In this article we will take a look at the 10 best dividend stocks to buy now according to billionaire Cliff Asness.
Cliff Asness is an American billionaire and hedge fund manager. Asness, whose worth stands at $1.4 billion, oversees AQR Capital Management, a hedge fund that he co-founded with Robert Krail, John Liew, and David Kabiller in 1998.
The hedge fund, whose name is short for Applied Quantitative Research, leans towards factor-based investing. Asness enjoyed great success shortly after co-founding the hedge fund. He earned $37 million in 2003 and $50 million the following year. The hedge fund suffered a great deal due to the quant meltdown in 2007 and the financial crisis the following year. However, it quickly recovered in the years after that, and by 2010, it had $33 billion worth of assets under its management.
AQR’s 13F value in Q4 2020 was $56.407 billion, a slight change from the $59.162 billion market value in the previous quarter. The company added 161 new stocks to its portfolio in the period and increased its stake in 701 stocks that were already part of its portfolio. It sold off its shares in 154 stocks and reduced its stake in 1275 existing stocks.
Its performance in Q4 2020 was up 11.02% and 17.75% in the last four quarters. Its portfolio includes some of the most popular tech stocks. For example, Asness increased his hold in Tesla, Inc. (NASDAQ: TSLA) by 25% in the fourth quarter of 2020, entering 2021 with a $316.27 million stake in the company. Tesla, Inc. (NASDAQ: TSLA) shares have gained 262% over the last 12 months. However, Tesla, Inc. (NASDAQ: TSLA) is down 16% year to date as Elon Musk continue to engage in Twitter wars around Bitcoin and other cryptocurrencies.
Apple Inc. (NASDAQ: AAPL) is the biggest holding of AQR as of the end of the fourth quarter, as the hedge fund reported owning 16,476,321 shares of the company, worth $2.19 billion. Some of the company’s recent announcements included the hiring of Antonio Garcia Martinez. However, Apple Inc. (NASDAQ: AAPL) was quick to part ways with Martinez. Media reports suggest that some Apple Inc. (NASDAQ: AAPL) employees objected to Martinez joining the company citing some of his past writings that they said were “offensive”.
Apple Inc. (NASDAQ: AAPL) continues to be in the news due to its latest app store changes. On the other hand, Cathie Wood’s ARK, which continue to report losses, is selling Apple stock. ARK Fintech Innovation ETF (NYSEARCA:ARKF) recently sold 87,560 shares of Apple (NASDAQ:AAPL). However, the firm still owns 200,387 shares of the company.
Another notable tech stock in AQR portfolio is Facebook, Inc. (NASDAQ: FB). The hedge fund owns a $970 million stake in the company. Facebook, Inc. (NASDAQ: FB) is reportedly testing its Live Audio Rooms, a rival Clubhouse product. The feature will allow users on Facebook, Inc. (NASDAQ: FB) platform to hold group meets in the form of audio conversations.
Cliff Asness of AQR Capital Management
But in this article, we will focus on some of the best dividend stocks owned by Cliff Asness, as of the end of 2020.
Asness is an exception in an industry reeling from losses. 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.
Here are some of the best dividend stocks recommended by Cliff Asness. We use AQR’s 13F holdings for Q4’2020 for this analysis.
Best Dividend Stocks to Buy Now
10. Arbor Realty Trust, Inc. (NYSE: ABR)
Asness’ Stake Value: $267,000
Percentage of Cliff Asness’ 13F Portfolio: 0.001%
Dividend Yield: 7.65%
No. of Hedge Fund Holders: 14
Arbor Realty Trust, Inc. (NYSE: ABR) is one of the top commercial and multi-family mortgages in the U.S. It currently has 1634 units across the country and has garnered more than $92.6 million worth of funding. It recently released its Q1 2021 financials, revealing a net income of $69.5 million or $0.55 per diluted share, compared to the $59.3 million, or $0.54 per share net loss, in Q1 2020.
The company’s earnings distributable to shareholders amounted to $75.1 million, or $0.52 per share, which outperformed the $40.5 million, or $0.31 distributable earnings reported in Q1 2020. The stock ranks 10th in the list of best dividend stocks to buy now according to billionaire Cliff Asness.
Arbor Realty Trust, Inc. (NYSE: ABR) recently announced the issuance of 5.00% senior unsecured notes due 2026 with a $175 million principal amount. The notes will be issued through a private placement.
The company’s Q1 2021 financial report revealed that it generated $29.5 million in total revenue during the quarter. Arbor Realty Trust, Inc. (NYSE: ABR) reported a GAAP net income was $20.4 million, equivalent to $0.15 per share. Its non-GAAP income was $23.3 million, or $0.18 per share.
