In this article we will take a look at the 10 best dividend stocks to buy according to billionaire Kerr Neilson. You can skip our detailed analysis of Kerr Neilson’s history, investment philosophy, and hedge fund performance, and go directly to the 5 Best Dividend Stocks to Buy According to Billionaire Kerr Neilson.
Billionaire Kerr Neilson is the investment manager and co-founder of Platinum Asset Management. The fund’s market value increased to $4.35 billion in Q4 2020 from $4.042 billion in Q3 2020. Kerr Neilson is often referred to as the Warren Buffett of Australia for his versatility in choosing high-performing stocks. In this article, we will focus on the 10 best dividend stocks to buy according to billionaire Kerr Neilson.
Kerr Neilson has worked for reputable financial institutions during his career, including Bankers Trust Australia. Neilson co-funded Platinum Asset Management. Until 2020, the company was estimated to manage A$22 billion in funds. With 9.26% performance in the last four quarters, Kerr Neilson is regarded as one of the top hedge fund managers in the world.
Neilson’s portfolio is well-diversified, having positions in high-growth companies, value stocks, as well as dividend payers that are also working on long-term growth projects.
Dividend investing is tricky. You cannot just prioritize high yields because companies that are putting everything in their dividends are often avoiding investing in long-term projects. On the other hand, companies like Microsoft Corporation (NASDAQ: MSFT), Intel Corporation (NASDAQ: INTC), and Apple Inc. (NASDAQ: AAPL) are known for paying dividends consistently to their shareholders, albeit at low yields. But these companies offer gains in terms of share price appreciation. Their dividends are also safe and backed by strong fundamentals.
Microsoft Corporation (NASDAQ: MSFT) is one of the best technology stocks that pay dividends. Since 2003, Microsoft Corporation (NASDAQ: MSFT) has been increasing its dividend annually, with the most recent increase being a hike of 9.8%. The company is also investing heavily into its growth divisions, including Cloud and AI. The stock is up 10% year to date.
Microsoft Corporation (NASDAQ: MSFT) recently announced financial results for Q1 of 2021. Its revenue came in at $41.7 billion, indicating a 19% increase from the previous year. The company’s net income for the quarter ending March 31, 2021, was $15.5 billion GAAP, along with $14.8 billion non-GAAP, indicating a 44% and 38% increase from the previous year, respectively. Diluted EPS of Microsoft Corporation (NASDAQ: MSFT) came in at $2.03 GAAP, along with $1.95 non-GAAP, reflecting a YoY increase of 45%, and 39%, respectively.
Intel Corporation (NASDAQ: INTC) is another example of a strong dividend-paying company. On average, Intel’s dividend has increased 7.7% per year during the last 10 years. In January 2021, Intel Corporation (NASDAQ: INTC) raised its quarterly dividend to $0.3475 per share, an increase of 5.3%. Intel is scheduled to invest $3.5 billion for advanced semiconductor packaging technologies in New Mexico operations. The company maintains a balance between shareholder returns in the form of dividends and investing in its long-term product pipeline.
Apple Inc. (NASDAQ: AAPL) has also paid consistent dividends over the last several years. Apple Inc. (NASDAQ: AAPL)’s dividend yield is less than 1%, but the company’s dividend is safe and investors also enjoy a steady appreciation in stock price. Over the last 12 months, Apple shares are up 60%. Apple Inc. (NASDAQ: AAPL) recently also announced its Q2 2021 financial results posting $89.6 billion of record revenue, reflecting a 54% rise on a YoY basis. Its earnings per diluted share over the quarter came in at $1.40, while the international sales have accounted for 67% of quarterly revenue.
Kerr Neilson of Platinum Asset Management
But in this article we are going to focus on dividend stocks owned by billionaire Kerr Neilson. We will use Platinum Asset Management’s 13F holdings data for Q4’2020 for this analysis.
Investing in dividend stocks has become important amid the increasing financial volatility. 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 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (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 16th. 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 start our list of best dividend stocks to buy according to billionaire Kerr Neilson.
Best Dividend Stocks to Buy According to Billionaire Kerr Neilson
10. Petróleo Brasileiro S.A. – Petrobras (NYSE: PBR)
Neilson’s Stake Value: $85,000
Percentage of Kerr Neilson’s 13F Portfolio: 0.001%
Dividend Yield: 4.26%
No. of Hedge Fund Holders:24
Petróleo Brasileiro S.A. – Petrobras (NYSE: PBR) is among the largest oil and gas producer and seller in Brazil and across the world. The company shall receive an amount of approximately $6.5 billion in reimbursement for Sepia and Atapu subsalt fields development investments it had done earlier in Brazil. This clears its roadblocks for auctioning more of pre-salt acreage. The stock ranks 10th in the list of best dividend stocks to buy according to billionaire Kerr Neilson.
Petróleo Brasileiro S.A. – Petrobras (NYSE: PBR) recently said that the import parity of fuel prices shall be preserved, while the company’s focus will remain on deepwater oil reserves.
9. Gilead Sciences, Inc. (NASDAQ: GILD)
Neilson’s Stake Value: $92,037,000
Percentage of Kerr Neilson’s 13F Portfolio: 2.11%
Dividend Yield: 4.27%
No. of Hedge Fund Holders:72
Research-based Gilead Sciences, Inc. (NASDAQ: GILD) is a biopharmaceutical company known for commercializing indigenously discovered and developed medicines in unmet medical needs segment. The medicines are sold across Europe, U.S., and other nations. Gilead Sciences, Inc. (NASDAQ: GILD) has recently declared $0.71 per share of a quarterly cash dividend. The dividend is to be paid on June 29, 2021, to stockholders on the company’s register as of June 15, 2021. Gilead Sciences, Inc. (NASDAQ: GILD) ranks 9th in the list of best dividend stocks to buy according to billionaire Kerr Neilson.
