5 Ultra High Dividend Stocks Hedge Funds Are Piling On

In Seagate Technology PLC (NASDAQ:STX), the number of funds long the stock advances by six to 38 during the first three months of 2017, while the total value of their holdings appreciated to $1.34 billion from $1.12 billion and represented nearly 10% of its outstanding stock. Among the investors bullish on Seagate Technology PLC (NASDAQ:STX) is billionaire Jeffrey Ubben‘s ValueAct Capital, which held 9.54 million shares at the end of March. Seagate Technology pays a dividend of $0.63 per share, which gives its stock a yield of almost 6%.

Now, with REITs and MLPs, it’s clear why they have high yields, but when it comes to normal companies (like Seagate and the aforementioned Windstream Holdings), a high dividend can be a warning sign that the company is trying to retain investors through dividends, while its business is facing challenges. Even though Seagate Technology PLC (NASDAQ:STX) managed to beat bottom-line estimates in its last several earnings reports, investors are worried that the company’s market position will weaken once Solid State Drives (SSD) overtake the more traditional Hard Disk Drives (HDD) once the price for the former overtakes the latter’s. In this way, Seagate has to push harder to gain more share in the SSD market instead of being happy with its leading position in the HDD market. In turn, this will require more investment, which could make the dividend unsustainable in the long-run. Nevertheless, Seagate Technology PLC (NASDAQ:STX)’s management currently seems to be committed to returning cash to shareholders through buybacks and dividends. In addition, it has been reducing costs and has decent free cash flow, but additional investments will probably require a reduction in the distributed capital.

Finally, we have Park Hotels & Resorts Inc (NYSE:PK), in which 34 funds tracked by us held shares at the end of March, compared to just eight funds a quarter earlier. Additionally, the aggregate value of their holdings surged to $752.20 million from $16.99 million. The significant increase in the number of long investors can be explained by the fact that the company only started trading at the end of December, after having been spun-off from Hilton Worldwide Holdings Inc (NYSE:HLT). Soon after the spin-off, Park Hotels & Resorts Inc (NYSE:PK) declared a dividend of $0.43, which gives its stock a yield of 6.30%. The company’s stock has lost around 8% so far this year, but looking at its dividend yield alone, it seems attractive, as the yield is one of the highest among hospitality REITs. By comparison, Pebblebrook Hotel Trust (NYSE:PEB) has a yield of 4.70%, while Ashford Hospitality Trust, Inc. (NYSE:AHT)’s dividend yield is only slightly higher at 7.20%. Among the investors that reported new positions in Park Hotels & Resorts Inc (NYSE:PK) as of the end of March were David S. Och’s OZ Management and Steve Cohen‘s Point72 Asset Management, which disclosed ownership of 4.96 million shares and 4.62 million shares, respectively, in their latest 13F filings.

Disclosure: None