In this article, we will look at 10 dividend stocks to buy according to billionaire Steve Cohen.
Steve Cohen is an American billionaire and the hedge fund manager of Point72 Asset Management. According to Forbes, as of 2021, Mr. Cohen is the 5th richest hedge fund manager with a net worth of approximately $16 billion, up from $14.5 billion in 2020. As of September 30th, Steve Cohen manages over $22.76 billion in 13F securities through his hedge fund, Point72 Asset Management.
Mr. Cohen was an Economics major at the University of Pennsylvania, from where he graduated in 1978. Mr. Cohen was then recruited as a junior trader at Gruntal & Co where he stayed until 1992. After leaving Gruntal & Co, the billionaire founded SAC Capital with a total investment of $25 million.
The Evolution of Cohen’s Investment Philosophy
Steve Cohen’s investment strategies have evolved over time. The billionaire’s initial approach towards managing equities at SAC Capital was to encourage rapid-fire trading. Mr. Cohen would be trading more than 20 million shares every day, holding onto trading positions for not more than a few days, and sometimes only a few hours.
However, as market and investing trends changed, so did Mr. Cohen’s strategies. The billionaire investor started targeting long-short and fixed income equities.
In 2006, The Wall Street Journal reported that while Mr. Cohen was a rapid-fire trader who never held onto stocks for long, he had started holding trading positions for longer periods of time. Steve A. Cohen’s strategies have almost always worked out since the billionaire made a fortune during his days at SAC. The hedge fund’s returns, from inception till its closing in 2013, were averaged around 25%.
In 2014, Steve A. Cohen founded Point72 Asset Management as a family office. After waiting out the two-year ban, the firm opened itself for outside money in 2018. In 2020 the Point72 Asset Management reported a 16% gain, making it the fund’s best year since its reopening. However, in January of 2021, Mr. Cohen invested $750 million in Melvin Capital, which was suffering losses as a result of attacks on short bets by retail investors. This move triggered a community of Reddit investors, which cost Point72 Asset Management losses between 10% and 15%.
Among the top holdings of Point72 Asset Management, we have Microsoft Corporation (NASDAQ:MSFT), Visa Inc (NYSE:V), Mastercard Incorporated (NYSE:MA), and International Business Machines Corp. (NYSE:IBM).
However, for the purposes of this list, we will take a look at the 10 dividend stocks on Mr. Cohen’s 13F portfolio that have the highest yields.
Our Methodology
We scoured Point72 Asset Management’s investment portfolio to find the stocks that pay dividends. We narrowed our selection down to stocks that yielded more than 2%.
These stocks were ranked according to Point72 Asset Management’s investment portfolio at the end of the third quarter of 2021.
Dividend Stocks to Buy According to Billionaire Steve Cohen
10. Sibanye Stillwater Limited (NYSE:SBSW)
Stake Value of Point72 Asset Management: $940,000
Percentage of Point72 Asset Management’s 13F Portfolio: 0%
Number of Hedge Fund Holders: 9
Dividend Yield as of December 12: 13.63%
Sibanye Stillwater Limited (NYSE:SBSW) operates as a precious metals mining company in South Africa, the United States, Zimbabwe, Canada, and Argentina. As of December 12th, Sibanye Stillwater Limited has a forward yield of 13.63% and a price-to-earnings ratio of 3.47.
By the end of the third quarter of 2021, Sibanye Stillwater Limited was present in 9 hedge fund portfolios. The total stakes of these hedge funds in the company were over $141.72 million. Mr. Cohen’s stake in Sibanye Stillwater Limited as of 30th September was valued at $940,000.
This October, Deutsche Bank analyst Abhi Agarwal initiated coverage of Sibanye Stillwater Limited and assigned the stock a Buy rating along with a $19 price target.
Here is what Desert Lion Capital has to say about Sibanye Stillwater Limited in its first-quarter 2021 investor letter:
“Sibanye is a South African gold and platinum group metals (“PGM”) producer with mines in South Africa and the U.S. Established in 2012, it has since become one of South Africa’s largest gold producers and the largest PGM producer in the world. Sibanye also operate a PGM recycling facility and own a majority interest in DRDGOLD, a specialist in the recovery of gold and other precious metals from open pit tailings.
The investment thesis incorporates the following logic:
- If central banks globally are going to continue printing money unabated, precious metals prices should rise.
