10 Very High Yield Dividend Stocks Billionaires Are Piling Into

Published on December 20, 2023 at 9:21 am by Alexandr Oleinic in Dividend Stocks, Hedge Funds, News

In this article, we’re going to take a look at 10 very high yield dividend stocks billionaires are piling into.

Investing in dividend stocks could be a good strategy especially if you are looking for a steady stream of income. Many companies choose to distribute at least a portion of their profits as dividends to their shareholders. In this way, investors in dividend stocks obtain income from two streams, the dividend payout and the returns generated by the stock appreciation. Companies that don’t pay dividends usually reinvest them into further growth, providing investors with higher returns from stock appreciation, whereas dividends are often paid by more mature companies. Therefore, a company that pays a high dividend is also reassuring its investors regarding its financial situation.

David E. Shaw Vertex Pharmaceutical

Since dividend-paying companies are usually those that have built a solid position on the market and are often quite mature in terms of growth, it does mean that you, as an investor, trade off some of the returns that you can get from investing in growth companies. However, in addition to steady dividend payouts, you also get less volatility and less risk. Depending on your risk profile you can allocate various portions of your portfolio towards growth stocks and companies that pay a dividend.

Of course, there are different times and not always companies can maintain a steady dividend payout. However, there is an elite list of businesses, called Dividend Aristocrats, which encompasses companies that are included in the S&P 500 Index and have grown their dividends every year for at least 25 years. Despite the economy turbulence, these companies still managed to raise their dividend. In our list of very high yield dividend stocks billionaires are piling into, one company is a dividend aristocrat, as you will find out later.

Now, once you decide to add one or several dividend-paying companies to your portfolio, you have quite a large list to pick from. Of course you can narrow it down to the aforementioned list of dividend aristocrats, or even further to dividend kings, which are companies that have been growing their dividends for the past 50 years. For example, Altria Group Inc (NYSE:MO), which is also one of the high yield dividend stocks are piling into, is a dividend king. Altria Group Inc (NYSE:MO) has been growing its dividend for the past 54 years. Even earlier this year, Altria Group Inc (NYSE:MO) added $0.04 to its quarterly dividend, taking it to $0.98 per share.

Alternatively, when looking for dividend stocks to invest in, you can take a look at what hedge funds are doing. Hedge funds like investing in dividend stocks as a way to obtain steady returns, but also to mitigate their risk from other investments. We have compiled a list of top 16 dividend stocks to buy according to hedge funds. In addition, there is a select list of hedge funds, which are managed by billionaire investors. Given the solid returns that contributed to these people’s high net worth, we believe it’s worth taking a closer look into what billionaires are piling into.

Our Methodology

We have scanned the 13F filings of hedge funds led by billionaires and identified the most popular stocks that billionaires are bullish on as of the end of September. In order to identify the 10 very high yield dividend stocks billionaires are piling into, we looked at the dividend yields for these stocks, which represents the percentage return from dividends on every dollar invested in the stock. Once we had the dividend yield, we focused on stocks that have a dividend yield above 5%.

Without any further ado, let’s see which companies make the list of very high yield dividend stocks billionaires are piling into.

10. Truist Financial Corp (NYSE:TFC)

Nr. of Billionaire Investors: 13

Dividend Yield: 6.06%

Our list kicks off with Truist Financial Corp (NYSE:TFC), a North Carolina-headquartered bank holding company that operates in 15 states and Washington DC. At the end of September, there were 13 billionaires’ hedge funds bullish on the company, including David E. Shaw‘s D E Shaw, Cliff Asness’ AQR Capital Management, and Israel Englander’s Millennium Management. For the last quarter, Truist Financial Corp (NYSE:TFC) reported EPS of $0.84, beating the consensus estimate of $0.83 and its revenue of $5.73 billion was also slightly above expectations. In addition, in October, Truist Financial Corp (NYSE:TFC) declared a quarterly dividend of $0.52 per share, in-line with the previous payout. During the third-quarter earnings call, Truist Financial Corp (NYSE:TFC) CFO Mike Maguire said that paying the dividend is one of the company’s primary capital priorities alongside “supporting the organic growth needs of new and existing core clients.”

