In this article, we presented billionaire George Soros’ top 10 dividend stocks to buy now.
Billionaire investor George Soros is known for his short-term speculations and investments in various asset classes, meaning the Hungarian-American hedge fund manager invests money relatively like gambling. The fund manager likes to follow the direction of financial markets instead of technical indicators.
Unlike Warren Buffett’s strategy of making investments in popular US companies, George Soros’ investment holding company, Soros Fund Management, has a history of making bets on commodity prices, currencies, bonds, stocks, and ETFs. He also likes to pick dividend stocks to enhance the overall returns.
On top, most of his bets are entirely based on macroeconomic analysis. “The objective is to ride the economic trends whose premise is false and step off from it before it is discredited,” Soros said.
His investment strategy is clearly reflecting from the stock picks in the latest quarter as the Soros Fund Management has either eliminated or reduced its positions in banks and financial services companies. The banking and financial sector is likely to face hard times amid low-interest rates and consumers shift towards digital platforms for payment transactions.
George Soros of Soros Fund Management
The Fund has also been investing aggressively in ETFs and dividend-paying stocks. George Soros led fund has invested almost $313 million in Invesco QQQ Trust (NASDAQ: QQQ) in the September quarter, according to the latest 13F filing. QQQ represents the second-largest holding of Soros Fund Management, accounting for 7.67% of the 13F portfolio.
In addition to dividend investments, Soros Fund Management likes to diversify the investment portfolio, with several small positions in large equities and large positions in small equities.
According to the latest quarterly filing, Soros Fund Management has made several changes in its portfolio to align its investments with the pandemic related market trends. The fund has bought 46 news stocks and added to its 18 existing positions while selling 55 stocks. The fund management has also trimmed its stake in 32 stocks during the September quarter. The top ten holdings represent 56% of the overall portfolio.
Although Soros has one the most diversified portfolio, the focus of this article will only be on his biggest investments in dividend stocks. This is because the portfolio manager has invested hefty money in dividend-paying stocks and assets, with the strategy of generating returns through steady share price gains along with dividends.
While George Soros reputation remains intact, the same can’t be said of the hedge fund industry as a whole, as 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 78 percentage points since March 2017 (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 16. 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.
Let’s now begin reviewing the top 10 Dividend Stocks George Soros holds in his portfolio.
10. Maxim Integrated Products, Inc. (NASDAQ: MXIM)
The semiconductor company Maxim Integrated Products (NASDAQ: MXIM) is a newcomer in Soros’ stock portfolio. The hedge fund has bought 294,369 shares of Maxim valued at $19 million, accounting for 0.49% of the portfolio.
Although the shares of the chipmaker soared almost 40% this year, its dividend yield still stands above 3%. The company currently offers a quarterly dividend of $0.48 per share. Its dividends look safe amid double-digit revenue and earnings growth performance.
The company has reported 14% revenue growth in the September quarter while earnings per share of $0.72 topped the consensus estimate by $0.14 per share. The cash flows are also offering a complete cover to dividend payments.
9. LPL Financial Holdings Inc (NASDAQ: LPLA)
The brokerage service provider LPL Financial Holdings (NASDAQ: LPLA) accounts for 0.60% of Soros’ portfolio at the end of the latest quarter. Although the firm dropped its stake in brokerage service provider during the third quarter, it holds 321,547 shares valued at $24 million. Soros first bought LPL Financial Holdings stock in the fourth quarter of 2017.
Soros has been enjoying quarterly dividends along with share price gains through its LPL Financial investments over the years.
The brokerage firm currently offers a quarterly dividend of $0.25 per share, yielding around 1.30%. Also, its shares grew 124% in the past five years, thanks to its earnings growth potential. The company has generated gross profit growth of 41% year over year in the September quarter.
8. Microchip Technology Incorporated (NASDAQ:MCHP)
The billionaire investor George Soros has initiated a position in Microchip Technology (NASDAQ:MCHP) during the September quarter. Soros fund has bought 267,956 shares of a chipmaker that is involved in manufacturing various embedded control applications. The investments account for 0.67% of Soros’ portfolio.
Microchip technology offers a dividend yield above 1%, with a history of 17 straight years of a dividend increase. Its low payout ratio based on the income of 23% as well as strong cash generation potential offers room for big dividend increases in the years ahead.
The chipmaker has generated $1.3 billion in the September quarter revenue while earnings per share came in at $0.56. The company forecasts December quarter revenue in the range of $1.3 billion, with expectations for $1.51 in earnings per share. Shares of Microchip Technology soared 40% so far this year on the back of improving sales and earnings growth trend.
7. NortonLifeLock Inc. (NASDAQ: NLOK)
The cybersecurity software provider NortonLifeLock (NASDAQ: NLOK) is among the dividend stocks Soros fund likes to hold in the portfolio. The hedge fund first initiated a position in the cybersecurity software company during the first quarter this year and it had sold almost half its position during the September quarter. It is currently the 19the biggest stock holding of Soros funds, accounting for 1.18% of the portfolio.
NortonLifeLock is founded in 2018 after Broadcom (NASDAQ: AVGO) bought Symantec’s enterprise security assets for $10.7 billion. The company currently offers a quarterly dividend of $0.125 per share, yielding above 2.50%.
Shares of the cybersecurity firm remained under pressure throughout this year amid pandemic related challenges. However, the company plans to expand its revenue base through acquisition. It recently announced the acquisition of German-based cybersecurity software company Avira in a cash deal.
