Billionaire Seth Klarman’s Top 9 Dividend Stock Picks

Published on November 15, 2022 at 2:54 pm by Vardah Gill in Dividend Stocks, Hedge Funds, News

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

Seth Klarman is one of Wall Street’s highly influential investors. His hedge fund Baupost Group is widely known for delivering an annual average return of 15% in the past four decades while reporting only four years of losses during this time, as reported by Business Insider. Just like Warren Buffett, Klarman also follows value investing philosophy and believes that value investing requires patience, skill, and discipline. In addition to this, he also advises investors to focus on risks before returns and the relative performance of the stock. As someone who picked his first stock at the age of ten, Klarman’s decades of experience and skill culminated in the phenomenal performance of his fund. As of November 2022, the billionaire has a real-time net worth of $1.5 billion, according to Forbes.

In one of his interviews with Business Insider this October, Klarman mentioned that value investing mainly involves realizing a company’s worth and not its overall returns. He further mentioned that investors today are drawn to new investing ideas and assets, but the main focus should be on the long-term opportunities provided by these assets. In his interview with Harvard Business School in June, Klarman asserted that gold is one of the safest assets in the current market environment and investors should have gold assets in their portfolios.

As of the close of Q3 2022, Baupost Group held a 13F portfolio valued at roughly $5.8 billion, compared with $6.7 billion in the previous quarter. The hedge fund has major investments in the tech and services sectors, with finance and healthcare making up the smaller portions of the portfolio. Some of the fund’s most prominent holdings include Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:META), and Amazon.com, Inc. (NASDAQ:AMZN). However, we will discuss the fund’s top dividend stocks in this article.

Our Methodology:

For this list, we analyzed data from Baupost Group’s Q3 2022 13F portfolio. The stocks are ranked according to their stake value in the portfolio.

9. DigitalBridge Group, Inc. (NYSE:DBRG)

Baupost Group’s Stake Value: $41,154,000

Dividend Yield as of November 15: 0.27%

DigitalBridge Group, Inc. (NYSE:DBRG) is a Florida-based digital infrastructure investment firm. The company owns and invests in several businesses including data centers, small cells, fibers, and cell towers.

DigitalBridge Group, Inc. (NYSE:DBRG) is one of the latest acquisitions of Baupost Group as the hedge fund opened its position in the company in Q3. The firm bought roughly 3.3 million DBRG shares, worth over $41 million. The company represented 0.71% of billionaire Seth Klarman’s portfolio and is his important holding alongside Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:META), and Amazon.com, Inc. (NASDAQ:AMZN).

On September 14, DigitalBridge Group, Inc. (NYSE:DBRG) reinstated its quarterly dividends after suspending its payouts for over two years in recognition of the pandemic. It currently pays a quarterly dividend of $0.01 per share for a dividend yield of 0.27%, as of November 15.

In its recently-announced Q3 2022 results, DigitalBridge Group, Inc. (NYSE:DBRG) posted revenue of $296.6 million, which showed a 17.6% growth from the same period last year. At the end of September, the company had $636.3 million available in cash and cash equivalents, and its total assets amounted to over $11.7 billion.

In November, Raymond James maintained a Strong Buy rating on DigitalBridge Group, Inc. (NYSE:DBRG) with a $34 price target, highlighting the company’s focus on Digital Infrastructure assets that would continue to attract capital.

As of the close of Q2 2022, 26 hedge funds in Insider Monkey’s database owned stakes in DigitalBridge Group, Inc. (NYSE:DBRG), compared with 27 in the previous quarter. These stakes are collectively worth nearly $340 million.

Ave Maria mentioned DigitalBridge Group, Inc. (NYSE:DBRG) in its Q2 2022 investor letter. Here is what the firm has to say:

“DigitalBridge Group, Inc. (NYSE:DBRG) is a new holding. The company is an asset manager that invests, through private investment funds, in digital infrastructure assets such as data centers, cellular towers, small cells, fiber and edge installations. DigitalBridge could benefit from multiple tailwinds, including the proliferation of data, which needs infrastructure to transmit, process and store. We took advantage of the recent downward pressure on the stock price to add to the Fund’s position.”

8. Fidelity National Information Services, Inc. (NYSE:FIS)

Baupost Group’s Stake Value: $46,476,000

Dividend Yield as of November 15: 2.89%

Fidelity National Information Services, Inc. (NYSE:FIS) is an American multinational IT service management company that offers a wide range of financial products and services. The company currently pays a quarterly dividend of $0.47 per share, having raised it by 21% in January. This was the company’s second consecutive dividend growth after the pandemic. The stock’s dividend yield on November 15 came in at 2.89%.

Baupost Group opened its position in Fidelity National Information Services, Inc. (NYSE:FIS) in the most recent quarter, purchasing shares worth over $46.7 million. The company accounted for 0.8% of billionaire Seth Klarman’s portfolio.

