In this article we discuss the 10 best dividend stocks to buy according to billionaire James Dinan. If you want to skip our detailed analysis of Dinan’s history, investment philosophy, and hedge fund performance, go directly to the 5 Best Dividend Stocks to Buy According to Billionaire James Dinan.
James Dinan is an American investor, hedge fund manager, philanthropist, and the founder of York Capital Management. He started his career at Donaldson, Lufkin & Jenrette, where he worked as an investment banker for two years.
In 1987, Dinan lost his entire investment on Black Friday before bouncing back in 1991 and founding York Capital Management, an investment management firm, launched with $3.6 million.
Before the 2007-08 financial crisis, York Capital Management had registered massive success and $16 billion in assets. The hedge fund posted losses during the 2008 financial downturn but bounced back in the following years, reaching $26 billion in 2015. However, Dinan’s fund has been suffering lately. In November 2020, the billionaire reportedly informed his employees that he plans to exit the hedge fund business and use York to manage internal money. WSJ reported York still expected to manage about $9 billion in private equity and debt.
As of the first quarter of 2021, York Capital Management has significant holdings in Amazon.com, Inc. (NASDAQ: AMZN) and Facebook, Inc. (NASDAQ: FB). Intel Corporation (NASDAQ: INTC) is also among the notable holdings of York as the fund has a $43 million stake in the company.
In the last quarter, Dinan sold off his entire stake in Microsoft Corporation (NASDAQ: MSFT). Microsoft Corporation (NASDAQ: MSFT) is up roughly 30% over the last 12 months. On June 2, KGI Securities rated the stock of Microsoft Corporation (NASDAQ: MSFT) as “Outperform” and set a price target of $300.
Dinan holds 1,489 shares of Amazon. The company reported a net income of $8.1 billion for the first quarter ended March 31, 2021, compared with a net income of $2.5 billion in Q1 2020. During the quarter, Amazon.com, Inc. (NASDAQ: AMZN)’s net sales increased 44% to $108.5 billion compared with $75.5 billion in Q1 2020.
On the other hand, Facebook, Inc. (NASDAQ: FB), in which York Capital initiated a new position in the first quarter, recently topped Goldman Sachs’ Hedge Fund VIP List of 50 stocks that appear among the largest 10 holdings of hedge funds. Facebook’s daily active users (DAUs) stood at 1.88 billion as of March 2021, an 8% increase YoY.
James Dinan of York Capital Management
In recent years, James has been struggling to generate returns for investors, a common theme in the industry that is reeling from losses. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. 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 88 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.
Below we have highlighted the 10 best dividend stocks to buy according to billionaire James Dinan:
Best Dividend Stocks to Buy According to Billionaire James Dinan
10. TransUnion (NYSE: TRU)
Dinan’s Stake Value: $4,528,000
Percentage of James Dinan’s 13F Portfolio: 0.65%
Dividend Yield: 0.35%
Number of Hedge Fund Holders: 41
TransUnion (NYSE: TRU) offers risk and information solutions in three main segments: U.S. Markets, International, and Consumer Interactive. It is placed tenth on our list of 10 best dividend stocks to buy according to billionaire James Dinan.
TransUnion total revenue in the first quarter of 2021 amounted to $745 million, representing an 8% increase compared to Q1 2020. During Q1 2021, net income was $128 million compared to $70 million in Q1 2020. Diluted earnings per share was $0.67, compared with $0.37 for the first quarter of 2020.
The company’s board declared a dividend of $0.095 per share, representing a 26.7% increase from $0.075 declared in Q1 2020.
In February, Hamzah Mazari, an analyst at Jefferies, upgraded the stock of TransUnion (NYSE: TRU) to “Buy” from “Hold,” upping his price target to $115 from $92.
Just like Intel Corporation (NASDAQ: INTC), Amazon.com, Inc. (NASDAQ: AMZN) and Facebook, Inc. (NASDAQ: FB), TransUnion is one of the best stocks to buy according to billionaire James Dinan.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and TransUnion (NYSE: TRU) was one of them. Here is what the fund said:
“We started new investment campaigns in TransUnion. TransUnion is one of the three leading credit bureaus, providing consumer credit data to support mortgage underwriting, credit card issuance, auto loans and fraud detection. The pandemic weighed on the company’s results in 2020, but we think a consumer-led recovery could drive sharp acceleration in banks’ lending and, therefore, demand for TransUnion’s data. The company is also investing in promising secular growth initiatives such as online fraud detection, digital marketing data and income verification, which we believe could be additional profit-cycle drivers.”
