Most investors enjoy receiving dividend checks and enjoy owning dividend-paying stocks. Although the share price of a dividend-paying company can follows ups and downs throughout the whole year, investors still make money from holding that reliable stock. The key word here is reliable! Some high-dividend stocks may not necessarily be reliable, as their companies’ Boards may decide not to pay any dividend whenever things take a turn for the worse. Therefore, if one is looking for stocks that been consistently paying out dividends, he/she should look for financially strong and mature companies. The well-known billionaire Leon Cooperman, founder of Omega Advisors hedge fund, and his team recently disclosed their 25 top positions through an investor conference call. Thus, this article will lay out the updated list of Cooperman’s top dividend picks as of October 16.
We follow hedge funds like Omega Advisors because our research has shown that their stock picks historically managed to generate alpha even though the filings are up to 45-days delayed. We used a 60-day delay in our back tests to be on the safe side and our research showed that the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Total Return Index by an average of 95 basis points per month between 1999 and 2012. After adjusting for risk, our calculations revealed that these stocks’ monthly alpha was 80 basis points. We have also been sharing and tracking the performance of these stocks since the end of August 2012, during which time they have returned 102%, outperforming the S&P 500 ETF by more than 53 percentage points (see more details here).
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#5 Pfizer Inc. (NYSE:PFE)
Shares Owned by Omega Advisors (as of June 30): None
Portion of Omega’s Assets (as of October 16): 2.1%
Current Dividend Yield: 3.22%
Pfizer Inc. (NYSE:PFE) represents a new position for Omega Advisors, as it did not disclose any shares in the biopharmaceutical company through the 13F filing for the June quarter. The newly-disclosed position amassed 2.1% of the hedge fund’s assets on October 16 and is one of the two healthcare picks that rank among the top 25 holdings. The company has a quarterly dividend distribution of $0.28 per share, which offers a current dividend yield of 3.22%. On Thursday, the company’s officials confirmed that they had been in talks to acquire Allergan PLC (NYSE:AGN), but assured that no agreement had been reached to that point in time. The market is already pricing in a potential deal, but the shares of Pfizer are still 8% in the green year-to-date. Ken Fisher’s Fisher Asset Management reported a 31.93 million-share position in Pfizer Inc. (NYSE:PFE) through the latest round of 13F filings.
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#4 Dow Chemical Co (NYSE:DOW)
Shares Owned by Omega Advisors (as of June 30): 2.32 million shares ($118.49 million)
Portion of Omega’s Assets (as of October 16): 1.7%
Current Dividend Yield: 3.3%
Dow Chemical Co (NYSE:DOW) has gained a few spots in the list of Leon Cooperman’s largest holdings since the end of the second quarter. It is worth pointing out that Omega Advisors was bullish on the stock during the second quarter, when it added some 442,000 shares to the holding. On October 22, the company’s Board of Directors declared a quarterly dividend of $0.46 per share, which marks an increase of 10% from the previously-paid dividend. As a result, the Dow’s dividend increased by 21% on a compound annual basis since the last quarter of 2009. Even more to that, Dow Chemical has paid out cash dividends each quarter since 1912, which emphasizes the reliability of this company. Meanwhile, the stock is up 13% since the beginning of the current year, which represents one more reason to own this stock. Dan Loeb’s Third Point was the largest shareholder of Dow Chemical Co (NYSE:DOW) within our database at the end of the June quarter, holding 23 million shares.