Investors looking for yield have had a hard time generating solid returns, with the interest rates having been kept so low for such a long time. An obvious alternative are dividend stocks. Telecommunications and utilities sectors, which are known for high concentration of dividend stocks, have registered the largest growth recentlz, as investors flocked to these stocks, pushing prices higher. Billionaire Carl Icahn also likes to invest in dividend paying stocks, as we found a number of high-dividend paying stocks among his top equity positions. Let’s have a look at five stocks that rank among Icahn’s largest positions and also sport a solid dividend yield.
While there are many metrics that investors can assess in the investment process, hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).
Follow Carl C. Icahn's Icahn Capital LP
#5 American Railcar Industries, Inc. (NASDAQ:ARII)
– Annual Dividend: $1.60
– Dividend Yield: 4.16%
First up is the US manufacturer of hopper and tank railcars. Having made no changes to the positions, Carl Ican’s fund continues to hold 11.9 million shares valued at $468 million according to its latest 13F filing. American Railcar Industries, Inc. (NASDAQ:ARII) has a market cap of $742 million and is currently trading at an earnings multiple of 7.0 compared to the industry average of 16. Since the start of 2016, the stock has been trading in a range and is currently down by 16% for the year, having ended Monday’s trading session at $38.28 per share. Although American Railcar Industries, Inc. (NASDAQ:ARII) is not very popular among hedge funds, with only 11 of the funds we follow currently invested in the stock, roughly 63% of its common stock was held by these 11 funds at the end of the quarter. Chuck Royce is also keeping an eye on this stock, as his fund, Royce & Associates, held 189,100 shares, unchanged over the quarter.
Follow American Railcar Industries Inc. (NASDAQ:ARII)
Follow American Railcar Industries Inc. (NASDAQ:ARII)
#4 Xerox Corp (NYSE:XRX)
– Annual Dividend: $0.31
– Dividend Yield: 3.23%
During the second quarter, Icahn and his team have boosted their investment in Xerox by 8%, taking it to a little over 99 million shares worth approximately $939 million at the end of June. Hedge fund interest in Xerox Corp (NYSE:XRX) picked up during the most recent quarter, with the number of funds invested having increased to 31 at the end of June, from 29 a quarter before. Anand Parekh‘s Alyeska Investment Group established a fresh position during the quarter, having amassed 5.26 million shares valued at $49.9 million. As its revenue stream has slumped in recent years, falling 75% since 2011, Xerox Corp (NYSE:XRX) is set to split its document business from the struggling service business, hoping it would reinvigorate their performance. The company’s management is adamant the split would result in a cost reduction of $2.4 billion over the next three fiscal years, with $700 million expected to accrue by the end of the current year.
