In this article we discuss the 10 best dividend stocks to buy according to Michael Burry.
Michael Burry, the chief of California-based Scion Asset Management, predicted the 2008 mortgage crisis in the United States that led to one of the worst financial downturns in decades, catapulting him to global fame and inspiring a Hollywood film in this regard. Although Burry is famous for value investing, he has also diversified his investment portfolio through bets on high growth stocks like Tesla, Inc. (NASDAQ: TSLA), Alphabet Inc. (NASDAQ: GOOG), and Facebook, Inc. (NASDAQ: FB) in recent years.
In regulatory filings released earlier this month, Burry revealed his short position on Tesla, Inc. (NASDAQ: TSLA) and a bull outlook towards Alphabet Inc. (NASDAQ: GOOG) and Facebook, Inc. (NASDAQ: FB) for the coming months. Tesla, Inc. (NASDAQ: TSLA) is one of the largest holdings (short position) of Scion Asset Management that has seen share price fall in recent days amid supply chain pressures and decreasing demand. Burry has predicted that increased market competition will further hit the stock of the electric vehicle maker.
Besides the bet against Tesla, Inc. (NASDAQ: TSLA), other major revelations from the filing include close to 12% increased activity on Alphabet Inc. (NASDAQ: GOOG) and Facebook, Inc. (NASDAQ: FB) stock, as well as doubling of stakes for Scion in dividend stocks like The Kraft Heinz Company (NASDAQ: KHC). Burry has call options on over 1.1 million The Kraft Heinz Company (NASDAQ: KHC) shares, up from over 580,000 shares last year. The Kraft Heinz Company (NASDAQ: KHC) pays a regular and healthy dividend to shareholders.
Dividend stocks are often a good option as a hedge against market pressures during times of chaos. Amid increased stock volatility around tech-related growth stocks in recent weeks, as well as supply chain pressures that look set to increase inflation, Burry is perhaps shielding his hedge fund from possible setbacks until the crisis period is over. There are several other dividend stocks in his portfolio from the energy, telecommunications, and other sectors. Some of these are discussed below.
It remains to be seen how Burry will perform this year compared to other hedge fund managers as an uncertain post-pandemic economy takes off. 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.
Michael Burry of Scion Asset Management
With this context in mind, here is our list of the 10 best dividend stocks to buy according to Michael Burry.
Best Dividend Stocks to Buy According to Michael Burry
10. Scorpio Tankers Inc. (NYSE: STNG)
Number of Hedge Fund Holders: 20
Dividend Yield:
Scorpio Tankers Inc. (NYSE: STNG) is a Monaco-based tanker shipping company founded in 2009. It is placed tenth on our list of 10 best dividend stocks to buy according to Michael Burry. Scorpio stock has offered investors more than 95% in returns year-to-date. Scion Asset Management holds 190,100 shares in the company worth over $3.5 million. This represents 0.25% of their portfolio. The company primarily engages in the international transportation of refined petroleum products.
Scorpio Tankers Inc. (NYSE: STNG) stock is a good option for income investors as the firm pays a sizable dividend. On May 7, the company declared a quarterly dividend of $0.10 per share, in line with previous.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm Hosking Partners is a leading shareholder in Scorpio Tankers Inc. (NYSE: STNG) with 945,017 shares worth more than $17 million.
Just like Facebook, Inc. (NASDAQ: FB), Alphabet Inc. (NASDAQ: GOOG), and The Kraft Heinz Company (NASDAQ: KHC), Scorpio Tankers Inc. (NYSE: STNG) is one of the best stocks to buy according to Michael Burry.
In its Q2 2020 investor letter, Evermore Global Advisors, an asset management firm, highlighted a few stocks and Scorpio Tankers Inc. (NYSE: STNG) was one of them. Here is what the fund said:
“Scorpio Tankers (STNG US), one of the world’s largest product tanker operators, was the largest detractor to Fund performance during the second quarter. COVID-19 has caused significant demand destruction in oil and other refined oil products which resulted in contango for diesel, jet fuel and gasoline forward prices that made floating storage an attractive option for traders and refiners. We saw the positive impact on spot rates at the end of March and April, which pushed rates higher to unprecedented levels.
Starting in late April, Saudi Arabia, Russia and OPEC+ eventually agreed to cut oil production which led to the contango trade to dissipate, which negatively impacted spot rates and STNG’s stock price. While current rates are no longer at record high levels, we believe STNG secured attractive rates during the second quarter and we expect the company to generate significant cash flows, a view that has been dismissed by the broader market. In addition, STNG has reached an agreement with scrubber manufacturers to delay the purchase and installation of 19 scrubbers until at least 2021 in order to take advantage of the current environment.”
