Billionaire Seth Klarman’s Top 5 Dividend Stock Picks

In this article, we discuss top 5 dividend stocks to buy according to billionaire Seth Klarman. If you want to read our detailed analysis of Klarman’s investment strategy and overall performance of Baupost Group, go directly to read Billionaire Seth Klarman’s Top 9 Dividend Stock Picks. 

5. Encompass Health Corporation (NYSE:EHC)

Baupost Group’s Stake Value: $133,429,000
Dividend Yield as of November 15: 1.05%

Encompass Health Corporation (NYSE:EHC) is one of America’s largest providers of post-acute healthcare services and also offers other healthcare services to its patients. In October, Raymond James raised its price target on the stock to $72 with a Strong Buy rating on the shares, highlighting the company’s Q3 earnings beat. The firm also appreciated the company’s announcement of bonuses and improving contract labor.

Baupost Group started investing in Encompass Health Corporation (NYSE:EHC) during the fourth quarter of 2021, purchasing shares worth over $46.7 million. At the end of Q3 2022, the hedge fund owned roughly 3 million EHC shares, worth over $133.4 million. The company represented 2.3% of billionaire Seth Klarman’s portfolio.

Encompass Health Corporation (NYSE:EHC) currently pays a quarterly dividend of $0.15 per share and has a dividend yield of 1.05%, as of November 15.

At the end of Q2 2022, 34 hedge funds in Insider Monkey’s database owned stakes in Encompass Health Corporation (NYSE:EHC), down from 48 in the preceding quarter. These stakes are valued at $645.5 million.

4. Micron Technology, Inc. (NASDAQ:MU)

Baupost Group’s Stake Value: $164,627,000
Dividend Yield as of November 15: 0.72%

Micron Technology, Inc. (NASDAQ:MU) is an American semiconductor manufacturing company that also specializes in data storage and other related services. The company currently pays a quarterly dividend of $0.115 per share, raising it by 15% in July this year. This was the company’s first dividend hike since the inception of its dividend policy in 2021. As of November 15, the stock has a dividend yield of 0.72%.

During Q3 2022, Baupost Group raised its position in Micron Technology, Inc. (NASDAQ:MU) by 21%. This increase takes the fund’s total MU stake to $164.6 million. The company accounted for 2.84% of billionaire Seth Klarman’s portfolio.

In October, Loop Capital initiated its coverage of Micron Technology, Inc. (NASDAQ:MU) with a Buy rating and a $70 price target, appreciating the company’s key metrics and other fundamentals.

As per Insider Monkey’s Q2 2022 database, 69 hedge funds reported owning stakes in Micron Technology, Inc. (NASDAQ:MU), falling from 78 in the previous quarter. Those stakes held a total value of over $2.1 billion.

Claret Asset Management mentioned Micron Technology, Inc. (NASDAQ:MU) in its Q3 2022 investor letter. Here is what the firm has to say:

“Inflation is still higher than interest rates… not an incentive to save for most people. Either inflation must come down or interest rates have to go up further. Or both. And probably both. Now that they are taking the punch bowl away and the party is over, what happens next? For whatever reason, the stock market seems to always precede the economic reality: Micron reached a high of $98.45 on January 5th, 2022 and is trading at $50.00 today.”

3. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC)

Baupost Group’s Stake Value: $180,149,000
Dividend Yield as of November 15: 1.49%

SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is a Connecticut-based software company that sells related services to the financial industry. The company has been raising its dividends consistently for the past 6 years. It currently offers a quarterly dividend of $0.20 per share for a dividend yield of 1.49%, as of November 15.

Highlighting the company’s recent quarterly earnings and expected slow demand for its products, Jefferies maintained a Hold rating on SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) in October with a $55 price target.

Baupost Group has been investing in SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) since the second quarter of 2020. The hedge fund raised its position in the company by 28% during Q3 2022, which takes its total stake to over $180 million. The company represented 3.1% of billionaire Seth Klarman’s portfolio.

At the end of Q2 2022, 50 hedge funds in Insider Monkey’s database owned stakes in SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), growing from 48 in the previous quarter. These stakes have a collective value of over $2.7 billion.

