In this article, we discuss top 9 dividend stocks to buy according to billionaire Seth Klarman.
Seth Klarman is one of Wall Street’s highly influential investors. His hedge fund Baupost Group is widely known for delivering an annual average return of 15% in the past four decades while reporting only four years of losses during this time, as reported by Business Insider. Just like Warren Buffett, Klarman also follows value investing philosophy and believes that value investing requires patience, skill, and discipline. In addition to this, he also advises investors to focus on risks before returns and the relative performance of the stock. As someone who picked his first stock at the age of ten, Klarman’s decades of experience and skill culminated in the phenomenal performance of his fund. As of November 2022, the billionaire has a real-time net worth of $1.5 billion, according to Forbes.
In one of his interviews with Business Insider this October, Klarman mentioned that value investing mainly involves realizing a company’s worth and not its overall returns. He further mentioned that investors today are drawn to new investing ideas and assets, but the main focus should be on the long-term opportunities provided by these assets. In his interview with Harvard Business School in June, Klarman asserted that gold is one of the safest assets in the current market environment and investors should have gold assets in their portfolios.
As of the close of Q3 2022, Baupost Group held a 13F portfolio valued at roughly $5.8 billion, compared with $6.7 billion in the previous quarter. The hedge fund has major investments in the tech and services sectors, with finance and healthcare making up the smaller portions of the portfolio. Some of the fund’s most prominent holdings include Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:META), and Amazon.com, Inc. (NASDAQ:AMZN). However, we will discuss the fund’s top dividend stocks in this article.
Our Methodology:
For this list, we analyzed data from Baupost Group’s Q3 2022 13F portfolio. The stocks are ranked according to their stake value in the portfolio.
9. DigitalBridge Group, Inc. (NYSE:DBRG)
Baupost Group’s Stake Value: $41,154,000
Dividend Yield as of November 15: 0.27%
DigitalBridge Group, Inc. (NYSE:DBRG) is a Florida-based digital infrastructure investment firm. The company owns and invests in several businesses including data centers, small cells, fibers, and cell towers.
DigitalBridge Group, Inc. is one of the latest acquisitions of Baupost Group as the hedge fund opened its position in the company in Q3. The firm bought roughly 3.3 million DBRG shares, worth over $41 million. The company represented 0.71% of billionaire Seth Klarman’s portfolio and is his important holding alongside Alphabet Inc., Meta Platforms, Inc., and Amazon.com, Inc..
On September 14, DigitalBridge Group, Inc. reinstated its quarterly dividends after suspending its payouts for over two years in recognition of the pandemic. It currently pays a quarterly dividend of $0.01 per share for a dividend yield of 0.27%, as of November 15.
In its recently-announced Q3 2022 results, DigitalBridge Group, Inc. posted revenue of $296.6 million, which showed a 17.6% growth from the same period last year. At the end of September, the company had $636.3 million available in cash and cash equivalents, and its total assets amounted to over $11.7 billion.
In November, Raymond James maintained a Strong Buy rating on DigitalBridge Group, Inc. with a $34 price target, highlighting the company’s focus on Digital Infrastructure assets that would continue to attract capital.
As of the close of Q2 2022, 26 hedge funds in Insider Monkey’s database owned stakes in DigitalBridge Group, Inc., compared with 27 in the previous quarter. These stakes are collectively worth nearly $340 million.
Ave Maria mentioned DigitalBridge Group, Inc. in its Q2 2022 investor letter. Here is what the firm has to say:
“DigitalBridge Group, Inc. (NYSE:DBRG) is a new holding. The company is an asset manager that invests, through private investment funds, in digital infrastructure assets such as data centers, cellular towers, small cells, fiber and edge installations. DigitalBridge could benefit from multiple tailwinds, including the proliferation of data, which needs infrastructure to transmit, process and store. We took advantage of the recent downward pressure on the stock price to add to the Fund’s position.”