9. CVS Health Corporation (NYSE: CVS)
Number of Hedge Fund Holders: 62
Dividend Yield: 2.29%
CVS Health Corporation (NYSE: CVS) is a Rhode Island-based healthcare firm founded in 1963. It is ranked ninth on our list of 10 best dividend stocks to buy according to Michael Burry. The company stock has offered investors returns exceeding 29% over the course of the past twelve months. Scion Asset owns 400,000 shares in the health firm worth over $30 million, representing 2.22% of their portfolio. CVS health owns a pharmacy brand and sells insurance products as well.
CVS Health Corporation (NYSE: CVS) posted quarterly results on May 4, reporting earnings per share of $2.04 per share for the first three months of 2021. The EPS beat market predictions by $0.32. The revenue over the period was over $69 billion.
At the end of the first quarter of 2021, 62 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in CVS Health Corporation (NYSE: CVS), up from 56 in the previous quarter worth $961 million.
In its Q1 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and CVS Health Corporation (NYSE: CVS) was one of them. Here is what the fund said:
“We sold our position in CVS Health Corp. to allocate capital to companies with larger margins of safety. During the five years that we owned CVS Health Corp., the company acquired Aetna. At the time, we also owned Aetna, and we believed the combination of the two companies would create additional value. After the acquisition, its business performance has been disappointing. We reevaluated our assumptions and determined its value has not grown.”
8. RPT Realty (NYSE: RPT)
Number of Hedge Fund Holders: 8
Dividend Yield: 2.36%
RPT Realty (NYSE: RPT) is a New York-based real estate investment trust that runs shopping centers. It was founded in 1955 and is placed eighth on our list of 10 best dividend stocks to buy according to Michael Burry. RPT stock has returned more than 109% to investors over the past year. The company owns close to 50 shopping centers across the US and primarily deals in open air ones. Scion Asset holds 600,00 shares in the company worth over $6.8 million, representing 0.5% of their portfolio.
In earnings results for the first three months of 2021, posted on May 5, RPT Realty (NYSE: RPT) reported a revenue of over $50 million, down over 5% compared to the revenue over the same period last year but beating market predictions by $2.27 million.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium Management is a leading shareholder in RPT Realty (NYSE: RPT) with 450,087 shares worth more than $5.1 million.
Just like Facebook, Inc. (NASDAQ: FB), Alphabet Inc. (NASDAQ: GOOG), and The Kraft Heinz Company (NASDAQ: KHC), RPT Realty (NYSE: RPT) is one of the best stocks to buy according to Michael Burry.
7. NetApp, Inc. (NASDAQ: NTAP)
Number of Hedge Fund Holders: 26
Dividend Yield: 2.42%
NetApp, Inc. (NASDAQ: NTAP) is a California-based technology company that provides cloud data and management services. It was founded in 1992 and is ranked seventh on our list of 10 best dividend stocks to buy according to Michael Burry. Scion Asset holds 300,000 shares in the firm worth over 21 million, representing 1.61% of their portfolio. Some of the industries the company serves include energy, financial services, government, high technology, internet, life sciences, healthcare services, and manufacturing, among others.
Although NetApp, Inc. (NASDAQ: NTAP) is a tech-related growth stock, it pays a regular and healthy dividend. In February, the company declared a quarterly dividend of $0.48 per share, in line with previous.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in NetApp, Inc. (NASDAQ: NTAP) with 1 million shares worth more than $75 million.
6. SunCoke Energy, Inc. (NYSE: SXC)
Number of Hedge Fund Holders: 22
Dividend Yield: 3.34%
SunCoke Energy, Inc. (NYSE: SXC) is an Illinois-based raw material processing and handling company. It is placed sixth on our list of 10 best dividend stocks to buy according to Michael Burry. The company deals in steel, coke, electric utility, coal producing, and other manufacturing products. SunCoke stock has offered investors returns exceeding 119% in the past twelve months. Scion Asset Management holds 1.1 million shares in the company worth over $7 million, representing 0.56% of their portfolio.
SunCoke Energy, Inc. (NYSE: SXC) declared earnings per share of $0.20 per share for the first quarter of 2021 on April 28, beating market predictions by $0.10. The revenue over the period was close to $360 million, beating market estimates by over $50 million.
At the end of the first quarter of 2021, 22 hedge funds in the database of Insider Monkey held stakes worth $86 million in SunCoke Energy, Inc. (NYSE: SXC), up from 19 in the preceding quarter worth $65 million.
Just like Facebook, Inc. (NASDAQ: FB), Alphabet Inc. (NASDAQ: GOOG), and The Kraft Heinz Company (NASDAQ: KHC), SunCoke Energy, Inc. (NYSE: SXC) is one of the best stocks to buy according to Michael Burry.