9. KeyCorp (NYSE:KEY)

Nr. of Billionaire Investors: 11

Dividend Yield: 6.19%

Then there’s KeyCorp (NYSE:KEY), another bank holding company, although a regional one. Recently, KeyCorp (NYSE:KEY) lowered its fourth-quarter income outlook. During a presentation at the Goldman Sachs 2023 US Financial Services Conference, KeyCorp (NYSE:KEY) said it expects non-interest income to fall by 5% to 8% over the quarter, compared to a previous outlook of an increase between 1% and 3%. Nevertheless, the company’s last financial report was quite solid with both EPS of $0.29 and revenue of $1.57 billion beating the consensus estimates. In addition, the company declared a quarterly dividend of $0.205 payable in December. During the third quarter, billionaire Ken Griffin‘s Citadel Investment Group boosted its stake in KeyCorp (NYSE:KEY) by over 400% to 22.21 million shares worth $238.98 million.

8. Kinder Morgan Inc (NYSE:KMI)

Nr. of Billionaire Investors: 11

Dividend Yield: 6.38%

Next on our list of very high yield dividend stocks billionaires are piling into is Kinder Morgan Inc (NYSE:KMI), whose stock sports a dividend yield of 6.38% and saw 11 billionaires holding shares as of the end of September. In November, Kinder Morgan Inc (NYSE:KMI) said it had reached an agreement to acquire NextEra Energy Partner’s South Texas assets, STX Midstream. Following the completion of the deal valued at $1.82 billion, Kinder Morgan Inc (NYSE:KMI) will get access to a pipeline system that connects the Eagle Ford basin with Mexico and Gulf Coast markets. Moreover, earlier this month, Kinder Morgan announced the prelimary guidance for 2024, saying it expects net income of $1.21 per share. In addition, the company said it plans to pay an annualized dividend of $1.15 per share in 2024, which would represent the seventh consecutive year of dividend growth.

7. Eagle Bancorp Inc (NASDAQ:EGBN)

Nr. of Billionaire Investors: 12

Dividend Yield: 6.84%

The stock of Eagle Bancorp Inc (NASDAQ:EGBN) slid by more than 40% since the beginning of the year, amid concerns about the state of the banking sector and the US economy following the collapse of three major regional banks. Nevertheless, the company is currently paying a quarterly dividend of $0.45 per share and last year announced a buyback of 1.60 million shares. For the latest quarter, Eagle Bancorp Inc (NASDAQ:EGBN) posted EPS of $0.91, beating the estimates by $0.19, while its revenue of $70.7 million came in slightly lower than expected. Among the top shareholders of Eagle Bancorp Inc (NASDAQ:EGBN) are billionaires Israel Englander’s Millennium Management and Cliff Asness‘ AQR Capital Management, which disclosed stakes worth $11.73 million and $7.75 million, respectively, in their latest 13F filings.

6. Verizon Communications Inc. (NYSE:VZ)

Nr. of Billionaire Investors: 12

Dividend Yield: 6.89%

Communication company Verizon Communications Inc. (NYSE:VZ) also made the list of 10 very high yield dividend stocks billionaires are piling into as 12 billionaire investors are bullish on the company whose stock has a dividend yield of around 6.9%. Earlier this month, Verizon Communications Inc. (NYSE:VZ) declared a dividend of $0.0665 per share, in-line with the previous. Verizon has been raising its dividend every year since 2007 the latest being a 1.9% increase declared in June. Due to its steady dividend growth, low volatility and solid financials, Verizon communications Inc. (NYSE:VZ) is one of the best widow and orphan stocks to buy. During the third quarter, billionaire Israel Englander‘s Millennium Management boosted its position in Verizon by 4.62 million shares to 4.69 million shares, while billionaire Ken Griffin’s Citadel Investment Group raised its stake by 600% to 4.57 million shares.

5. Devon Energy Corp (NYSE:DVN)

Nr. of Billionaire Investors: 13

Dividend Yield: 7.80%

At the end of September, there were 13 hedge funds run by billionaires bullish on Devon Energy Corp (NYSE:DVN), including Israel Englander’s Millennium Management, Leon Cooperman’s Omega Advisors and David E. Shaw’s D E Shaw. In November, Devon Energy Corp (NYSE:DVN) raised its dividend by 57% to $0.77 per share. In addition, the company reported better-than-expected top and bottom-line figures for the third quarter. During the earnings call, Devon Energy Corp (NYSE:DVN) President and CEO Rick Muncrief mentioned that the dividend growth was caused by the company more than doubling its free cash flow as it managed to keep the reinvestment rates to 50% of the cash flow. During the fourth quarter, Devon Energy Corp (NYSE:DVN) expects to maintain a solid financial position.