8. Fidelity National Information Services, Inc. (NYSE:FIS)
Baupost Group’s Stake Value: $46,476,000
Dividend Yield as of November 15: 2.89%
Fidelity National Information Services, Inc. (NYSE:FIS) is an American multinational IT service management company that offers a wide range of financial products and services. The company currently pays a quarterly dividend of $0.47 per share, having raised it by 21% in January. This was the company’s second consecutive dividend growth after the pandemic. The stock’s dividend yield on November 15 came in at 2.89%.
Baupost Group opened its position in Fidelity National Information Services, Inc. in the most recent quarter, purchasing shares worth over $46.7 million. The company accounted for 0.8% of billionaire Seth Klarman’s portfolio.
In Q3 2022, Fidelity National Information Services, Inc. missed Street estimates on various fronts but the company’s revenue of $3.6 billion saw a 2.6% growth from the same period last year. During the quarter, the company remained committed to its shareholder obligation as it paid $1.3 billion in dividends and share repurchases.
Appreciating the company’s Q3 earnings, Barclays maintained an Overweight rating on Fidelity National Information Services, Inc. in November with a $90 price target.
Fidelity National Information Services, Inc. was a part of 67 hedge fund portfolios in Q2 2022, compared with 68 in the previous quarter. The stakes owned by these hedge funds are collectively valued at over $3.3 billion.
ClearBridge Investments mentioned Fidelity National Information Services, Inc. in its Q3 2022 investor letter. Here is what the firm has to say:
“We also sold out of payments and financial software maker Fidelity National Information Services, Inc. (NYSE:FIS), choosing to concentrate our digital payments exposure in PayPal (PYPL), which we believe has a more attractive risk/reward at these levels and more internal levers to generate returns. We bought FIS in 2019 for its mix of offense and defense with banking software and services as a stable business and payments that could keep up with fintech. The shares outperformed the benchmark up to the sale, illustrating the resiliency of the core business; however, FIS has underperformed higher-growth payment names.”
7. Gray Television, Inc. (NYSE:GTN)
Baupost Group’s Stake Value: $46,683,000
Dividend Yield as of November 15: 2.81%
Gray Television, Inc. (NYSE:GTN) is a Georgia-based television broadcasting company that operates over 180 stations across the country in 113 markets. In November, Barrington maintained an Outperform rating on the stock with a $15 price target, acknowledging the company’s performance and its fundamentals post-pandemic.
On November 4, Gray Television, Inc. declared a quarterly dividend of $0.08 per share, in line with its previous dividend. As of November 15, the stock has a dividend yield of 2.81%.
Baupost Group started investing in Gray Television, Inc. during the first quarter of 2022, with shares worth over $28.4 million. Over the quarters, the hedge fund has raised its stake in the company and currently owns shares worth over $46.6 million. The firm raised its stake in the company by 45% during Q3. The company made up 0.8% of billionaire Seth Klarman’s portfolio.
In the third quarter of 2022, Gray Television, Inc. reported revenue of $909 million, which showed a 51.2% growth from the same period last year. The company returned $124 million to shareholders during the quarter, $20 million of which represented dividend payments. At the end of the quarter, the company had $144 million available in cash.
Gray Television, Inc. experienced a positive hedge fund sentiment in Q2 2022, as 25 hedge funds in Insider Monkey’s database owned stakes in the company, up from 18 in the previous quarter. These stakes have a total value of $236.3 million.
6. Lithia Motors, Inc. (NYSE:LAD)
Baupost Group’s Stake Value: $53,638,000
Dividend Yield as of November 15: 0.68%
Lithia Motors, Inc. (NYSE:LAD) is an American automotive dealership that is also the third-largest new vehicle automotive dealership company in the US. The company currently has over 267 stores in 24 states across the country.
Lithia Motors, Inc. is one of the latest holdings of Baupost Group. The hedge fund opened its position in the company with 25,000 shares, worth over $53.6 million. The company made up 0.92% of billionaire Seth Klarman’s portfolio in Q3. It is another prominent holding of the hedge fund in Q3 in addition to Alphabet Inc., Meta Platforms, Inc., and Amazon.com, Inc..
On October 19, Lithia Motors, Inc. declared a quarterly dividend of $0.42 per share, in line with its previous dividend. The company has been raising its dividends consistently for the past 11 years. As of November 15, the company’s shares boast a yield of 0.68%.