- The drive for cleaner and greener is accelerating. The market for platinum, palladium and rhodium is structurally attractive.
- The company is generally mischaracterized. Ask around, and one will find that most people still refer to Sibanye as “a South African gold miner” with “lots of debt from that Stillwater acquisition.”
- It is not quick and easy to ramp up PGM supply in response to higher demand and prices. Favorable supply-demand characteristics will likely remain favorable for longer.
- Bad capital allocation decisions, corporate excesses, and resultant tarnished reputations from the previous boom period are still fresh in the minds of most mining executives. Neal Froneman has proven himself a disciplined capital allocator. His approach to capital allocation is straightforward: deploy capital at expected returns that enhances value to shareholders or distribute it via dividends and buybacks.
- The company is debt-free and generating heaps of cash.
- The valuation is cheap. At current metal prices, Sibanye is trading at about 5 times after-tax cash profits.
Sibanye is effectively a call option on a potential commodity super cycle. In the meantime, the value of our “option” is unlikely to deteriorate as we are rewarded with healthy dividend flows.”
9. Takeda Pharmaceutical Company Limited (NYSE:TAK)
Stake Value of Point72 Asset Management: $21,292,000
Percentage of Point72 Asset Management’s 13F Portfolio: 0.15%
Number of Hedge Fund Holders: 15
Dividend Yield as of December 12: 5.94%
Takeda Pharmaceutical Company Limited (NYSE:TAK) engages in the research, development, manufacturing, marketing, and out-licensing of pharmaceutical products worldwide.
This October, Jefferies analyst Stephen Barker upgraded Takeda Pharmaceutical Company Limited to Buy from Hold and reiterated a $35 price target.
By the end of the third quarter of 2021, Insider Monkey identified Takeda Pharmaceutical Company Limited on 15 investment portfolios. The total stakes that these hedge funds had in the company exceeded $443.62 million.
Like Microsoft Corporation, Visa Inc, Mastercard Incorporated, and International Business Machines Corp., Mr. Cohen has significant stakes in Takeda Pharmaceutical Company Limited.
8. Enbridge Inc (NYSE:ENB)
Stake Value of Point72 Asset Management: $28,233,000
Percentage of Point72 Asset Management’s 13F Portfolio: 0.12%
Number of Hedge Fund Holders: 24
Dividend Yield as of December 12: 7.20%
Enbridge Inc (NYSE:ENB) operates as an energy infrastructure company. The company operates through five segments: Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution and Storage, Renewable Power Generation, and Energy Services. This December, the company declared its 27th consecutive annual common share dividend raise and upped the dividend by 3%. The dividend will be effective as of March 1st, 2022. The stock’s forward yield as of December 12 stands at 7.20%.
On November 8th, RBC Capital analyst Robert Kwan raised his price target on Enbridge Inc to CA $61 from CA $57 and reiterated an Outperform rating on the shares.
ClearBridge Investments, an investment management firm, published its “Global Infrastructure Value Strategy” second quarter 2021 investor letter, in which it mentioned Enbridge Inc. Here’s what the firm had to say:
“On a regional basis, the U.S. and Canada was the top contributor to quarterly performance, of which Canadian energy infrastructure company Enbridge was one of the lead performers. Enbridge owns and operates one of the largest oil and gas pipeline networks in North America. The company also owns regulated gas distribution utilities in Ontario, Canada. Enbridge’s Line 3 Replacement Project received a favorable court ruling regarding the adequacy of its Environmental Impact Statement. This significantly lowers the execution risk for the project and enables the company to place the project into service later in the year.”
7. AT&T Inc. (NYSE:T)
Stake Value of Point72 Asset Management: $30,317,000
Percentage of Point72 Asset Management’s 13F Portfolio: 0.13%
Number of Hedge Fund Holders: 66
Dividend Yield as of December 12: 9.11%
AT&T Inc. provides telecommunication, media, and technology services worldwide. The company operates through Communications, WarnerMedia, and Latin America segments.
For the quarter ending this September, AT&T Inc. turned over revenues of $39.92 billion and beat on EPS. The company reported an EPS of $0.87, beating expert estimates by $0.08.
AT&T Inc. was found to be a part of 66 hedge fund portfolios, including Point72 Asset Management, by the end of the third quarter of 2021. The total stake value of these funds in the company was in excess of $3.21 billion, up from $2.89 billion in the previous quarter with 68 identified positions.
