In this article we will take a look at the 10 best dividend stocks to buy according to billionaire Paul Tudor Jones. You can skip our detailed Paul Tudor Jones’ history, investment philosophy, and hedge fund performance, and go directly to the 5 Best Dividend Stocks to Buy According to Billionaire Paul Tudor Jones.
Paul Tudor Jones II has a solid reputation in the investment landscape. He is the founder of Tudor Investment Corporation hedge fund. He has been in the investment landscape since the 1980s and invests in multiple asset classes, including commodities, equities, currencies, derivatives, and others.
Paul Tudor Jones revealed his stance on cryptocurrencies in a recent interview with CNBC and disclosed that roughly 1% of his assets are in Bitcoin. He also noted during the interview that he is convinced that Bitcoin is a store of value.
Tudor Jones’ hedge fund gained 13.16% in Q4 2020 and 16.97% in the last four quarters. The fund is diversified into various segments, including 23.71% in information technology, 17.86% in finance, 13.68% in consumer discretionary, 11.31% in healthcare, and 8.58% in communications.
Paul Tudor Jones’ Holdings and Portfolio Updates
Paul Tudor Jones likes to diversify his portfolio. His Q4 portfolio shows that he is investing heavily in the technology stocks. For example, in the fourth quarter, Jones’ fund increased its hold in Apple (NASDAQ:AAPL) by 55%, ending the period with 307,719 shares of the company, worth $40.83 million. Recently, Morgan Stanley slashed its estimates for Apple’s (NASDAQ:AAPL) Services segment based on the “softer” April data for app store. The firm’s analyst maintained an Overweight rating for the stock with a price target of $161. Apple (AAPL) shares have gained 70% in the last 12 months.
Another notable portfolio update from Jones was Uber Technologies Inc (NYSE: UBER), in which his hedge fund increased its stake by 466%. The fund owns 300,552 shares of the company as of the end of the fourth quarter, worth $15.33 million. Uber Technologies Inc (NYSE: UBER) shares recently receded after U.S. Labor Secretary Marty Walsh said that most domestic gig workers should be classified as employees and also receive the related benefits.
He said that the government is “looking at it” and plans to have conversations with companies that employ gig workers (Uber Technologies Inc (UBER), LYFT Inc (NASDAQ: LYFT), among others)
Tudor Investment recently increased its stake in multiple stocks, including Slack Technologies, Inc. (NYSE: WORK), in which it boosted its stake by 2.10 million shares to 2.21 million shares in total. It ranks fourth in Tudor’s portfolio, accounted for 2.64% of his portfolio.
Other than Slack Technologies, Inc. (NYSE: WORK), Jones also bought an additional 464,224 shares in Grubhub Inc. (NYSE: GRUB) bringing the total stake to 1.13 million shares. Grubhub is in the limelight amid an increasing in demand of food delivery following the pandemic. In the month of March, Credit Suisse analyst Bhavin Shah initiated coverage on the stock and rated it “Neutral” setting a price target of $45. Grubhub Inc. (NYSE: GRUB) has given a return of 37.88% over the past one year.
Another stock that was newly added to the portfolio was Airbnb, Inc. (NASDAQ: ABNB), where Tudor purchased 355,000 shares. Last week, Needham & Company initiated coverage on the stock and rated it “Buy” setting a price target of $210. Airbnb, Inc. (NASDAQ: ABNB) has yielded a return of 14.23% over the past one year.
Investing in the best dividend stocks is one of the best ways to rapidly grow your portfolio, which Paul Tudor Jones has proved since founding his hedge fund. Finding the best dividend stocks is not exactly a walk in the park. Even the smart money is struggling at finding the most valuable stocks. 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 delve into the best dividend stocks to buy according to billionaire Paul Tudor Jones based on his hedge fund’s Q4 portfolio.
Best Dividend Stocks to Buy According to Billionaire Paul Tudor Jones
10. SLR Investment Corp. (NASDAQ: SLRC)
Dividend Yield: 8.84%
Value: $325,000
Percent of Paul Tudor Jones’ 13F Portfolio: 0.0092%
No. of hedge Fund Holders: 12
SLR Investment Corp. (NASDAQ: SLRC) is a business development investment firm whose investments mainly consist of senior secured loans offered by middle-market companies in the private sector. The fair value of its investment portfolio was $2.0 billion from roughly 600 borrowers as of December 31, 2020.
The company’s Q4 2020 financials looked healthy, with a $14.9 million net investment income equivalent to $0.35 per share. Its net investment income for the full year 2020 was $59.2 million, equivalent to $1.40 per share. Its net asset value as of December 31, 2020, was $20.16 per share.
SLR Investment Corp. (NASDAQ: SLRC) declared a Q4 2020 dividend of $0.41 per share, which is healthy enough to earn a spot in the best dividend stocks list. One of the most notable developments from the company includes its rebranding to SLR Capital Partners.