In October, Benchmark maintained a Buy rating on Lithia Motors, Inc. with a $300 price target. The firm believes that higher-margin service businesses will grow at a faster rate than the overall market.
At the end of Q2 2022, 40 hedge funds in Insider Monkey owned stakes in Lithia Motors, Inc., worth over $2 billion. In the previous quarter, 46 hedge funds owned positions in the company, with stakes valued at $2.5 billion.
5. Encompass Health Corporation (NYSE:EHC)
Baupost Group’s Stake Value: $133,429,000
Dividend Yield as of November 15: 1.05%
Encompass Health Corporation (NYSE:EHC) is one of America’s largest providers of post-acute healthcare services and also offers other healthcare services to its patients. In October, Raymond James raised its price target on the stock to $72 with a Strong Buy rating on the shares, highlighting the company’s Q3 earnings beat. The firm also appreciated the company’s announcement of bonuses and improving contract labor.
Baupost Group started investing in Encompass Health Corporation during the fourth quarter of 2021, purchasing shares worth over $46.7 million. At the end of Q3 2022, the hedge fund owned roughly 3 million EHC shares, worth over $133.4 million. The company represented 2.3% of billionaire Seth Klarman’s portfolio.
Encompass Health Corporation currently pays a quarterly dividend of $0.15 per share and has a dividend yield of 1.05%, as of November 15.
At the end of Q2 2022, 34 hedge funds in Insider Monkey’s database owned stakes in Encompass Health Corporation, down from 48 in the preceding quarter. These stakes are valued at $645.5 million.
4. Micron Technology, Inc. (NASDAQ:MU)
Baupost Group’s Stake Value: $164,627,000
Dividend Yield as of November 15: 0.72%
Micron Technology, Inc. (NASDAQ:MU) is an American semiconductor manufacturing company that also specializes in data storage and other related services. The company currently pays a quarterly dividend of $0.115 per share, raising it by 15% in July this year. This was the company’s first dividend hike since the inception of its dividend policy in 2021. As of November 15, the stock has a dividend yield of 0.72%.
During Q3 2022, Baupost Group raised its position in Micron Technology, Inc. by 21%. This increase takes the fund’s total MU stake to $164.6 million. The company accounted for 2.84% of billionaire Seth Klarman’s portfolio.
In October, Loop Capital initiated its coverage of Micron Technology, Inc. with a Buy rating and a $70 price target, appreciating the company’s key metrics and other fundamentals.
As per Insider Monkey’s Q2 2022 database, 69 hedge funds reported owning stakes in Micron Technology, Inc., falling from 78 in the previous quarter. Those stakes held a total value of over $2.1 billion.
Claret Asset Management mentioned Micron Technology, Inc. in its Q3 2022 investor letter. Here is what the firm has to say:
“Inflation is still higher than interest rates… not an incentive to save for most people. Either inflation must come down or interest rates have to go up further. Or both. And probably both. Now that they are taking the punch bowl away and the party is over, what happens next? For whatever reason, the stock market seems to always precede the economic reality: Micron reached a high of $98.45 on January 5th, 2022 and is trading at $50.00 today.”
3. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC)
Baupost Group’s Stake Value: $180,149,000
Dividend Yield as of November 15: 1.49%
SS&C Technologies Holdings, Inc. is a Connecticut-based software company that sells related services to the financial industry. The company has been raising its dividends consistently for the past 6 years. It currently offers a quarterly dividend of $0.20 per share for a dividend yield of 1.49%, as of November 15.
Highlighting the company’s recent quarterly earnings and expected slow demand for its products, Jefferies maintained a Hold rating on SS&C Technologies Holdings, Inc. in October with a $55 price target.
Baupost Group has been investing in SS&C Technologies Holdings, Inc. since the second quarter of 2020. The hedge fund raised its position in the company by 28% during Q3 2022, which takes its total stake to over $180 million. The company represented 3.1% of billionaire Seth Klarman’s portfolio.
At the end of Q2 2022, 50 hedge funds in Insider Monkey’s database owned stakes in SS&C Technologies Holdings, Inc., growing from 48 in the previous quarter. These stakes have a collective value of over $2.7 billion.