AT&T Inc. is one of the top dividend stocks to buy according to billionaire Steve Cohen. Other popular stocks among the billionaire’s top picks include Microsoft Corporation, Visa Inc, Mastercard Incorporated, and International Business Machines Corp..
6. Plains GP Holdings LP (NYSE:PAGP)
Stake Value of Point72 Asset Management: $17,974,000
Percentage of Point72 Asset Management’s 13F Portfolio: 0.07%
Number of Hedge Fund Holders: 12
Dividend Yield as of December 12: 7.24%
Plains GP Holdings LP (NYSE:PAGP) owns and operates midstream energy infrastructure in the United States and Canada. It operates through three segments: Transportation, Facilities, and Supply and Logistics. On November 29th, Barclays analyst Christine Cho reinstated coverage of Plains GP Holdings LP with an Equal Weight rating.
There were 12 hedge funds in Insider Monkey’s database that held stakes in Plains GP Holdings LP by the end of the third quarter of 2021. These stakes exceeded $73.98 million. Point72 Asset Management’s stake in Plains GP Holdings LP by the end of September 2021 was valued at $17.97 million.
5. Star Bulk Carriers Corp. (NASDAQ:SBLK)
Stake Value of Point72 Asset Management: $7,940,000
Percentage of Point72 Asset Management’s 13F Portfolio: 0.03%
Number of Hedge Fund Holders: 21
Dividend Yield as of December 12: 23.71%
Star Bulk Carriers Corp. (NASDAQ:SBLK) operates as a shipping company that engages in marine transportation of dry bulk cargoes worldwide. The company’s vessels transport a range of major bulks, including iron ores, coal, and grains, as well as minor bulks, such as bauxite, fertilizers, and steel products.
This November, the company announced that its board of directors has declared a quarterly cash dividend of $1.25 per share on the company’s common stock, up 78.6% from the previous dividend of $0.70 per share. The dividend will be payable by December 22nd, to shareholders of record on December 10th.
On 13th September 2021, H.C. Wainwright analyst Magnus Fyhr initiated coverage of Star Bulk Carriers Corp. with a Buy rating and $35 price target.
Massif Capital mentioned Star Bulk Carriers Corp. in its third-quarter 2021 investor letter. Here’s what the investment management firm had to say:
“We initiated one long position, one short position and exited one position during the third quarter. Our new long position was in Star Bulk Carriers (SBLK), a pure-play dry bulk operator with roughly 120 controlled vessels and 14 million tons of combined cargo capacity globally.
SBLK has one of the better management teams in the maritime shipping industry and the lowest cost structure among all dry bulk names. After announcing their new dividend policy in May, SBLK now has one of the best payout structures in shipping. The firm has paid out $0.3 and $0.7 per share in dividends for the first and second quarters of 2021. SBLK will most likely announce a dividend for the third quarter somewhere in the $1.15-$1.25 per
share range, depending on movement in net working capital.We believe the best way to look at this business is through cash generation potential and how much is returned to investors. The current equity valuation does not reflect current rates for shipping (earnings), partly because of the velocity of the move in rates and because shipping cycles turn, and it’s not clear whether this is a local top or the early innings of a multi-year cycle. Our belief is the latter. Part of our catalyst is the market re-rating the stock higher once the length of the increased earnings power becomes understood. It is a relatively strong catalyst in the sense that with a strong dividend policy, we can be patient for the market to underwrite this story as the cash is either returned to us via a high dividend yield if the market is either slow or chooses not to join our side of the trade.
Our estimates suggest a time-charter equivalent rate (net profit or loss of operating a vessel daily) of at least $30,000 for SBLK in Q4, with the firm earning a potential annual average of $26,000. Our base case is that this is a strong floor going into next year, with little need to articulate much more upside. If rates hold, which we expect them to do, we could see a 20+% annual dividend year next year for SBLK. If the market priced the equity such that the dividend yield was 8%, that implies a $62 stock. Today our base case target for the firm is $37 per share. This is likely conservative as we know that third-quarter rates are higher than the second quarter, and third-quarter dividends will most likely reflect that. We are cautious about diving too deep into the sensitivities to the upside with this position as we are arriving at some pretty remunerative torque using current contracted values and seemingly conservative forecasts…”
4. Equitrans Midstream Corporation (NYSE:ETRN)
Stake Value of Point72 Asset Management: $31,474,000
Percentage of Point72 Asset Management’s 13F Portfolio: 0.13%
Number of Hedge Fund Holders: 25
Dividend Yield as of December 12: 6.10%
Equitrans Midstream Corporation (NYSE:ETRN) owns, operates, acquires, and develops natural gas gathering, transmission and storage, and water services assets in the Appalachian Basin. It operates through three segments: Gathering System, Transmission and Storage System, and Water Service System.