In Q3 2022, Fidelity National Information Services, Inc. (NYSE:FIS) missed Street estimates on various fronts but the company’s revenue of $3.6 billion saw a 2.6% growth from the same period last year. During the quarter, the company remained committed to its shareholder obligation as it paid $1.3 billion in dividends and share repurchases.

Appreciating the company’s Q3 earnings, Barclays maintained an Overweight rating on Fidelity National Information Services, Inc. (NYSE:FIS) in November with a $90 price target.

Fidelity National Information Services, Inc. (NYSE:FIS) was a part of 67 hedge fund portfolios in Q2 2022, compared with 68 in the previous quarter. The stakes owned by these hedge funds are collectively valued at over $3.3 billion.

ClearBridge Investments mentioned Fidelity National Information Services, Inc. (NYSE:FIS) in its Q3 2022 investor letter. Here is what the firm has to say:

“We also sold out of payments and financial software maker Fidelity National Information Services, Inc. (NYSE:FIS), choosing to concentrate our digital payments exposure in PayPal (PYPL), which we believe has a more attractive risk/reward at these levels and more internal levers to generate returns. We bought FIS in 2019 for its mix of offense and defense with banking software and services as a stable business and payments that could keep up with fintech. The shares outperformed the benchmark up to the sale, illustrating the resiliency of the core business; however, FIS has underperformed higher-growth payment names.”

7. Gray Television, Inc. (NYSE:GTN)

Baupost Group’s Stake Value: $46,683,000

Dividend Yield as of November 15: 2.81%

Gray Television, Inc. (NYSE:GTN) is a Georgia-based television broadcasting company that operates over 180 stations across the country in 113 markets. In November, Barrington maintained an Outperform rating on the stock with a $15 price target, acknowledging the company’s performance and its fundamentals post-pandemic.

On November 4, Gray Television, Inc. (NYSE:GTN) declared a quarterly dividend of $0.08 per share, in line with its previous dividend. As of November 15, the stock has a dividend yield of 2.81%.

Baupost Group started investing in Gray Television, Inc. (NYSE:GTN) during the first quarter of 2022, with shares worth over $28.4 million. Over the quarters, the hedge fund has raised its stake in the company and currently owns shares worth over $46.6 million. The firm raised its stake in the company by 45% during Q3. The company made up 0.8% of billionaire Seth Klarman’s portfolio.

In the third quarter of 2022, Gray Television, Inc. (NYSE:GTN) reported revenue of $909 million, which showed a 51.2% growth from the same period last year. The company returned $124 million to shareholders during the quarter, $20 million of which represented dividend payments. At the end of the quarter, the company had $144 million available in cash.

Gray Television, Inc. (NYSE:GTN) experienced a positive hedge fund sentiment in Q2 2022, as 25 hedge funds in Insider Monkey’s database owned stakes in the company, up from 18 in the previous quarter. These stakes have a total value of $236.3 million.

6. Lithia Motors, Inc. (NYSE:LAD)

Baupost Group’s Stake Value: $53,638,000

Dividend Yield as of November 15: 0.68%

Lithia Motors, Inc. (NYSE:LAD) is an American automotive dealership that is also the third-largest new vehicle automotive dealership company in the US. The company currently has over 267 stores in 24 states across the country.

Lithia Motors, Inc. (NYSE:LAD) is one of the latest holdings of Baupost Group. The hedge fund opened its position in the company with 25,000 shares, worth over $53.6 million. The company made up 0.92% of billionaire Seth Klarman’s portfolio in Q3. It is another prominent holding of the hedge fund in Q3 in addition to Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:META), and Amazon.com, Inc. (NASDAQ:AMZN).

On October 19, Lithia Motors, Inc. (NYSE:LAD) declared a quarterly dividend of $0.42 per share, in line with its previous dividend. The company has been raising its dividends consistently for the past 11 years. As of November 15, the company’s shares boast a yield of 0.68%.

In October, Benchmark maintained a Buy rating on Lithia Motors, Inc. (NYSE:LAD) with a $300 price target. The firm believes that higher-margin service businesses will grow at a faster rate than the overall market.

At the end of Q2 2022, 40 hedge funds in Insider Monkey owned stakes in Lithia Motors, Inc. (NYSE:LAD), worth over $2 billion. In the previous quarter, 46 hedge funds owned positions in the company, with stakes valued at $2.5 billion.

Click to continue reading and see Billionaire Seth Klarman’s Top 5 Dividend Stock Picks.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on October 30, 2024 at by Inan Dogan, PhD

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A New Dawn is Coming to U.S. Stocks

Published on November 16, 2024 at by Insider Monkey Staff

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Click to continue reading…

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