LVS Advisory mentioned SS&C Technologies Holdings, Inc. in its Q3 2022 investor letter. Here is what the firm has to say:
“SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is a publicly traded acquisition platform led by its founder Bill Stone who is also the largest shareholder. SS&C’s platform focuses on investment fund services (accounting, administration, back-office tools) and enterprise software. The company routinely makes large acquisitions in its target markets financed by debt and then quickly rationalizes the acquired companies and pays down debt. SS&C and its operators are very good at what they do. Since becoming public in 2010, SSNC has compounded its earnings per share at 25% per year (over 11 years). Despite this impeccable track record, the stock is down more than 40% this year. Investors are generally skeptical that an acquisition platform can generate strong investment returns given the current level of interest rates. Investors are also worried that SS&C’s customer base will be negatively impacted by the decline in asset prices. I am happy to take the other side of that bet! While SS&C will face some near-term headwinds from the market’s volatility, its client base is largely composed of private equity funds and hedge funds which have fared relatively well during 2022. SS&C’s valuation multiple is the cheapest it has ever been since its IPO and the company is aggressively buying back stock. A well-timed transaction could also be in the cards. SS&C made a number of outstanding, opportunistic acquisitions during the great recession from 2008 to 2010 and the company is primed to run that playbook again.”
2. Willis Towers Watson Public Limited Company (NASDAQ:WTW)
Baupost Group’s Stake Value: $258,294,000
Dividend Yield as of November 15: 1.40%
Willis Towers Watson Public Limited Company (NASDAQ:WTW) is a London-based multinational insurance company that provides related insurance advisory services to its consumers. During Q3 2022, Baupost Group increased its stake in the company by 39%. The firm owned a WTW stake worth over $258.2 million, which represented 4.45% of billionaire Seth Klarman’s portfolio.
Willis Towers Watson Public Limited Company currently pays a quarterly dividend of $0.82 per share. The stock has a dividend yield of 1.40%, as of November 15.
Piper Sandler upgraded Willis Towers Watson Public Limited Company to Overweight in October with a $250 price target. The firm mentioned that the company would be able to produce solid results due to its organic growth and cost-cutting efforts.
As per Insider Monkey’s Q2 2022 database, 50 hedge funds reported owning stakes in Willis Towers Watson Public Limited Company, compared with 49 in the previous quarter. These stakes have a total value of over $1.7 billion.
Artisan Partners mentioned Willis Towers Watson Public Limited Company in its Q3 2022 investor letter. Here is what the firm has to say:
“Willis Towers Watson Public Limited Company (NASDAQ:WTW) shares rose 2% in the quarter. This modest increase made it one of our best performers during a difficult quarter. Absent significant news, the business continues to benefit from a hard insurance market. Results are still lagging peers, but the management team seems to be making progress in closing the gap. In the meantime, the company is returning significant amounts of capital to shareholders. Over the past eight months, it has repurchased $4 billion in stock and reduced the share count by 15%. And there is more on the way. This is a good business in a fantastic industry trading at 12X normalized earnings. We believe it is worth much more.”
1. Veritiv Corporation (NYSE:VRTV)
Baupost Group’s Stake Value: $336,002,000
Dividend Yield as of November 15: 1.95%
Veritiv Corporation (NYSE:VRTV) is a Georgia-based business-to-business provider of packaging, hygiene, and publishing products. The company was the fifth-largest holding of Baupost Group in Q3 2022. The hedge fund owned stakes worth over $336 million in the company, which represented 5.79% of billionaire Seth Klarman’s portfolio.
On November 8, Veritiv Corporation initiated its dividend policy and pays a quarterly dividend of $0.63 per share. The stock has a dividend yield of 1.95%, as of November 15.
At the end of Q2 2022, 17 hedge funds in Insider Monkey’s database owned stakes in Veritiv Corporation, compared with 19 in the previous quarter. These stakes have a total value of $443.8 million.
You can also take a look at 11 Best Dividend Stocks to Buy According to Warren Buffett and 10 Best High-Dividend Stocks to Buy Now
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This article is originally published at Insider Monkey.