Insider Monkey data showed 25 hedge fund positions, including Point72 Asset Management, for Equitrans Midstream Corporation by the end of the third quarter of 2021.
On 28th September, BofA analyst Chase Mulvehill reinstated coverage of Equitrans Midstream Corporation and gave the stock a Neutral rating and $11 price target.
3. Altria Group Inc (NYSE:MO)
Stake Value of Point72 Asset Management: $354,000
Percentage of Point72 Asset Management’s 13F Portfolio: 0%
Number of Hedge Fund Holders: 45
Dividend Yield as of December 12: 7.98%
Altria Group Inc (NYSE:MO) manufactures and sells cigarettes, oral tobacco products, and wine in the United States. On December 8th, Altria Group Inc announced that its board of directors declared a quarterly cash dividend on the company’s common stock of $0.90 per share. The stock has a forward yield of 7.98%, and the common stock cash dividend is payable on 10th January 2022, to shareholders of record on December 23rd, 2021.
By the end of the third quarter of 2021, there were 45 hedge funds in Insider Monkey’s database that held stakes in Altria Group Inc that were in excess of $829.78 million.
Broyhill Asset Management, an investment management firm, mentioned Altria Group Inc in its second-quarter 2021 investor letter. Here’s what they had to say:
“Altria (MO) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 20%. We shared our thoughts on these regulations during the quarter, which are available here.
MO Valuation. MO is up ~ 18% YTD (even accounting for the recent sell-off). We expect MO to generate close to $5 in annual FCF per share over the next few years, putting the stock at ~ 10x, which is less than half the market’s multiple today. Over the last decade, shares have traded at an average multiple of 15x and within a range of ~ 10x – 20x (+/-1 standard deviation). The stock yields 7.2% at the current price, close to a 6% premium to treasuries. Historically, shares have traded closer to a 3% premium to the 10Y, which would imply a ~ $75 share price.”
2. LyondellBasell Industries NV (NYSE:LYB)
Stake Value of Point72 Asset Management: $12,773,000
Percentage of Point72 Asset Management’s 13F Portfolio: 0.05
Number of Hedge Fund Holders: 39
Dividend Yield as of December 12: 5.03%
LyondellBasell Industries NV (NYSE:LYB) is a chemical company with operations in the United States, Germany, Mexico, Italy, Poland, France, Japan, China, the Netherlands, and internationally.
This October Christopher Parkinson, an analyst at Mizuho, initiated coverage of LyondellBasell Industries NV with a Buy rating and gave the stock a $125 price target.
Insider Monkey was able to spot LyondellBasell Industries NV among 39 hedge fund portfolios by the end of the third quarter of 2021. The total value of these hedge funds’ stakes was $676.59 million.
1. Rio Tinto Group (NYSE:RIO)
Stake Value of Point72 Asset Management: $3,819,000
Percentage of Point72 Asset Management’s 13F Portfolio: 0.01
Number of Hedge Fund Holders: 20
Dividend Yield as of December 12: 11.73%
Rio Tinto Group (NYSE:RIO) is involved in the exploration, mining, and processing of mineral resources worldwide. The company offers aluminum, copper, diamonds, gold, borates, titanium dioxide, salt, iron ore, and uranium. This November, the company announced its plans on expanding its smelter site in Canada, which will maximize low-carbon aluminum production.
By the end of the third quarter of 2021, 20 hedge funds had stakes in Rio Tinto Group that exceeded $1.33 billion. Mr. Cohen’s stake in the company was valued at $3.81 million, which covers 0.01% of Point72 Asset Management’s 13F portfolio.
On December 9th, Morgan Stanley analyst Alain Gabriel upgraded Rio Tinto Group to Overweight from Equal Weight.
You can also take a look at 10 Best Oil Stocks to Buy Amid Post-COVID Demand Boom and Price Volatility and 15 Best Energy Stocks to Buy Now.
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This article is originally published at Insider Monkey.