5. Urstadt Biddle Properties Inc. (NYSE: UBP)
Number of hedge fund holders: N/A
Dividend Yield: 3.36%
Urstadt Biddle Properties Inc. (NYSE: UBP) is a Connecticut-based real estate investment trust that deals in shopping centres. It was founded in 1969 and is ranked fifth on our list of 10 best dividend stocks to buy according to Michael Burry. The company stock has offered more than 33% in returns to investors over the past twelve months. Scion Asset owns 52,512 shares in the company worth over $874,000, representing 0.06% of their portfolio. The real estate trust controls over 81 properties in areas around New York.
On March 30, Urstadt Biddle Properties Inc. (NYSE: UBP) declared a quarterly dividend of $0.125 per share, in line with previous. In the fourth quarter of 2020, the company reported a revenue of more than $32 million, down 5% compared to the same period in 2019.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Urstadt Biddle Properties Inc. (NYSE: UBP) with 336,817 shares worth more than $5.6 million.
4. Helmerich & Payne, Inc. (NYSE: HP)
Number of Hedge Fund Holders: 21
Dividend Yield: 3.56%
Helmerich & Payne, Inc. (NYSE: HP) is an Oklahoma-based company that drills oil and gas wells. It was founded in 1920 and is placed fourth on our list of 10 best dividend stocks to buy according to Michael Burry. The company stock has offered investors returns exceeding 38% in the past twelve months. Scion Asset Management holds 200,000 shares in the company worth over $5.3 million, representing 0.39% of their portfolio. The company operates more than 260 lands in North America and tens of international ones.
Helmerich & Payne, Inc. (NYSE: HP) is a solid bet for a dependable income. On April 29, the company declared a quarterly dividend of $0.25 per share, in line with previous. The dividend would be payable to shareholders in early June.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Two Sigma Advisors is a leading shareholder in Helmerich & Payne, Inc. (NYSE: HP) with 1.6 million shares worth more than $43 million.
In its Q1 2020 investor letter, Palm Valley Capital, an asset management firm, highlighted a few stocks and Helmerich & Payne, Inc. (NYSE: HP) was one of them. Here is what the fund said:
“Helmerich & Payne (HP) is the number one land drilling company in the United States. Founded in 1920, Helmerich & Payne has a long history of successfully navigating through the frequent booms and busts of the energy industry. As oil and natural gas prices plummeted during the quarter, Helmerich & Payne’s stock fell sharply and traded below our calculated value of its 331 land rigs. Although we expect results to suffer in the near-term, we believe the company’s balance sheet will allow it to survive the current bust in the energy industry. As of December 31, 2019, the company had $412 million in cash and has no debt maturities until 2025.”
3. The Kraft Heinz Company (NASDAQ: KHC)
Number of Hedge Fund Holders: 33
Dividend Yield: 3.62%
The Kraft Heinz Company (NASDAQ: KHC) is an Illinois-based food company founded in 1869. It is ranked third on our list of 10 best dividend stocks to buy according to Michael Burry. Kraft stock has returned more than 43% to investors over the course of the past twelve months. Scion Asset Management holds more than 1.1 million shares in the food company worth over $46 million, representing close to 3.5% of their portfolio. Some of the famous brands owned by the firm include Kool-Aid, Jell-O, ABC, Master, Golden Circle, and Quero, among others.
The Kraft Heinz Company (NASDAQ: KHC) has paid a regular and healthy dividend for years. On April 29, the firm declared a quarterly dividend of $0.40 per share, in line with previous and payable to shareholders by the end of June.
Out of the hedge funds being tracked by Insider Monkey, Nebraska-based firm Berkshire Hathaway is a leading shareholder in The Kraft Heinz Company (NASDAQ: KHC) with 325 million shares worth more than $13 billion.
Just like Facebook, Inc. (NASDAQ: FB) and Alphabet Inc. (NASDAQ: GOOG), The Kraft Heinz Company (NASDAQ: KHC) is one of the best stocks to buy according to Michael Burry.
In its Q4 2020 investor letter, Berkshire Hathaway, the asset management firm, highlighted a few stocks and The Kraft Heinz Company (NASDAQ: KHC) was one of them. Here is what the fund said:
“We exclude our Kraft Heinz holding — 325,442,152 shares — (In the list of 15 common stock investments that at yearend were our largest in market value) because Berkshire is part of a control group and therefore must account for that investment using the “equity” method. On its balance sheet, Berkshire carries the Kraft Heinz holding at a GAAP figure of $13.3 billion, an amount that represents Berkshire’s share of the audited net worth of Kraft Heinz on December 31, 2020.
Berkshire and its subsidiaries hold investments in certain businesses that are accounted for pursuant to the equity method. Currently, the most significant of these is our investment in the common stock of The Kraft Heinz Company (“Kraft Heinz”). Kraft Heinz is one of the world’s largest manufacturers and marketers of food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee and other grocery products. Berkshire currently owns 325,442,152 shares of Kraft Heinz common stock representing 26.6% of the outstanding shares.
