In this article we present the list of 10 Best Dividend Stocks To Buy According To Billionaire Ken Fisher.
Ken Fisher is the billionaire Founder, Executive Chairman, Co-Chief Investment Officer, and former CEO of Fisher Investments, which manages over $120 billion in assets as of the end of September. The growing investment advisor has hired more than 1,000 employees in the past year and recently finished construction of a new building at its headquarters in Washington state.
Fisher Asset Management (as the firm is called on its SEC filings) has achieved remarkable growth due to its consistent and market-beating results over the years. A Forbes analysis in 2015 found that the firm beat the market by an impressive average of 4.2 percentage points per year on average over the previous 18 years. Our own calculations of Fisher Asset Management’s long positions in companies with market caps of at least $1 billion revealed similar results, with those picks beating the market in 2015, 2016, and 2017, as well as through the first nine months of 2018.
We are interested in Ken Fisher’s dividend stock picks precisely because the billionaire money manager isn’t actually a big fan of investing in stocks for the sake of their dividend yields. In Fisher’s “The Little Book of Market Myths“, he makes the point that high-dividend stocks don’t have better volatility or return characteristics than other stocks, and that if your sole motivation for purchasing a stock is its dividend, you could be in for a rude awakening, as that dividend could be cut or axed altogether, a fate that has befallen several notable dividend stocks in 2020.
Ken Fisher of Fisher Asset Management
Instead, Fisher recommends building a diversified portfolio that is focused on long-term returns and then instituting a form of “homegrown dividends” by selling a small portion of shares for cash as needed or desired. Given that philosophy, we can trust that Ken Fisher’s favorite dividend stocks are great investments for many more reasons than just their yields.
Several of Ken Fisher’s most prominent dividend picks as of Fisher Asset Management’s most recent 13 filing for the reporting period of September 30 come from the metals and mining sector, which he made a big move into during the second quarter of 2018. Energy stocks constitute the bulk of his favorite high-dividend stock picks, while a lone healthcare stock also cracks the top 10. Each of the following ten stocks boasts an annual dividend yield of at least 4%.
While Ken Fisher’s reputation remains intact, the same can’t be said of the hedge fund industry as a whole, as 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 56 percentage points since March 2017 (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 34% through August 17. 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 enewsletter below to receive our stories in your inbox.
Without further ado, let’s begin our countdown of the 10 Best Dividend Stocks To Buy According To Billionaire Ken Fisher.
10. ConocoPhillips (NYSE:COP)
The first high-dividend stock to make the cut is ConocoPhillips (NYSE:COP), which Fisher owns 4.92 million shares of as of September 30 and which Fisher Asset Management has held since at least 2001. Other hedge funds haven’t expressed the same confidence in COP shares recently, as a net total of 26 hedge funds tracked by Insider Monkey dumped the stock between Q3 2019 and Q2 2020, one of the greatest exoduses from any stock during that time.
Given that its shares have cratered by 46% in 2020 and following a 37.7% hike to its dividend in the last year, ConocoPhillips has become a far more compelling dividend stock, with a yield that now tops 4.8%. And because the company has traditionally committed only a small amount of its free cash flow to dividend payments, it’s well positioned to weather the pandemic with its enhanced dividend still intact, having made concessions in other spending areas, like share buybacks, to see it through this period.
9. Exxon Mobil Corp (NYSE:XOM)
Exxon Mobil Corp (NYSE:XOM) is a longtime holding of Fisher Asset Management and the firm added another 177,390 XOM shares to its position in Q3, lifting it to 7.35 million shares. 53 of the hedge funds tracked by Insider Monkey were XOM shareholders at the end of Q2, an 18% decline from the end of Q1.
Exxon Mobil hasn’t raised its dividend in 2020, ending a run of 18 consecutive years, but the oil giant was at least able to avoid slashing it like Royal Dutch Shell, BP, and several other oil companies. Exxon has had to massively raise its debt levels in 2020 but nonetheless maintains a reasonable debt-to-equity ratio of about 0.39 and management is confident that it will be able to make its dividend payments throughout the next year. With a promising vaccine looming, which would be a boon for oil prices and XOM’s profitability, the dividend looks safe over the long term.
8. Royal Dutch Shell plc (NYSE:RDS)
Fisher Asset Management has owned Royal Dutch Shell plc (NYSE:RDS) shares since 2005, but slashed its position by 27% in Q3, a quarter after the oil major shocked the investment world by cutting its dividend for the first time since World War II. Fisher still owned 10.99 million shares on September 30 valued at over $276 million.
Even after cutting its dividend by 66% in April, the stock was still yielding over 4% and would’ve qualified for inclusion on this list, partly due to the stock price likewise tanking during the early months of the pandemic. RDS shareholders received even better news in October though, when strong quarterly results allowed RDS to boost its dividend by 4% and to commit to 4% annual increases going forward.
7. BHP Group PLC (NYSE:BBL)
Fisher Asset Management owned 6.66 million BHP Group PLC (NYSE:BBL) shares on September 30 and has owned the stock since its Q2 2018 mining sector buying spree. Other hedge funds tracked by Insider Monkey have been equally bullish on BBL since mid-2018, as evidenced by the 57% jump in ownership of the stock amongst that group of select funds.
