In this article we discuss the 5 high yield dividend stocks to buy according to billionaire David Harding. If you want to read our detailed analysis of Cohen’s history and hedge fund performance, go directly to the 10 High Yield Dividend Stocks to Buy According to Billionaire David Harding.
5. Orchid Island Capital, Inc. (NYSE: ORC)
No. of Hedge Fund Holders: 10
Dividend Yield: 14.50%
This finance firm specializes in residential mortgage-backed securities (RMBS), including structured agency RMBS and Agency RMBS. 10 hedge funds owned Orchid Island Capital shares in Q4 2020.
Orchid generated $16.5 million in net income in Q4 2020, equivalent to $0.23 per common share. The company announced a dividend of $0.195 in Q4 2020 and a full year 2020 dividend of $0.79 per share. The impressive dividend payout makes it one of the best high yield dividend stocks on Harding’s portfolio.
Orchid announced a public offering for 8 million common shares, and the sale is expected to generate $44.4 million. The investment firm will use the proceeds from the public offering to cover some general corporate expenses while the rest of the funds will be invested in Agency RMBS.
4. Kosmos Energy Ltd (NYSE: KOS)
No. of Hedge Fund Holders: 10
Dividend Yield: 6.8%
The company deals with the exploration and production of oil and natural gas in regions of Africa that are under-explored. Some of the countries where it operates include Morocco, Cameroon, and Ghana. 10 hedge funds had invested in Kosmos Energy in Q4 2020.
Kosmos Energy has been uniquely positioning itself to meet the growing demand for LNG in developing economies. Kosmos Energy reported a net income of $8 million, equivalent to $0.02 per diluted share in Q4 2020. It had an adjusted net loss of $49 million or $0.12 per diluted share for the same period. The company’s Q4 revenue was $274 million, or $41.84 per BOE.
Goldman Sachs raised the price target for the company’s stock from $2.40 to $4.50 and upgraded the stock from neutral to a ‘’buy.’’ The investment bank justified the upgraded rating by stating that the company’s LNG asset called Tortue is underappreciated as far as its value is concerned. This underappreciation falls in line with David Harding’s criteria for the best high yield dividend stocks. Neil Mehta, an analyst at Goldman Sachs, revealed that the revised update was courtesy of positive expectations of free cash flow in the second half of 2021 and well into 2022. Oil recovery and improving volumes in Ghana highlight Tortue’s attractive nature as a long-term investment.
3. Bed Bath & Beyond Inc. (NASDAQ: BBBY)
No. of Hedge Fund Holders: 33
Dividend Yield: 2.56%
This is a retail company that owns stores under multiple brand names, including Bed Bath & Beyond (BBB), buybuy BABY, Harmon and Harmon Face Values (Harmon), and Christmas Tree Shops (CTS). The brands sell various products, including food, furniture, apparel, home furnishings, baby products, beauty products, and more. 33 hedge funds owned BBB stock in Q4 2020, including D E Shaw, which had more than 6 million shares, making it BBB’s largest hedge fund shareholder. BBY is in our list of best dividend stocks of David Harding because of the consistent dividend hikes offered by the company offered the last several years.
BBB expects its Q1 revenue to grow by more than 40% to around $1.83 billion, which still lower than the consensus estimates of $1.92 billion. The company expects its full-year 2021 revenue to range between $8.0 billion to $8.2 billion. CFO recently acquired 20,000 common shares of BBB, increasing its stake in the company to 300,000 shares. Demand for products in its industrial segment and the anticipated revenue growth are among the reasons why BBB is among the best high yield dividend stocks according to David Harding.
2. Park Hotels & Resorts Inc. (NYSE: PK)
No. of Hedge Fund Holders: 13
Dividend Yield: 8.27%
It is one of the top lodging REITs, and it boasts of an extensive portfolio of resorts and hotels. The portfolio includes 60 premium resorts and hotels with more than 33,000 rooms in the city center. Of 13 hedge funds holding this stock includes Citadel Investment Group, which had more than 1.6 million shares in Park hotels & resorts Inc.
Citadel Investment Group had more than 1.6 million shares of the company, making it the biggest hedge fund investor in this company.
The hotel industry has been gradually recovering from the pandemic impact. However, the company might not be as solvent as expected, a situation that could turn problematic in the future. The recovery will be slow considering the pandemic’s extended presence. Individuals and businesses have therefore been exercising caution by traveling less.
The REIT reported a 96% decline in its Q2 revenue, raising concerns about its financial instability. If the pandemic continues for an extended duration of time, the hotel industry might be severely affected. Many hotels might not be able to restart their operations, and employees will lose their jobs.
This is what Mason Hawkins said about Park Hotels & Resorts:
“Park Hotels and Resorts (-68%, -2.82%), was another top detractor. Park saw its occupancy levels hit unprecedented lows due to travel reduction and conference cancellations as a result of COVID-19. Park responded by closing all or parts of the majority of its owned hotels. We have evaluated the company’s debt (the next maturity is $700 million at the end of 2021) and liquidity (about $1.4 billion) and believe it will survive the crisis. CEO Tom Baltimore purchased shares personally after the stock’s sharp decline but still well above where it trades. The stock was deeply discounted at quarter end, but our appraisal of the value has declined with the loss of cash-flow. As we said above, it is in the third bucket, and we did not add during the quarter. Park trades at an extremely wide discount to both relatively stable replacement cost (it trades at less than 20% of that metric) and a fast moving value, providing a large margin of safety at today’s low price.”
1. Amplify Energy Corp. (NYSE: AMPY)
No. of Hedge Fund Holders: 9
Dividend Yield: 16%
Amplify deals with oil and gas exploration services such as managing exploration properties on behalf of U.S companies that own or operate them. 9 hedge funds owned the company’s stock as per the latest quarter, and Avenue Capital led the pack courtesy of its 2.56 million shares in Amplify Energy.
Amplify’s latest forecasts suggest that its positive cash flow from $60 WTI oil will amount to $25 million in 2021. The company’s positive cash flow might reach $50 million in 2022, with oil prices in their mid-50s, which paints a good picture of why it is in the list of best high yield dividend stocks according to David Harding. Poor fiscal performance from the oil production companies and price volatility in the energy industry have been a drawback for Amplify.
Recovering oil prices provided a huge boost to the company’s stock, as well as the Midstates merger. Amplify has been developing oil reserves for the last 13 years, but it still remains undervalued.
You can also take a peek at Billionaire Ken Fisher’s Top 5 High Dividend Stock Picks and Balaji Srinivasan’s Top 5 Investments, Portfolio and Ideas.