The strong position of Gilead Sciences, Inc. (NASDAQ: GILD) is evident from its Q1 2021 financial results. Gilead posted a 16% increase in revenue from the previous year at $6.4 billion. The rise in revenue is primarily attributed to the sale of Veklury (remdesivir), among other medications. Meanwhile, the company has also signed a research collaboration with Oxford BioTherapeutics Ltd. for evaluating five new solid tumor and hematologic indication targets.
Nelson Roberts Investment Advisors, in its Q3 2020 investor letter, mentioned Gilead Sciences, Inc. (NASDAQ: GILD). Here is what Nelson Roberts Investment Advisors has to say about Gilead Sciences, Inc. in its letter:
“In the healthcare sector, we sold our position in Gilead (NASDAQ: GILD) as there are no near or medium-term growth drivers for the company. Its popular HIV drug, Truvada, is going off patent this year. Additionally, UnitedHealth Group said it would not cover Gilead’s other HIV drug, Descovy. Lastly, the multiple acquisitions that Gilead has made recently are not ready for prime time, and it will likely be two years or more before any of Gilead’s new drugs have a meaningful impact on revenue.”
8. Manulife Financial Corporation (NYSE: MFC)
Neilson’s Stake Value: $89,000
Percentage of Kerr Neilson’s 13F Portfolio: 0.001%
Dividend Yield: 4.29%
No. of Hedge Fund Holders:20
Manulife Financial Corporation (NYSE: MFC) and the subsidiaries are known for facilitating financial services and products in U.S., Canada, Asia, and other international locations. Manulife Financial Corporation (NYSE: MFC) recently announced that Sustainable Asia Bond Fund will henceforth be available in Europe. This fund seeks investment in Asian fixed income securities, claiming sustainability. The stock ranks 8th in the list of best dividend stocks to buy according to billionaire Kerr Neilson.
In Hong Kong, Manulife Financial Corporation has also inked a lease agreement at ITT or International Trade Tower Kowloon East for around 145,000 square feet. This is the strongest and largest lease of Hong Kong in the Kowloon East area since 2019. The lease agreement cement company’s Hong Kong commitment focused on better agency growth.
7. Prudential Financial, Inc. (NYSE: PRU)
Neilson’s Stake Value: $85,000
Percentage of Kerr Neilson’s 13F Portfolio: 0.001%
Dividend Yield: 4.34%
No. of Hedge Fund Holders:36
Prudential Financial, Inc. (NYSE: PRU), alongside its subsidiaries, provides investment management, insurance, and financial services and products in the U.S., as well as other countries. Prudential Financial reported Q1 2021 results recently, with $2.828 billion net income attributable to the company, or $6.98 per common share. This compares with a $271 million net loss or $0.70 per common share in Q1 2020. After adjusting tax, the operating income of the company came in at $1.665 billion or $4.11 per common share for Q1 2021, as against $897 million or $2.22 per common share for Q1 2020. The stock ranks 7th in the list of best dividend stocks to buy according to billionaire Kerr Neilson.
Prudential Financial, Inc. (NYSE: PRU)’s business unit, Prudential Retirement, recently also closed its transaction involving the third-largest longevity risk transfer for U.K. business. The transaction is worth $8.4 billion of the pensioner liabilities. The same business unit has additionally launched Advice and Income Engines, powered by NextCapital at Prudential. Expand Research has a “Neutral” rating on Prudential Financial, Inc. (NYSE: PRU).
6. International Business Machines Corporation (NYSE: IBM)
Neilson’s Stake Value: $169,000
Percentage of Kerr Neilson’s 13F Portfolio: 0.01%
Dividend Yield: 4.51%
No. of Hedge Fund Holders:51
International Business Machines Corporation (NYSE: IBM) ranks 6th in the list of best dividend stocks to buy according to billionaire Kerr Neilson Earlier this month, International Business Machines Corporation (NYSE: IBM) announced that it is creating a 2nm node chip, which will be the first-ever in the world. The new chip is estimated to offer 45% better performance, with a 75% lower energy consumption than the existing 7nm node chips. Additionally, IBM has announced Q1 2021 financial results, reporting strong performance. The stock ranks 6th in the list of best dividend stocks to buy according to billionaire Kerr Neilson.
Like Microsoft Corporation (NASDAQ: MSFT), Intel Corporation (NASDAQ: INTC) and Apple Inc. (NASDAQ: AAPL), IBM is one of the most reliable tech dividend stocks.
Revenue in the first quarter of 2021 is reported at $17.7 billion, a rise of 1% from the previous year. GAAP gross profit margin of IBM came in at 46.3%, rising 120 basis points. For full-year 2021 guidance, IBM expects $11 billion to $12 billion of adjusted cash flow.
Additionally, International Business Machines Corporation (NYSE: IBM) has also partnered with Parle Products, the Indian food goods company, to facilitate the latter with hybrid cloud transition.
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Disclosure: None. 10 Best Dividend Stocks to Buy According to Billionaire Kerr Neilson is originally published on Insider Monkey.