Its dividends appear safe considering the sustainable growth in revenue and earnings. Its dividend payout ratio also offers room for more dividend increases. The company expects December quarter earnings in the range of $0.38 per share, which is significantly higher than the quarterly dividend per share of $0.125.
6. Otis Worldwide Corporation (NYSE: OTIS)
George Soros has also been showing confidence in the manufacturer of elevators and escalators Otis Worldwide Corporation (NYSE: OTIS). The hedge fund first initiated a position in Otis during the second quarter, but it sold half of the stake during the third quarter to capitalize on share price gains. The firm currently holds 802,547 shares of elevators and escalators manufacturer that was founded in 1853 and is headquartered in Farmington, Connecticut.
Otis Worldwide is among the top dividend stocks due to its strong cash generation potential. Its free cash flow conversion ratio is likely to stand at 135% of net income in the December quarter. The company currently offers a quarterly dividend of $0.20 per share, yielding above 1%.
Otis is a perfect pick for value investors because it offers robust share price growth along with hefty dividends. Its stock price soared almost 40% since the beginning of fiscal 2020, thanks to the substantial improvement in profits. The adjusted diluted earnings per share of elevators and escalators manufacturers rose 25.5% year over year to $0.69 in the latest quarter.
5. Aramark (NYSE: ARMK)
Soros Fund Management had used the dip in Aramark’s share price as a buying opportunity. The fund has first bought Aramark shares during the first quarter and added to its position during the third quarter. The dividend-paying stock currently accounts for 1.30% of the overall portfolio valued at $52.9 million.
The consumer discretionary company currently offers a quarterly dividend of $0.11 per share, yielding above 1.10%. In addition to dividends, investors can benefit from its share price gains. Aramark stock soared almost 25% in the last month alone amid improving future fundamentals. Social distancing policies and locks downs have impacted its financial numbers, but shares regained momentum on coronavirus vaccine discovery.
Moreover, its dividends are safe as cash flows are offering a complete cover to dividend payments. It has generated $146 million in free cash flows in the third quarter compared to dividend payments of $110 million.
4. Activision Blizzard, Inc. (NASDAQ: ATVI)
The video game publisher Activision Blizzard (NASDAQ: ATVI) continues gaining legendary investor George Soros attention as the hedge fund has added 31,066 shares to its existing position during the September quarter, expanding the stake to 2.18% of the overall portfolio. Activision Blizzard was the 11th largest stock holding of Soros Fund Management at the end of the last quarter.
The video game publisher has been rewarding heavily to investors both in the form of dividends and share price gains. It has raised dividends in the past ten straight years and its dividend growth average stood around 13% in the past five years. The shares of video game publishers cruised 51% in the past twelve months alone, thanks to robust growth in video gaming sales and content.
The company’s product releases have substantially enhanced audiences in its Call of Duty and World of Warcraft franchises. Moreover, staying at home policies throughout this year put a new premium on all forms of at-home entertainment.
3. Darden Restaurants, Inc (NYSE: DRI)
Casual dining eatery Darden Restaurants (NYSE: DRI) is among the dividend stocks George Soros likes the most. The firm first created a position in Darden during the second quarter and increased its stake by 15% in the third quarter. Casual dining eatery currently occupies 2.51% of the overall Soros portfolio. The firm currently holds 1 million shares valued above $102 million.
Darden Restaurants is one of the most favorite stocks among dividend investors because of its extensive dividend growth history.
Although the casual dining company has suspended its dividend during the first half of this year due to lockdowns, it has recently reinstated a quarterly dividend on outstanding common stock. Investors have been appreciating Darden’s strategies in challenging times. Its shares are up 31% in the last six months.
Looking ahead, the company plans to open 35-40 net new restaurants in the December quarter despite pandemic related challenges. It now expects December quarter earnings per share in the range of $0.65-$0.75 compared to analysts’ consensus for $0.35 per share.
2. VICI Properties (NYSE: VICI)
The dividend-paying stocks VICI Properties (NYSE: VICI) have been in Soros’ portfolio since the first quarter of 2018. The fund currently holds 5.4 million shares of a real estate firm, accounting for 3.14% of the overall portfolio. It is the eighth largest stock holding of Soros Fund Management valued at $128 million at the end of the latest quarter.
VICI Properties offers a dividend yield of 5.5% and its quarterly dividend stands at $0.33 per share. Its dividends are safe because of robust financial numbers and aggressive growth strategies. The real estate firm reported third-quarter revenue growth of 52% from the past year period while earnings per share of $0.43 grew from $0.35 year over year.
1. D.R. Horton (NYSE: DHI)
The homebuilder D.R. Horton is the most favorite dividend stock of George Soros as the firm has been holding homebuilding stock since the first quarter of 2019. Indeed, the Soros fund has added significantly to its existing position during the third quarter. D.R. Horton is the third-largest stock holding of George Soros, accounting for 5.66% of the portfolio.
D.R. Horton offers a dividend yield just above 1% and it has raised dividends in the past six straight years. The homebuilder currently offers a quarterly dividend of $0.20 per share, representing a 14% increase from the past year. The company has generated $20 billion in fiscal 2020, with expectations that revenue will jump to $25.0 billion in 2021. The high double-digit revenue and earnings growth will allow the homebuilder to make significant dividend increases in the next year.
Please also see Top 10 Stocks George Soros Just Bought and 10 Best High Dividend Stocks To Buy Now.
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This article is originally published at Insider Monkey.