9. Broadmark Realty Capital Inc. (NYSE: BRMK)
Asness’ Stake Value: $233,000
Percentage of Cliff Asness’ 13F Portfolio: 0.001%
Dividend Yield: 8.02%
No. of Hedge Fund Holders: 10
Broadmark Realty Capital Inc. (NYSE: BRMK) is a company that services, underwrites, and manages a trust loan portfolio, both first deed and short-term. The loans facilitate the construction and development of commercial and residential properties, and the company currently operates as a REIT. The stock ranks 9th in the list of best dividend stocks to buy according to billionaire Cliff Asness.
White Brook Capital, in its Q1 2021 investor letter, mentioned Broadmark Realty Capital Inc. (NYSE: BRMK). Here is what White Brook Capital has to say about Broadmark Realty Capital Inc. in its letter:
“Broadmark Realty, Inc (BRMK), was sold because of competition for capital from new positions and other investments in the portfolio. The company will continue to do fine, but better short and long-term investment opportunities were available.”
8. American Finance Trust, Inc. (NASDAQ: AFIN)
Asness’ Stake Value: $827,000
Percentage of Cliff Asness’ 13F Portfolio: 0.001%
Dividend Yield: 8.81%
No. of Hedge Fund Holders: 8
American Finance Trust, Inc. (NASDAQ: AFIN) is a publicly-traded REIT that manages a diversified portfolio that largely consists of distribution, traditional retail, and service oriented commercial real estate assets.
The company’s recently released Q1 2021 financials revealed that it generated $79.2 million in revenue, representing a 6.2% from its $74.6 million Q4 2020 revenue. Its loss attributable to shareholders during the quarter was $9.4 million, which is slightly more than the $9.2 million loss reported in the previous quarter.
American Finance Trust, Inc. (NASDAQ: AFIN) declared a $0.85 per share dividend on an annualized basis, equivalent to a $0.2125 per share quarterly dividend. The stock ranks 8th in the list of best dividend stocks to buy according to billionaire Cliff Asness.
7. New York Mortgage Trust, Inc. (NASDAQ: NYMT)
Asness’ Stake Value: $249,000
Percentage of Cliff Asness’ 13F Portfolio: 0.001%
Dividend Yield: 9.08%
No. of Hedge Fund Holders: 19
New York Mortgage Trust, Inc. (NASDAQ: NYMT) is a U.S-based company that manages and finances multi-family and single family assets.
Like Facebook, Inc. (NASDAQ: FB), Apple Inc. (NASDAQ: AAPL) and Tesla, Inc. (NASDAQ: TSLA), NYMT is one of the best stocks in AQR’s portfolio.
The company recently disclosed its Q1 2021 financials revealing that its net income attributable to shareholders was $41.9 million while the net income per share was $ 0.11. During the quarter, its net interest income was $30.34 million, while its comprehensive income attributable to shareholders was $44.7 million. It reported a 2.42% net interest margin on its portfolio.
New York Mortgage Trust’s book value per common share at the end of Q1 was $4.71, and it reported a $0.10 per share dividend.
6. Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI)
Asness’ Stake Value: $846,000
Percentage of Cliff Asness’ 13F Portfolio: 0.001%
Dividend Yield: 9.3%
No. of Hedge Fund Holders: 18
Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) is a REIT whose business model involves acquiring, investing in, and managing mortgage loans, especially in the commercial segment.
The company reported its Q1 2021 financials in April, revealing a $0.37 per share net income and a $0.39 non-GAAP distributable earnings per share (common stock). The company announced a $0.35 per share dividend for the first quarter, which is in line with the dividend announced for the previous quarter.
Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) ranks 6th in the list of best dividend stocks to buy according to billionaire Cliff Asness.
Like Facebook, Inc. (NASDAQ: FB), Apple Inc. (NASDAQ: AAPL) and Tesla, Inc. (NASDAQ: TSLA), ARI is one of the best stocks in AQR’s portfolio.
In one of its investor letters, Diamond Hill Capital highlighted a few stocks and Apollo Commercial Real Estate Finance Inc. (NYSE:ARI) is one of them. Here is what Diamond Hill Capital said:
“Shares of real estate investment trust (REIT) Apollo Commercial Real Estate Finance, Inc. declined along with many other mortgage REITs. While the company isn’t exposed to the margin call issues of other mortgage REITs, its risky loan book, especially in hotels and construction, are particularly at risk in this downturn, which could lead to additional loan losses, reduced book value, and lower dividends. We covered our position after the shares reached our estimate of intrinsic value.”
5. Two Harbors Investment Corp. (NYSE: TWO)
Asness’ Stake Value: $312,000
Percentage of Cliff Asness’ 13F Portfolio: 0.001%
Dividend Yield: 9.65%
No. of Hedge Fund Holders: 18
Two Harbors Investment Corp. (NYSE: TWO) is essentially a real estate investment trust (REIT) that manages and finances mortgage-backed residential securities (RMBS), mortgage servicing rights, and non-agency securities, among other financial assets in the U.S. The stock ranks 5th in the list of best dividend stocks to buy now based on Cliff Asness’ 13F portfolio.