9. Ross Stores, Inc. (NASDAQ: ROST)
Dinan’s Stake Value: $3,412,000
Percentage of James Dinan’s 13F Portfolio: 0.49%
Dividend Yield: 0.93%
Number of Hedge Fund Holders: 57
Ross Stores, Inc. (NASDAQ: ROST) has a network of subsidiaries through which it operates off-price retail apparel and home fashion stores through the dd’s DISCOUNTS and Ross Dress for Less brands. It is ranked ninth on our list of 10 best dividend stocks to buy according to billionaire James Dinan.
Ross Stores recently opened three dd’s DISCOUNTS stores and another four Ross Dress for Less (“Ross”) in five different states in February and March. The addition is part of the company’s strategy to add around 60 new stores, including 40 Ross and 20 dd’s DISCOUNTS locations. Cumulatively, the company has 1,866 Ross Dress for Less and dd’s DISCOUNTS locations across 40 states. The company has a long-term strategy to expand both chains.
Ross Stores, Inc. (NASDAQ: ROST) recently reported a net income of $476 million in Q1 2021, representing a 17% increase compared to what was reported in Q1 2020. The company declared a quarterly dividend of $0.285 per share.
Last month, Northcoast Research’s analyst Tim Vierengel upgraded the company’s stock to “Buy” from a “Neutral” rating and set a price target of $147.
In its Q4 2020 investor letter, Weitz Investment Management, an asset management firm, highlighted a few stocks and Ross Stores, Inc. (NASDAQ: ROST) was one of them. Here is what the fund said:
“Not surprisingly, Ross and TJX were among the hardest hit in our portfolio. In spring, almost all of their stores were closed. As health officials found that masks and distancing could significantly reduce transmission, the stores were able to reopen and continue operating during the recent winter surges. We estimate earnings per share declined roughly 80% for both companies. Most of the losses came from the second-quarter shutdowns, yet by the third quarter, sales were roughly the same as pre-crisis levels, which was honestly a little surprising to us. People really love their off-price apparel. Ross’s stock returned 5.8% and TJX’s 12.3%.”
8. The Charles Schwab Corporation (NYSE: SCHW)
Dinan’s Stake Value: $1,681,000
Percentage of James Dinan’s 13F Portfolio: 0.24%
Dividend Yield: 1.02%
Number of Hedge Fund Holders: 61
The Charles Schwab Corporation (NYSE: SCHW) has a network of subsidiaries through which it offers wealth management, securities brokerage, financial advisory, asset management, custody, and banking services. It is placed eight on our list of 10 best dividend stocks to buy according to billionaire James Dinan.
Credit Suisse’s analyst Craig Siegenthaler upgraded the stock to “Outperform” from “Neutral.” In addition, the analyst projects that Charles Schwab Corporation (NYSE: SCHW) will generate more than $4 in EPS by 2023 and approximately $5 by 2024.
Like Amazon.com, Inc. (NASDAQ: AMZN), Intel Corporation (NASDAQ: INTC) and Facebook, Inc. (NASDAQ: FB), SCHW is one of the best stocks to buy based on James Dinan’s Q1 portfolio.
Baron Asset Fund stated in their Q1 2021 investor letter that it’s too late to buy The Charles Schwab Corporation stock. Here is what Baron Asset Fund said:
“Shares of brokerage firm The Charles Schwab Corp. rose in the quarter. The company continued to successfully integrate its acquisition of TD Ameritrade. The merger enables Schwab to leverage efficiencies of scale to drive down its industry-leading operating costs per client assets even further. Additionally, net new assets grew in the mid-single-digits as customers tapped the services of the combined businesses. Finally, the business now has over $400 billion of interest-earning assets, which will generate improved profitability in a more normalized interest rate environment.”