BHP Group PLC’s semi-annual dividend payments currently yield just over 5% and have been raised over each of the last three years following a large cut in 2016. BBL has a 1 percentage point greater yield at present than sister stock BHP Group Ltd (NYSE:BHP), in addition to boasting slightly lower P/E and P/B ratios.
6. Chevron Corporation (NYSE:CVX)
Closing out the first-half of the list is Chevron Corporation (NYSE:CVX), which Fisher Asset Management owned 5.43 million shares of on September 30. The advisor has been a long-term shareholder of Chevron, dating all the way back to at least 1999 and its oldest 13F filing available through the SEC’s website. Chevron also ranked as one of the 10 Best High Dividend Stocks To Buy Now, being owned by 50 of the hedge funds tracked by Insider Monkey as of June 30.
Chevron’s quarterly dividend payments currently yield just over 6% and have been getting raised at an accelerating rate over the past three years in addition to having been hiked for 33 consecutive years. While Chevron has endured a difficult 2020 that has seen revenue and free cash flow sink, CEO Michael Wirth was adamant in March that CVX would withstand the pandemic with its dividend intact, telling CNN Business that the dividend was at the top of the company’s list of financial priorities, stating that shareholders depend on it.
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- BHP Group Ltd (NYSE:BHP)
In addition to BHL, Fisher Asset also owns a large stake in BHP Group Ltd (NYSE:BHP) consisting of 7.66 million shares on September 30. BHP is one of several mining companies that the firm bought during the second quarter of 2018 and has held on to it since, even as other hedge funds have been bailing on BHP in 2020, BHP ownership being down 33% among the funds tracked by Insider Monkey.
BHP’s semi-annual dividends have been greatly increased since 2016, when the company was forced to slash its dividend for the first time in 15 years following a huge decline in profit. BHP shares currently have a dividend yield of just over 4%, but with the company’s profit sliding over the past few years and its dividend payout ratio pushing above 0.9, it may not be able to sustain its current dividend for much longer.
- Vale SA (NYSE:VALE)
Over 40.14 million shares of Vale SA (NYSE:VALE) were held in the 13F portfolio of Fisher Asset Management on September 30, valued at over $424 million. Fisher has owned shares of the Brazilian mining company since late 2017, holding on to the stock even after Vale suspended its dividend payments in January 2019 following the Brumadinho dam disaster.
Vale announced in July that it would resume its semiannual dividend payments following a surge in iron ore prices that lead to nearly $1 billion of net income in Q2, a greater than four-fold increase compared to Q1. Vale’s most recent dividend payment of $0.427 on October 7 topped expectations and implies an annual yield of over 8%. The company has stated that it will make its next dividend payment in March 2021.
- TOTAL S.A. (NYSE:TOT)
Fisher Asset Management slashed its TOTAL S.A. (NYSE:TOT) holding by 21% during Q3, selling off over 4.45 million shares. It nonetheless maintained a large position of over 16.16 million shares of the energy company, which pays out a quarterly dividend that currently yields 7.85% annually. Hedge funds jumped back into TOT during Q2, with a 58% surge in ownership of the stock among the funds tracked by Insider Monkey.
While energy companies’ profitability has been dinged during the pandemic, Total CEO Patrick Pouyanne stated in July that TOT’s dividend is sustainable even with Brent trading as low as $40 per barrel; it’s currently close to $43. That said, don’t expect much dividend growth over the long term.
- GlaxoSmithKline plc (NYSE:GSK)
Fisher Asset Management owned 16.22 million shares of GlaxoSmithKline plc (NYSE:GSK) at the end of Q3, valued at over $610 million on September 30. The firm has been a longtime shareholder of the stock, dating all the way back to the first quarter of 2000.
GSK pays out one of the best dividends in the healthcare industry, allowing high-dividend investors to add some diversity to their portfolios. The stock currently yields 5.27% and looks very sustainable going forward. GSK’s dividend payments have not experienced much growth over the past five years though, so investors shouldn’t expect ongoing hikes.
While GSK has a strong dividend, Sio Capital’s Michael Castor said the company’s drug pipeline is far less impressive during an April interview with Insider Monkey’s research director Inan Dogan, particularly in light of its massive R&D budget.
- Rio Tinto Group (NYSE:RIO)
Billionaire Ken Fisher’s largest position in a high-yield dividend stock goes to Rio Tinto Group (NYSE:RIO), a mining company still looking for a new leader after former CEO Jean-Sebastien Jacques was ousted earlier this year following a shareholder revolt. Fisher Asset Management owns 11.79 million shares of RIO as of September 30 valued at over $712 million.
Rio Tinto’s semi-annual dividend will be paid out next in April 2021 and currently provides a yield of 6.18%. Rio Tinto has one of the strongest balance sheets in its industry, which has allowed it to raise its dividend payments by an average of 29% annually over the past three years.
If you want to check out the latest and greatest stock picks from billionaire investor Ken Fisher, don’t miss out on the Top 10 New Stocks Billionaire Ken Fisher Just Bought.
. Disclosure: None. 10 Best Dividend Stocks To Buy According To Billionaire Ken Fisher is originally published at Insider Monkey.