Two Harbors Investment operates as a REIT for reasons related to Federal income tax. REITs are required by law to distribute 90% or more of their taxable income to shareholders. The company recently announced its Q1 2021 financials, revealing that its book value at the end of the quarter ended March 31 was $7.29 per share. The quarterly return on that book value was (2.2)%.
The company’s core earnings were $45.8 million or $0.17 per weighted share (common stock). Its comprehensive income was $(48.5) million, representing a 9.3% annualized return on equity. Two Harbors declared its Q1 2021 dividend at $0.17 per share. Some of the key developments in Q1 include the issuance of 5-year convertible senior notes due 2026, whose principal amount was $287.5 million. It bought back and retired convertible senior notes due 2022, whose principal amount was $143.7 million. Two Harbors Investment Corp. (NYSE: TWO) finalized the redemption of $200 million Series E, and $75 million Series D preferred shares.
4. PennyMac Mortgage Investment Trust (NYSE: PMT)
Asness’ Stake Value: $819,000
Percentage of Cliff Asness’ 13F Portfolio: 0.001%
Dividend Yield: 9.71%
No. of Hedge Fund Holders: 15
PennyMac Mortgage Investment Trust (NYSE: PMT) is a finance company that specifically invests in mortgage assets in the U.S. The company released its Q1 2021 financials on May 6, revealing that it generated $65.4 million in net income attributable to common stock shareholders. The net revenue figure for the recent quarter was significantly lower than the $76.6 million net revenue that the company achieved in the previous quarter.
PennyMac Mortgage Investment Trust recently announced the pricing and upsizing of a private offer of its Exchangeable Senior Notes due 2026, whose principal amount is $300 million. The company plans to use the net proceeds from the private notes offering for general corporate purposes such as funding its investment and production activities, as well as those of its subsidiaries.
PennyMac Mortgage Investment Trust (NYSE: PMT) recently announced a quarterly dividend of $0.47 per share, which aligns with the previous dividend.
3. Fanhua Inc. (NASDAQ: FANH)
Asness’ Stake Value: $890,000
Percentage of Cliff Asness’ 13F Portfolio: 0.001%
Dividend Yield: 9.73%
No. of Hedge Fund Holders: 8
Fanhua Inc. (NASDAQ: FANH) is an insurance company that sells insurance products in the Chinese market. The company revealed in its Q1 2021 report that it had 4,730 claims in the period, representing a 61% year-over-year increase. The total cost of the insurance claims was 142,168,300 yuan, which represents a 50% year-over-year increase. Illness and death benefits, medical payments, and major illness benefits were the three top categories. FANH ranks 3rd in the list of best dividend stocks to buy now according to Cliff Asness.
The company declared a quarterly dividend of $0.25 per share in March 2021.
2. Chimera Investment Corporation (NYSE: CIM)
Asness’ Stake Value: $1,053,000
Percentage of Cliff Asness’ 13F Portfolio: 0.001%
Dividend Yield: 9.8%
No. of Hedge Fund Holders: 16
Chimera Investment Corporation (NYSE: CIM) is a U.S-based real investment Trust (REIT). The company recently announced its Q1 2021 financials, revealing that its net income for the three months ended March 31 was $139 million, or $0.54 per share. Its core earnings for the same period amounted to $87 million, or $0.36 per share. The stock ranks 2nd in the list of best dividend stocks to buy now based on AQR’s 13F portfolio.
Chimera Investment Corporation (NYSE: CIM) board of directors declared a quarterly cash dividend of $0.33 per share (common stock) in Q2 2021. The dividend payout is scheduled to take place on July 30.
1. Nordic American Tankers Limited (NYSE: NAT)
Asness’ Stake Value: $68,000
Percentage of Cliff Asness’ 13F Portfolio: 0.001%
Dividend Yield: 11.9%
No. of Hedge Fund Holders: 5
Nordic American Tankers Limited (NYSE: NAT) is a company that ferries oil through chartered or acquired double-hull tankers. The company recently revealed that Alexander Hansson, the son of NAT CEO, acquired 40K shares of the company, priced at $3.16.
Nordic American Tankers Limited (NYSE: NAT) released favorable earnings for Q4 and full-year 2020. Its full-year net income was $50 million, with earnings per share of $0.34. In comparison, the company reported a $10 million net loss in the previous year and a -$0.07 EPS. The stock ranks 1st in the list of best dividend stocks to buy now according to billionaire Cliff Asness.
You can also take a peek at 10 Extreme Dividend Stocks with Huge Upside and 10 Blue Chip Dividend Stocks Hedge Funds Are Buying.
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Disclosure: None. 10 Best Dividend Stocks to Buy Now According to Billionaire Cliff Asness is originally published on Insider Monkey.
