In this article we discuss the 10 best dividend stocks to buy according to Michael Burry. If you want to skip our detailed analysis of Burry‘s history, and his hedge fund performance, go directly to the 5 Best Dividend Stocks to Buy According to Michael Burry.
Michael Burry, the chief of California-based Scion Asset Management, predicted the 2008 mortgage crisis in the United States that led to one of the worst financial downturns in decades, catapulting him to global fame and inspiring a Hollywood film in this regard. Although Burry is famous for value investing, he has also diversified his investment portfolio through bets on high growth stocks like Tesla, Inc. (NASDAQ: TSLA), Alphabet Inc. (NASDAQ: GOOG), and Facebook, Inc. (NASDAQ: FB) in recent years.
In regulatory filings released earlier this month, Burry revealed his short position on Tesla, Inc. (NASDAQ: TSLA) and a bull outlook towards Alphabet Inc. (NASDAQ: GOOG) and Facebook, Inc. (NASDAQ: FB) for the coming months. Tesla, Inc. (NASDAQ: TSLA) is one of the largest holdings (short position) of Scion Asset Management that has seen share price fall in recent days amid supply chain pressures and decreasing demand. Burry has predicted that increased market competition will further hit the stock of the electric vehicle maker.
Besides the bet against Tesla, Inc. (NASDAQ: TSLA), other major revelations from the filing include close to 12% increased activity on Alphabet Inc. (NASDAQ: GOOG) and Facebook, Inc. (NASDAQ: FB) stock, as well as doubling of stakes for Scion in dividend stocks like The Kraft Heinz Company (NASDAQ: KHC). Burry has call options on over 1.1 million The Kraft Heinz Company (NASDAQ: KHC) shares, up from over 580,000 shares last year. The Kraft Heinz Company (NASDAQ: KHC) pays a regular and healthy dividend to shareholders.
Dividend stocks are often a good option as a hedge against market pressures during times of chaos. Amid increased stock volatility around tech-related growth stocks in recent weeks, as well as supply chain pressures that look set to increase inflation, Burry is perhaps shielding his hedge fund from possible setbacks until the crisis period is over. There are several other dividend stocks in his portfolio from the energy, telecommunications, and other sectors. Some of these are discussed below.
It remains to be seen how Burry will perform this year compared to other hedge fund managers as an uncertain post-pandemic economy takes off. 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.
Michael Burry of Scion Asset Management
With this context in mind, here is our list of the 10 best dividend stocks to buy according to Michael Burry.
Best Dividend Stocks to Buy According to Michael Burry
10. Scorpio Tankers Inc. (NYSE: STNG)
Number of Hedge Fund Holders: 20
Dividend Yield:
Scorpio Tankers Inc. (NYSE: STNG) is a Monaco-based tanker shipping company founded in 2009. It is placed tenth on our list of 10 best dividend stocks to buy according to Michael Burry. Scorpio stock has offered investors more than 95% in returns year-to-date. Scion Asset Management holds 190,100 shares in the company worth over $3.5 million. This represents 0.25% of their portfolio. The company primarily engages in the international transportation of refined petroleum products.
Scorpio Tankers Inc. (NYSE: STNG) stock is a good option for income investors as the firm pays a sizable dividend. On May 7, the company declared a quarterly dividend of $0.10 per share, in line with previous.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm Hosking Partners is a leading shareholder in Scorpio Tankers Inc. (NYSE: STNG) with 945,017 shares worth more than $17 million.
Just like Facebook, Inc. (NASDAQ: FB), Alphabet Inc. (NASDAQ: GOOG), and The Kraft Heinz Company (NASDAQ: KHC), Scorpio Tankers Inc. (NYSE: STNG) is one of the best stocks to buy according to Michael Burry.
In its Q2 2020 investor letter, Evermore Global Advisors, an asset management firm, highlighted a few stocks and Scorpio Tankers Inc. (NYSE: STNG) was one of them. Here is what the fund said:
“Scorpio Tankers (STNG US), one of the world’s largest product tanker operators, was the largest detractor to Fund performance during the second quarter. COVID-19 has caused significant demand destruction in oil and other refined oil products which resulted in contango for diesel, jet fuel and gasoline forward prices that made floating storage an attractive option for traders and refiners. We saw the positive impact on spot rates at the end of March and April, which pushed rates higher to unprecedented levels.
Starting in late April, Saudi Arabia, Russia and OPEC+ eventually agreed to cut oil production which led to the contango trade to dissipate, which negatively impacted spot rates and STNG’s stock price. While current rates are no longer at record high levels, we believe STNG secured attractive rates during the second quarter and we expect the company to generate significant cash flows, a view that has been dismissed by the broader market. In addition, STNG has reached an agreement with scrubber manufacturers to delay the purchase and installation of 19 scrubbers until at least 2021 in order to take advantage of the current environment.”