We recorded equity method earnings from our investment in The Kraft Heinz Company (NASDAQ: KHC) of $95 million in 2020, $493 million in 2019 and losses of approximately $2.7 billion in 2018. Equity method earnings (losses) included the effects of goodwill and identifiable intangible asset impairment charges recorded by Kraft Heinz. Our share of such charges was approximately $850 million in 2020, $450 million in 2019 and $3.7 billion in 2018. We received dividends from Kraft Heinz of $521 million in each of 2020 and 2019 and $814 million in 2018, which we recorded as reductions in our carrying value.
Shares of Kraft Heinz common stock are publicly-traded and the fair value of our investment was approximately $11.3 billion at December 31, 2020 and $10.5 billion at December 31, 2019. The carrying value of our investment was approximately $13.3 billion at December 31, 2020 and $13.8 billion at December 31, 2019. As of December 31, 2020, the carrying value of our investment exceeded the fair value based on the quoted market price by $2.0 billion (15% of carrying value). In light of this fact, we evaluated our investment in Kraft Heinz for impairment. We utilize no bright-line tests in such evaluations. Based on the available facts and information regarding the operating results of Kraft Heinz, our ability and intent to hold the investment until recovery, the relative amount of the decline and the length of time that fair value was less than carrying value, we concluded that recognition of an impairment loss in earnings was not required. However, we will continue to monitor this investment and it is possible that an impairment loss will be recorded in earnings in a future period based on changes in facts and circumstances or intentions.”
2. Lumen Technologies, Inc. (NYSE: LUMN)
Number of hedge fund holders: 32
Dividend Yield: 7.07%
Lumen Technologies, Inc. (NYSE: LUMN) is a Louisiana-based telecommunication firm founded in 1968. It is placed second on our list of 10 best dividend stocks to buy according to Michael Burry. Lumen stock has returned more than 46% to investors year-to-date. Scion Asset Management owns 650,000 shares in the telecom firm worth over $8.6 million, representing 0.64% of their portfolio. Lumen serves more than 4.5 million broadband customers across the United States.
In earnings results for the first quarter of 2021, Lumen Technologies, Inc. (NYSE: LUMN) reported earnings per share of $0.44 per share, beating market estimates by $0.03. The revenue over the period was over $5 billion.
At the end of the first quarter of 2021, 32 hedge funds in the database of Insider Monkey held stakes worth $1 billion in Lumen Technologies, Inc. (NYSE: LUMN), up from 29 in the preceding quarter worth $772 million.
In its Q1 2021 investor letter, Longleaf Partners Fund, an asset management firm, highlighted a few stocks and Lumen Technologies, Inc. (NYSE: LUMN) was one of them. Here is what the fund said:
“Lumen (40%, 3.33%), the global fiber company, was the top contributor. While COVID fallout still weighed on fourth quarter results, the company benefitted from positive business mix improvements. Early in the quarter, Lumen appreciated 38% in a few short days amidst the “Game Stop / Reddit” short cover phenomenon. After this shortterm bounce, Lumen’s stock price appreciated more steadily over the last six weeks of the quarter with improved results. Many of last year’s worst-case fears have not materialized and the outlook is improving for the core business. We continue to believe that the company has multiple ways within its control to both grow and realize value per share, and we have a 13D filed to allow us to discuss these options with the company. Lumen’s board, which includes Southeastern-nominated Chairman Mike Glenn from FedEx and Director Hal Jones from Graham Holdings, is doing good work to realize Lumen’s hidden value and return the business to FCF/share growth. Despite its appreciation, the stock trades at less than half of our appraisal.”
1. Golden Ocean Group Limited (NASDAQ: GOGL)
Number of Hedge Fund Holders: 11
Dividend Yield: 10.41%
Golden Ocean Group Limited (NASDAQ: GOGL) is a Bermuda-based dry bulk shipping company founded in 2004. It is ranked first on our list of 10 best dividend stocks to buy according to Michael Burry. The company stock has offered investors returns exceeding 210% in the past year. Scion Asset Management holds 530,000 shares in the company worth over $3.5 million, representing close to 0.26% of their portfolio.
In earnings results for the first quarter of 2021, posted earlier this month, Golden Ocean Group Limited (NASDAQ: GOGL) reported earnings per share of $0.14, beating market estimates by $0.04. The revenue for the first quarter of the year was over $158 million.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Golden Ocean Group Limited (NASDAQ: GOGL) with 3.4 million shares worth more than $23 million.
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Disclosure: None. 10 Best Dividend Stocks to Buy According to Michael Burry is originally published on Insider Monkey.