LVS Advisory mentioned SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) in its Q3 2022 investor letter. Here is what the firm has to say:

“SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is a publicly traded acquisition platform led by its founder Bill Stone who is also the largest shareholder. SS&C’s platform focuses on investment fund services (accounting, administration, back-office tools) and enterprise software. The company routinely makes large acquisitions in its target markets financed by debt and then quickly rationalizes the acquired companies and pays down debt. SS&C and its operators are very good at what they do. Since becoming public in 2010, SSNC has compounded its earnings per share at 25% per year (over 11 years). Despite this impeccable track record, the stock is down more than 40% this year. Investors are generally skeptical that an acquisition platform can generate strong investment returns given the current level of interest rates. Investors are also worried that SS&C’s customer base will be negatively impacted by the decline in asset prices. I am happy to take the other side of that bet! While SS&C will face some near-term headwinds from the market’s volatility, its client base is largely composed of private equity funds and hedge funds which have fared relatively well during 2022. SS&C’s valuation multiple is the cheapest it has ever been since its IPO and the company is aggressively buying back stock. A well-timed transaction could also be in the cards. SS&C made a number of outstanding, opportunistic acquisitions during the great recession from 2008 to 2010 and the company is primed to run that playbook again.”

2. Willis Towers Watson Public Limited Company (NASDAQ:WTW)

Baupost Group’s Stake Value: $258,294,000
Dividend Yield as of November 15: 1.40%

Willis Towers Watson Public Limited Company (NASDAQ:WTW) is a London-based multinational insurance company that provides related insurance advisory services to its consumers. During Q3 2022, Baupost Group increased its stake in the company by 39%. The firm owned a WTW stake worth over $258.2 million, which represented 4.45% of billionaire Seth Klarman’s portfolio.

Willis Towers Watson Public Limited Company (NASDAQ:WTW) currently pays a quarterly dividend of $0.82 per share. The stock has a dividend yield of 1.40%, as of November 15.

Piper Sandler upgraded Willis Towers Watson Public Limited Company (NASDAQ:WTW) to Overweight in October with a $250 price target. The firm mentioned that the company would be able to produce solid results due to its organic growth and cost-cutting efforts.

As per Insider Monkey’s Q2 2022 database, 50 hedge funds reported owning stakes in Willis Towers Watson Public Limited Company (NASDAQ:WTW), compared with 49 in the previous quarter. These stakes have a total value of over $1.7 billion.

Artisan Partners mentioned Willis Towers Watson Public Limited Company (NASDAQ:WTW) in its Q3 2022 investor letter. Here is what the firm has to say:

“Willis Towers Watson Public Limited Company (NASDAQ:WTW) shares rose 2% in the quarter. This modest increase made it one of our best performers during a difficult quarter. Absent significant news, the business continues to benefit from a hard insurance market. Results are still lagging peers, but the management team seems to be making progress in closing the gap. In the meantime, the company is returning significant amounts of capital to shareholders. Over the past eight months, it has repurchased $4 billion in stock and reduced the share count by 15%. And there is more on the way. This is a good business in a fantastic industry trading at 12X normalized earnings. We believe it is worth much more.”

1. Veritiv Corporation (NYSE:VRTV)

Baupost Group’s Stake Value: $336,002,000
Dividend Yield as of November 15: 1.95%

Veritiv Corporation (NYSE:VRTV) is a Georgia-based business-to-business provider of packaging, hygiene, and publishing products. The company was the fifth-largest holding of Baupost Group in Q3 2022. The hedge fund owned stakes worth over $336 million in the company, which represented 5.79% of billionaire Seth Klarman’s portfolio.

On November 8, Veritiv Corporation (NYSE:VRTV) initiated its dividend policy and pays a quarterly dividend of $0.63 per share. The stock has a dividend yield of 1.95%, as of November 15.

At the end of Q2 2022, 17 hedge funds in Insider Monkey’s database owned stakes in Veritiv Corporation (NYSE:VRTV), compared with 19 in the previous quarter. These stakes have a total value of $443.8 million.

You can also take a look at 11 Best Dividend Stocks to Buy According to Warren Buffett and 10 Best High-Dividend Stocks to Buy Now

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