7. Target Corporation (NYSE: TGT)
Dinan’s Stake Value: $1,884,000
Percentage of James Dinan’s 13F Portfolio: 0.27%
Dividend Yield: 1.23%
Number of Hedge Fund Holders: 78
Target Corporation (NYSE: TGT) is a general merchandise retailer in the United States. It is ranked seventh on our list of 10 best dividend stocks to buy according to billionaire James Dinan. In its Q1 2021 financial results, the company reported GAAP earnings per share (EPS) of $4.17, an increase of 643.2% from $0.56 reported in Q1 2020. During the quarter, Target Corporation (NYSE: TGT)’s sales grew by 22.9%, in addition to a 10.8% growth in Q1 2020.
With more-than-expected financial results, Target (NYSE: TGT) recently landed higher estimates from JPMorgan, with analyst Christopher Horvers saying the bullishness reflects the company’s balanced assortment with 27% of the mix reopening categories. In March, the board of directors of Target Corporation (NYSE: TGT) declared a quarterly dividend of $0.68 per share.
In May, Credit Suisse analyst Lavesh Hemnani rated the stock as “Outperform” and set a price target of $211. Just like Amazon.com, Inc. (NASDAQ: AMZN), Intel Corporation (NASDAQ: INTC) and Facebook, Inc. (NASDAQ: FB), Target is one of the best stocks to buy based on James Dinan’s Q1 portfolio.
In its Q1 2021 investor letter, Vltava Fund, an asset management firm, highlighted a few stocks and International Target Corporation (NYSE: TGT) was one of them. Here is what the fund said:
“Target, the Minneapolis-based retailer, continues to fire on all cylinders as the company has reported two quarters in a row of +20% revenue growth (5% traffic growth + 15% average basket size6 ), coupled with the strongest EBITDA margins in over four years. The company has successfully navigated the Covid-19 pandemic with online sales growing by 155% and 118% during Q3 2020 and Q4, respectively.
On March 2nd, the company reported another stellar quarter, with same-store sales growing by over 20%, and both earnings (+57% YoY) and revenues (+21% YoY) beating estimates. The shares are up 14.11% year-to-date. We believe the shares are a bargain 23x trailing and 20x forward earnings.”
6. Morgan Stanley (NYSE: MS)
Dinan’s Stake Value: $3,065,000
Percentage of James Dinan’s 13F Portfolio: 0.44%
Dividend Yield: 1.62%
Number of Hedge Fund Holders: 66
Morgan Stanley (NYSE: MS) is a financial holding company that offers various financial products and services to financial institutions, corporations, governments, and individuals worldwide. It is placed sixth on our list of 10 best dividend stocks to buy according to billionaire James Dinan. In its latest financial report, Morgan Stanley (NYSE: MS) reported net revenues of $15.7 billion for Q1 2021 compared to $9.8 billion reported in Q1 2020. The company’s EPS during the quarter amounted to $2.19 compared to $1.01 during the same period a year ago.
Morgan Stanley (NYSE: MS) declared a dividend of $0.35 for Q1 2021. In April, Berenberg upgraded the stock from “Hold” to “Buy,” while Daiwa Securities upgraded the stock from “Neutral” to “Outperform.”
Just like Amazon.com, Inc. (NASDAQ: AMZN), Intel Corporation (NASDAQ: INTC) and Facebook, Inc. (NASDAQ: FB), Morgan Stanley is one of the best stocks to buy based on James Dinan’s Q1 portfolio.
In its Q4 2020 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Morgan Stanley (NYSE: MS) was one of them. Here is what the fund said:
“Top three contributor Morgan Stanley, a leading global financial services company, came into the portfolio in Q4 as a result of its purchase of E*TRADE. E*TRADE is a great fit on Morgan Stanley’s wealth management platform and provides a considerable amount of non-interest-bearing deposit funding. James Gorman, chairman and CEO, has steadily de-risked Morgan Stanley’s business by adding less volatile fee streams and deemphasizing the risk-obtuse culture of prior management. We believe the market will come to appreciate this mix shift over time.”
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Disclosure: None. 10 Best Dividend Stocks to Buy According to Billionaire James Dinan is originally published on Insider Monkey.
