Billionaire George Soros’ Top Dividend Picks

Dividend stocks sufferred losses in November. Following Donald Trump’s election victory, expectations shifted towards lower taxes, higher growth rates and higher interest rates. Even though lower taxes and higher growth rates are good for dividend stocks, market participants worried that these wouldn’t be enough to ameliorate the negative effects of higher interest rates on the relative attractiveness of dividend stocks. Even though some hedge fund managers mentioned the possibility of 10-year interest rates reaching as high as 6% in the next few years, we believe this is highly unlikely, as there is a surplus of worldwide savings as well as several central banks that are still flooding the markets with cheap money. These forces will keep the long-term interest rates from rising quickly and dramatically. That’s why this may be a good time to get into dividend stocks.

George Soros is one of the most famous hedge fund managers in the world and is known as “The Man Who Broke the Bank of England” because of his successful short sale of $10 billion worth of sterling in 1992. He still has not lost his touch and was ranked as the tenth highest earning hedge fund manager as per Forbes. He is the founder and chairman of Soros Fund Management which earned an astounding $5.5 billion in 2013. The fund has a relatively high 46% concentration in the information technology sector increasing from 34% during the third quarter of 2015. The fund’s 13F portfolio had a value of $3.99 billion and bought 128 new stocks as per its last 13F filing. While hedge funds do not generally follow a strategy of focusing on high dividend yielding stocks, we have analysed George Soros’s portfolio in detail to select some of the high dividend paying stocks. We believe he is long these stocks for their upside potential, not their dividend yields. Below we take a look at some of his largest positions yielding 3% and more.

Imitating hedge funds and other institutional investors can help identify some of the most profitable stocks on the market. However, our extensive research that covered the period between 1999 and 2012, showed that the best approach is to follow these investors into their small-cap stocks. Our backtests showed that the 15 most popular small-cap stocks among hedge funds managed to generate a monthly alpha of 81 basis points, versus an alpha of 0.7 percentage points posted by their top 50 large-cap picks (see more details here).

Soros Fund Management initiated a new position in Intel Corporation (NASDAQ:INTC) buying 685,500 shares valued at $25.9 million during the third quarter. Intel Corporation (NASDAQ:INTC) constituted 0.65% of the fund’s portfolio at the end of September. The company sports a dividend yield of 3.08% which is one of the highest yields amongst the large cap technology stocks. The company recently paid a dividend of 26 cents per share in December. This semiconductor manufacturer is looking to revive its topline growth by expanding into the Internet of Things (IOT) and anti-virus segments. It reported an operating margin of 28% for its quarter ending October. The stock has returned more than 63% in the last ten years but has fallen by 1.3% over the last one month. This is in line with other technology stocks which have been generally under performing since the election results. Intel Corporation (NASDAQ:INTC) carries a mean analyst estimate of overweight. The aggregate value of hedge fund holding in Intel Corporation (NASDAQ:INTC) increased to $4.88 billion in the third quarter from $3.4 billion in the second quarter.

Soros Fund Management held 667,334 shares worth $20.9 million in Communications Sales & Leasing Inc (NASDAQ:CSAL) at the end of the third quarter, which constituted 0.52% of the fund’s portfolio as of September 30. This real estate investment trust (REIT) has a very high dividend yield of 9.6%. The company declared a quarterly cash dividend of $0.60 per common share in November. During its most recent third quarter, Communications Sales & Leasing Inc (NASDAQ:CSAL) posted revenues of $200 million and a net loss of $0.03 per share. The stock has rallied more than 30% in the last one year and has a mean recommendation of buy from most analysts covering the stock. 11.2% of this leading wireless infrastructure solutions providers float was held by 24 hedge funds. Though the number of hedge funds remained the same quarter over quarter, the total value of their holdings declined to $473 million from $489 million in the quarter earlier.

Anheuser Busch Inbev SA NV (ADR) (NYSE:BUD) was another new addition to the portfolio of Soros Fund Management during the third quarter. The fund bought 122,500 call options of this stock valued at more than $16 million as per their last 13F filing. This beer major gives a healthy dividend yield of 3.99% and the latest indicated dividend amount was $1.379 per share. With a portfolio of over 200 beer brands, this company has a market value of $164 billion. The stock has returned more than 69% in the last five year, but has seen a decline of almost 19% since January this year. The booze industry performs decently both in good as well as bad times and Anheuser Busch Inbev SA NV (ADR) (NYSE:BUD) keeps getting bigger and better with new acquisitions. The number of funds from our system owning Anheuser Busch Inbev SA NV (ADR) (NYSE:BUD) during the third quarter declined by 3 to 32. The value of their holdings also came down by 3.3% to $5.85 billion quarter over quarter.

Soros Fund Management bought 45,420 shares in Syngenta AG (ADR) (NYSE:SYT) during the July-September period. It was a new addition to the fund’s portfolio with a value of $3.979 million. The company has a dividend yield of 2.93% and engages in manufacturing of products that increases crop yields and food quality. Syngenta AG (ADR) (NYSE:SYT) posted a net profit margin of 15% and operating margin of 19% during its second quarter ending June. The stock price has gone up by 33% in the last five years, but under performed the S&P 500 index which has has gone up by 89% during the same time period. It is currently trading very near to its 52 week average price. As per our database, the total value of hedge fund holding in this stock increased by 11.67% to $1.22 billion at the end of the third quarter, while the number of funds increased to 36 from 33 quarter over quarter.

Soros Fund Management held 12,985 shares of Procter & Gamble Co (NYSE:PG) having a value of $1.2 million at the end of the third quarter. The fund pared its stake by selling 2,115 shares with Procter & Gamble Co (NYSE:PG) and the stock constituted 0.03% of the fund’s portfolio value as per its latest round of 13F filing. This giant consumer product producer gives a dividend yield of 3.25% and has increased its dividends have by 10% in the last four years. The current quarterly dividend stands at 66 cents per share up from an average of 60 cents per share in 2013. Procter & Gamble Co (NYSE:PG) reported better than expected fiscal first quarter results with net profits of $1.03 per share. This beat analysts’ expectations of $0.98 by 5%. The stock carries a mean recommendation of overweight and has returned more than 30% over the last ten years. The value of hedge fund holdings in this stock increased by a whopping 263% quarter-over-quarter as several hedge funds initiated big positions in the stock during Q3. 71 hedge funds in our system held $20.09 billion worth of PG shares at the end of September.

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