9. CVS Health Corporation (NYSE: CVS)
Number of Hedge Fund Holders: 62
Dividend Yield: 2.29%
CVS Health Corporation (NYSE: CVS) is a Rhode Island-based healthcare firm founded in 1963. It is ranked ninth on our list of 10 best dividend stocks to buy according to Michael Burry. The company stock has offered investors returns exceeding 29% over the course of the past twelve months. Scion Asset owns 400,000 shares in the health firm worth over $30 million, representing 2.22% of their portfolio. CVS health owns a pharmacy brand and sells insurance products as well.
CVS Health Corporation (NYSE: CVS) posted quarterly results on May 4, reporting earnings per share of $2.04 per share for the first three months of 2021. The EPS beat market predictions by $0.32. The revenue over the period was over $69 billion.
At the end of the first quarter of 2021, 62 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in CVS Health Corporation (NYSE: CVS), up from 56 in the previous quarter worth $961 million.
In its Q1 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and CVS Health Corporation (NYSE: CVS) was one of them. Here is what the fund said:
“We sold our position in CVS Health Corp. to allocate capital to companies with larger margins of safety. During the five years that we owned CVS Health Corp., the company acquired Aetna. At the time, we also owned Aetna, and we believed the combination of the two companies would create additional value. After the acquisition, its business performance has been disappointing. We reevaluated our assumptions and determined its value has not grown.”
8. RPT Realty (NYSE: RPT)
Number of Hedge Fund Holders: 8
Dividend Yield: 2.36%
RPT Realty (NYSE: RPT) is a New York-based real estate investment trust that runs shopping centers. It was founded in 1955 and is placed eighth on our list of 10 best dividend stocks to buy according to Michael Burry. RPT stock has returned more than 109% to investors over the past year. The company owns close to 50 shopping centers across the US and primarily deals in open air ones. Scion Asset holds 600,00 shares in the company worth over $6.8 million, representing 0.5% of their portfolio.
In earnings results for the first three months of 2021, posted on May 5, RPT Realty (NYSE: RPT) reported a revenue of over $50 million, down over 5% compared to the revenue over the same period last year but beating market predictions by $2.27 million.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium Management is a leading shareholder in RPT Realty (NYSE: RPT) with 450,087 shares worth more than $5.1 million.
Just like Facebook, Inc. (NASDAQ: FB), Alphabet Inc. (NASDAQ: GOOG), and The Kraft Heinz Company (NASDAQ: KHC), RPT Realty (NYSE: RPT) is one of the best stocks to buy according to Michael Burry.
7. NetApp, Inc. (NASDAQ: NTAP)
Number of Hedge Fund Holders: 26
Dividend Yield: 2.42%
NetApp, Inc. (NASDAQ: NTAP) is a California-based technology company that provides cloud data and management services. It was founded in 1992 and is ranked seventh on our list of 10 best dividend stocks to buy according to Michael Burry. Scion Asset holds 300,000 shares in the firm worth over 21 million, representing 1.61% of their portfolio. Some of the industries the company serves include energy, financial services, government, high technology, internet, life sciences, healthcare services, and manufacturing, among others.
Although NetApp, Inc. (NASDAQ: NTAP) is a tech-related growth stock, it pays a regular and healthy dividend. In February, the company declared a quarterly dividend of $0.48 per share, in line with previous.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in NetApp, Inc. (NASDAQ: NTAP) with 1 million shares worth more than $75 million.
6. SunCoke Energy, Inc. (NYSE: SXC)
Number of Hedge Fund Holders: 22
Dividend Yield: 3.34%
SunCoke Energy, Inc. (NYSE: SXC) is an Illinois-based raw material processing and handling company. It is placed sixth on our list of 10 best dividend stocks to buy according to Michael Burry. The company deals in steel, coke, electric utility, coal producing, and other manufacturing products. SunCoke stock has offered investors returns exceeding 119% in the past twelve months. Scion Asset Management holds 1.1 million shares in the company worth over $7 million, representing 0.56% of their portfolio.
SunCoke Energy, Inc. (NYSE: SXC) declared earnings per share of $0.20 per share for the first quarter of 2021 on April 28, beating market predictions by $0.10. The revenue over the period was close to $360 million, beating market estimates by over $50 million.
At the end of the first quarter of 2021, 22 hedge funds in the database of Insider Monkey held stakes worth $86 million in SunCoke Energy, Inc. (NYSE: SXC), up from 19 in the preceding quarter worth $65 million.
Just like Facebook, Inc. (NASDAQ: FB), Alphabet Inc. (NASDAQ: GOOG), and The Kraft Heinz Company (NASDAQ: KHC), SunCoke Energy, Inc. (NYSE: SXC) is one of the best stocks to buy according to Michael Burry.
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Disclosure: None. 10 Best Dividend Stocks to Buy According to Michael Burry is originally published on Insider Monkey.