“However, we do expect our financial performance in the fourth quarter to be very strong with operating margins set to expand and free cash flow to be quite robust. Overall, the fourth quarter is set up to round out another successful year financially for our company. And while we have certainly faced some challenges this year, we’re on track to deliver one of the best years in our 50-plus year history in terms of returns and free cash flow generation,” Muncrief added.

4. Walgreens Boots Alliance Inc (NASDAQ:WBA)

Nr. of Billionaire Investors: 11

Dividend Yield: 8.30%

Then there’s Walgreens Boots Alliance Inc (NASDAQ:WBA), the only dividend aristocrat in the list of very high yield dividend stocks billionaires are piling into. Walgreens Boots Alliance Inc (NASDAQ:WBA) has been growing its dividend for the past 47 years. According to a recent Bloomberg report, Walgreens Boots Alliance Inc (NASDAQ:WBA) is considering separating its UK-based Boots business and either to sell it or spin it off into a separate public company via an IPO. The company has considered selling Boots in the past but did not receive any competitive offers. Moreover, at the beginning of December, credit rating agency Moody’s Corp (NYSE:MCO) downgraded Walgreens Boots Alliance Inc (NASDAQ:WBA)’s senior unsecured credit rating to Junk status citing concerns about the company’s high debt relative to its income. Among 11 billionaires bullish on Walgreens Boots Alliance Inc (NASDAQ:WBA) as of the end of September, Israel Englander’s Millennium Management boosted its stake 10-fold to 1.61 million shares during the last quarter.

3. Altria Group Inc (NYSE:MO)

Nr. of Billionaire Investors: 13

Dividend Yield: 9.28%

Altria Group Inc (NYSE:MO) is the only dividend king in our list of stocks, having raised its dividend each year for the past 54 years. Earlier this month, the tobacco company declared a dividend of $0.98 per share, in-line with the previous and payable on January 10 for shareholders as of December 21. For the last quarter, Altria Group Inc (NYSE:MO) reported EPS of $1.28 and revenue of $5.28 billion, both lower than expected. Amid the miss, the company also narrowed its full-year outlook to between $4.91 and $4.98 from the previous range of $4.89 to $5.03. During the third quarter, billionaire Cliff Asness’ AQR Capital Management raised its stake in Altria Group Inc (NYSE:MO) by 55% to 4.71 million shares.

2. Hawaiian Electric Industries, Inc. (NYSE:HE)

Nr. of Billionaire Investors: 11

Dividend Yield: 10.80%

Hawaiian Electric Industries, Inc. (NYSE:HE) is a public utility company that supplies with electricity the US state of Hawaii, covering 95% of the states’ households. The company’s stock took a big hit earlier this year following a major fire that affected many parts of Hawaii and caused more than 100 deaths and thousands of people forced to relocate. It is alleged that negligence by Hawaiian Electric Industries, Inc. (NYSE:HE) led to the fire. Maui County has filed a civil suit against Hawaiian Electric Industries, Inc. (NYSE:HE) saying that the company did not properly maintain its power grid and did not power down its equipment despite a red flag warning from the National Weather Service. Nevertheless, amid the drop in stock price, Hawaiian Electric Industries, Inc. (NYSE:HE) saw an increase in popularity among hedge funds, as 23 investors from our database disclosed holding $151.98 million worth of stock as of the end of September, versus 18 funds with $49.70 million in shares a quarter earlier.

1. Petroleo Brasileiro ADR (NYSE:PBR)

Nr. of Billionaire Investors: 11

Dividend Yield: 19.70%

With a dividend yield of 19.70% and a total of 11 billionaires holding the stock, Petroleo Brasileiro ADR (NYSE:PBR) leads our list of very high yield dividend stocks billionaires are piling into. Among the energy company’s top shareholders are billionaires Ken Fisher’s Fisher Asset Management, Israel Englander’s Millennium Management, and Ken Griffin’s Citadel Investment Group, which hold stake worth $261.5 million, $57.60 million, and $41.87 million, respectively. Petroleo Brasileiro ADR (NYSE:PBR) last earnings report came in mixed with EPS of $0.85 beating the consensus estimate of $0.83, but its revenue of $25.27 billion missed the expectations by around $570 million. Nonetheless, Petroleo Brasileiro ADR (NYSE:PBR) recorded a free cash flow of $8.36 billion, down from $10.12 billion a year earlier, but it marked the 34th quarter of positive free cash flow. Going forward, Petrobras expects production to reach 2.8 million barrels of oil equivalent per day this year, raising the guidance from 2.6 MBOE/d. The company also cut its spending outlook to $13 billion from $16 billion.

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