven by innovation and investment in the healthcare industry. Representative holdings in the Fund include Cigna, United Health Group, Viatris and Quest Diagnostics.”
1. Devon Energy Corporation (NYSE:DVN)
Dividend Yield as of March 24: 6.51%
Value of Omega Advisors‘ 13F Position: $120 million
Topping the list of top dividend stocks to buy according to billionaire Leon Cooperman isDevon Energy Corporation (NYSE:DVN), which ranks as his fourth-largest holding overall. Cooperman’s family office did sell off 12% of its stake in Devon Energy during Q4, taking advantage of the stock’s stellar performance in 2021. That left Omega with over 2.72 million shares of the stock, which gained 170.73% last year.
Thanks to the strength of its financial performance, the natural gas exploration and production company have been rapidly jacking up its dividend in recent quarters, boosting its quarterly payout (which includes a variable payment of up to 50% of DVN’s excess FCF) from just $0.30 in March 2021 to $1.00 this month. Devon Energy Corporation (NYSE:DVN) has boosted its distribution for four straight years and made payments for 22 consecutive years.
Given oil prices are expected to continue rising, Devon Energy Corporation (NYSE:DVN)’s dividend could likewise do the same in the quarters to come. The company is coming off a spectacular year of record free cash flow, while its operating cash flow tripled year-over-year.
For more on the latest trades made by some of the biggest hedge fund managers in the world, check out 10 Real Estate Stocks to Buy Now According to Charles Fitzgerald’s V3 Capital and 10 Best Gas Stocks To Buy Now.
Follow Insider Monkey on Twitter
Suggested articles:
- 10 Best Dividend Stocks for Long Term
- 10 Best Dividend Stocks for Passive Income
- 15 Largest Fiber Optic Companies In The World
Disclosure: None. 10 Dividend Stocks to Buy Now According to Billionaire Leon Cooperman is originally published at Insider Monkey.