9. Ares Commercial Real Estate Corporation (NYSE: ACRE)
Dividend Yield: 9.04%
Value: $564,000
Percent of Paul Tudor Jones’ 13F Portfolio: 0.0159%
No. of hedge Fund Holders: 8
Ares Commercial Real Estate Corporation (NYSE: ACRE) is a financial company that provides and manages real estate loans in the commercial real estate segment. The company announced a healthy dividend at $0.33 per share for the latest quarter. It also declared a $0.02 per share supplemental dividend to be distributed alongside the declared quarterly dividend. It ranks 9th in the list of best dividend stocks to buy according to billionaire Paul Tudor Jones.
The company’s impressive dividend payout and commitment to generating value for shareholders earn it a comfortable spot among the best dividend stocks. Despite the healthy dividend payout, there have been some rough times in the past, especially in 2020, during which Ares Commercial Real Estate Corporation (NYSE: ACRE) suffered significant losses. However, it was able to bounce back and maintain a solid performance.
8. Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI)
Dividend Yield: 9.31%
Value: $1,162,000
Percent of Paul Tudor Jones’ 13F Portfolio: 0.0328%
No. of hedge Fund Holders: 18
Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) is a REIT that primarily invests in mezzanine loans, senior mortgages, and debt investments in the commercial real estate sector collateralized by real estate assets across Europe and the U.S. The company provides financing for various types of commercial properties. ARI ranks 8th in the list of best dividend stocks to buy according to billionaire Paul Tudor Jones. The REIT is owned by Apollo Global Management, Inc., which recently bought Yahoo and AOL from Verizon Communications Inc. (NYSE: VZ) for about $5 billion.
Apollo recently announced its Q1 financials, revealing that it generated $71 million in net income during the quarter, which was higher than the $65 million net income reported in the previous quarter. The revenue figure for the latest quarter outperformed the consensus estimate by $4.12 million. The non-GAAP EPS in Q1 was $0.39, while the GAAP EPS was $0.37. Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) controlled $6.8 billion worth of assets in its portfolio in Q1. The solid performance highlights its consistency as one of the best dividend stocks.
In one of its investor letters, Diamond Hill Capital highlighted a few stocks and Apollo Commercial Real Estate Finance Inc. (NYSE:ARI) is one of them. Here is what Diamond Hill Capital said:
“Shares of real estate investment trust (REIT) Apollo Commercial Real Estate Finance, Inc. declined along with many other mortgage REITs. While the company isn’t exposed to the margin call issues of other mortgage REITs, its risky loan book, especially in hotels and construction, are particularly at risk in this downturn, which could lead to additional loan losses, reduced book value, and lower dividends. We covered our position after the shares reached our estimate of intrinsic value.”
7. Capstead Mortgage Corporation (NYSE: CMO)
Dividend Yield: 9.34%
Value: $967,000
Percent of Paul Tudor Jones’ 13F Portfolio: 0.0273%
No. of hedge Fund Holders: 14
Capstead Mortgage Corporation (NYSE: CMO) is a Texas-based REIT that invests in residential pass-through mortgage securities called ARM securities backed by government entities such as Freddie Mac and Fannie Mae. The company’s earnings have been on the decline. However, investors remain happy courtesy of the implied ratio of payouts above the historical average, thus indicating a healthy dividend. The stock ranks 7th in the list of best dividend stocks to buy according to billionaire Paul Tudor Jones.
Capstead Mortgage reported a $0.13 non-GAAP EPS in Q1 while its GAAP EPS was $0.15. Its quarterly revenue was $20.11 million, which was down 10.4% YoY. The company declared a $0.15 per share dividend for Q1 2021.
Core earnings came in at $17.4 million or $0.13 per diluted share, which equates to a 7.7% annual return on equity capital. Capstead Mortgage Corporation (NYSE: CMO) portfolio was worth $7.4 billion at the end of the quarter, while its average annualized prepayment rate was 38.67%, slightly lower than 39.97% in the previous quarter.
6. New Mountain Finance Corporation (NASDAQ: NMFC)
Dividend Yield: 9.41%
Value: $940,000
Percent of Paul Tudor Jones’ 13F Portfolio: 0.0266%
No. of hedge Fund Holders: 10
New Mountain Finance Corporation (NASDAQ: NMFC) lends to middle-market firms as part of its strategy to generate revenue from debt securities investments. Its investment in the capital structure also allows it to earn money through capital appreciation.
The company announced its Q4 2020 results in February this year, revealing that it earned $67.8 million in revenue, surpassing the consensus estimate by $1.76 million. However, the revenue figure was down 7.4% YoY. Its net interest income during the quarter was $0.30, in line with the previous quarter.
The company’s net asset value is of $1.2 billion as of December 31, 2020, while its portfolio which consisted of 105 companies was worth almost $3 billion. Some of the company’s latest developments include the board’s approval of its plan to buy back $50 million worth of New Mountain Finance common shares as part of its share repurchase program.
The share buyback program will remain active until December 31 this year, unless the board favors its extension or until $50 million of the company’s shares have been repurchased, whichever comes first. The share repurchase program and the performance so far highlight why Tudor believes that New Mountain Finance Corporation (NASDAQ: NMFC) is still one of the best dividend stocks to buy.
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Disclosure: None. 10 Best Dividend Stocks to Buy According to Billionaire Paul Tudor Jones is originally published on Insider Monkey.
