Billionaire Leon Cooperman’s Top Dividend Picks

Hedge fund manager Leon Cooperman was a “bottom-fisher” during the recent market sell-off, asserting in an interview at the beginning of September that the U.S equity markets were likely to go higher. He turned out to be quite right, indeed. Specifically, the founder, chairman, and CEO of Omega Advisors said on CNBC’s “Squawk Box” that “Even though I think the market is in a zone of fair valuation, I think the market is not in a position in my opinion to go down a lot, and I think that the path is still upward”. It is also widely-known that most people, including Leon Cooperman, are fond of dividend-paying stocks, as they generate steady payments for their holders. It is also true that most dividend-paying stocks represent financially-healthy and mature companies, which may also see their shares appreciate over time. With this in mind, we will lay out a list of five stocks owned by Leon Cooperman’s Omega Advisors that offer the highest dividend yield.

Professional investors like Leon Cooperman spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, we also know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned 102% and beaten the market by more than 53 percentage points since the end of August 2012 (see the details).

#5 Dow Chemical Co (NYSE:DOW)

Shares Owned by Omega Advisors (as of June 30): 2.32 million shares

Value of Holding (as of June 30): $118.49 million

Current Dividend Yield: 3.66%

Omega Advisors put more faith in Dow Chemical Co (NYSE:DOW) during the second quarter, lifting its stake in the company by nearly 442,000 shares. Just a few days ago, the company announced a 10% increase to its quarterly dividend to $0.46 per share, which will be payable on January 29, 2016. As a result, Dow Chemical distributes an annualized dividend of $1.84 per share, giving it a current dividend yield of 3.66%. It is also worth pointing out that the company has paid cash dividends each quarter since 1912, while the freshly-announced quarterly dividend represents the highest in its entire history. The company’s disappointing stock performance during the third quarter (the stock lost 16%) is definitely overshadowed by the nearly 19% return it has delivered since the beginning of October. Dan Loeb’s Third Point was the largest stockholder of Dow Chemical Co (NYSE:DOW) within our database at the end of the second quarter, owning exactly 23 million shares.

#4 General Motors Company (NYSE:GM)

Shares Owned by Omega Advisors (as of June 30): 3.66 million shares

Value of Holding (as of June 30): $122.11 million

Current Dividend Yield: 4.05%

Omega Advisors was very bullish on General Motors Company (NYSE:GM) during the second quarter, as the firm increased its position in the car maker by 1.82 million shares during that three-month period. GM has paid a quarterly cash dividend of $0.36 per share for the past two quarters, which amounts to a current dividend yield of 4.05%. The company had a great start to the fourth quarter in terms of stock performance, with its shares gaining nearly 20% since the beginning of October. This comes after GM’s stock lost over 8% during the third quarter. General Motors also delivered a strong financial performance in the third quarter, thanks to its strong results in the United States and China. Warren Buffett’s Berkshire Hathaway held its position in General Motors Company (NYSE:GM) unchanged during the June quarter at 41 million shares.

#3 Navient Corp (NASDAQ:NAVI)

Shares Owned by Omega Advisors (as of June 30): 7.73 million

Value of Holding (as of June 30): $140.76 million

Current Dividend Yield: 4.94%

Omega Advisors sold off a portion of its stake in Navient Corp (NASDAQ:NAVI) during the quarter, which added up to 449,140 shares. The loan management, servicing and asset recovery company pays out an annualized dividend per share of $0.64, which currently generates a 4.94% dividend yield. The company had a terrible third quarter in terms of stock performance, as its shares lost 37% during the three-month period. Nevertheless, the stock has bounced back since the end of September, advancing by 23% thus far. Just a few days ago, Navient released its third quarter earnings report, which pleased the market despite it disclosing lower earnings relative to last year. The company posted GAAP net income of $237 million or $0.63 per diluted share, compared to $359 million or $0.85 reported a year ago. Cliff Asness’ AQR Capital Management reported ownership of 6.62 million shares of Navient Corp (NASDAQ:NAVI) through its 13F filing for the June quarter.

#2 Targa Resources Corp (NYSE:TRGP)

Shares Owned by Omega Advisors (as of June 30): 1.77 million shares

Value of Holding (as of June 30): $157.76 million

Current Dividend Yield: 6.21%

Targa Resources Corp (NYSE:TRGP) made the list of Leon Cooperman’s ten largest equity holdings at the end of the June quarter. However, Omega Advisors reduced its stake in the general partner of midstream master limited partnership (MLP) Targa Resources Partners LP by 192,416 shares during the second quarter. On October 20, the company announced a third quarter cash dividend of $0.91 per share, or $3.64 per share on an annualized basis. The freshly-announced dividend marks an increase of roughly 4% quarter-over-quarter and 24% year-over-year, and also adds up to a current dividend yield of 6.21%. The shares of Targa Resources lost slightly more than 41% during the latest quarter, but have advanced by nearly 14% since the end of that three-month period. Clint Carlson’s Carlson Capital owned almost 435,000 shares of Targa Resources Corp (NYSE:TRGP) on June 30.

#1 Chimera Investment Corporation (NYSE:CIM)

Shares Owned by Omega Advisors (as of June 30): 14.13 million shares

Value of Holding (as of June 30): $193.68 million

Current Dividend Yield: 13.53%

Chimera Investment Corporation (NYSE:CIM) was the sixth-largest equity holding of Omega Advisors at the end of the second quarter, accounting for 3.09% of its portfolio value. The specialty finance company pays out an annualized dividend of $1.92, which provides a current annualized dividend yield of 13.53%. In mid-September, the company’s Board of Directors announced a third quarter cash dividend of $0.48 per common share, and also stated that it anticipates maintaining a minimum quarterly dividend of the same amount for the fourth quarter as well. When it comes to the company’s stock performance, the shares of Chimera returned 0.09% during the third quarter and are slightly over 10% in the red year-to-date. Israel Englander’s Millennium Management acquired a 4 million-share stake in Chimera Investment Corporation (NYSE:CIM) during the June quarter.

Disclosure: None