Billionaire Ken Fisher’s Fisher Asset Management has filed its quarterly 13F disclosure with the SEC, presenting its portfolio of equity holdings as of the end of the March quarter. The portfolio’s top positions continue to include large-cap, dividend-paying stocks, such as Pfizer Inc. (NYSE:PFE), Johnson & Johnson (NYSE:JNJ), Cisco Systems, Inc. (NASDAQ:CSCO), General Electric Company (NYSE:GE), and Wells Fargo & Co (NYSE:WFC). During the quarter, Fisher also significantly boosted his stake in Apple Inc. (NASDAQ:AAPL) and several other positions that pay attractive dividend yields; discover the secrets of piggybacking great investors.
With this in mind, here is a closer look at four stocks/ADRs paying yields above 2% that Fisher was bullish about last quarter
McDonald’s Corporation (NYSE:MCD) position in Fisher’s hedge fund saw a 27% boost, to more than 2.3 million shares. The company reported a 1% rise in its first-quarter revenues and a 2% increase in EPS, as comparable sales dipped 1% partly because of “comparisons against strong prior year results that included an additional day in 2012 due to leap year.” Despite its expectations that “challenging global environment and bottom-line pressures” will persist, McDonald’s Corporation (NYSE:MCD)is targeting 2013 sales growth in the range of 3%–5% and operating income growth in the range of 6%–7%.
The company’s CEO recently suggested McDonald’s Corporation (NYSE:MCD) start offering all-day breakfast menus and delivery in some countries and U.S. locations, which could help bolster its sales in the future. The company also continues to expand globally, planning to open up 1,600 new restaurants worldwide this year. McDonald’s Corporation (NYSE:MCD) operates in 119 countries around the world, including China, which the company sees as a major opportunity despite food safety issues. McDonald’s Corporation (NYSE:MCD) has raised dividends for 36 years in a row. Its current yield is 3.0% and its payout ratio is 54%.
Rio Tinto plc (ADR) (NYSE:RIO), the world’s second-largest mining company, was another position in Fisher’s portfolio that saw a notable increase last quarter. Fisher increased his share ownership in Rio Tinto plc (ADR) (NYSE:RIO) by 29% to some 10 million shares. This dividend payer has a yield of 3.5%, payout ratio of 27% of its current-year EPS estimate, and five-year annualized dividend growth of 4.0%. The company’s shares look inexpensive, valued at 7.7x its 2013 earnings and 6.9x its 2014 earnings. With the weakness in the commodities markets, the stock has lost 8.6% over the past 12 months.
Still, Rio TintoRio Tinto plc (ADR) (NYSE:RIO) reported strong first-quarter operating results, achieving record first-quarter iron ore production, shipment and rail volumes. Rio Tinto plc (ADR) (NYSE:RIO) is expanding iron ore output capacity and expecting a 4.7% increase in production this year. On the other hand, Rio Tinto plc (ADR) (NYSE:RIO)’s mined copper output jumped 26% year-over-year last quarter; however, copper output will be adversely affected by a landslide at the company’s Bingham Canyon copper mine that took place in April. After taking a $14 billion impairment charge in its full-year 2012 results, Rio Tinto plc (ADR) (NYSE:RIO) is now divesting non-core assets and aiming to achieve $5 billion in cost savings over the next two years. The company’s new CEO has promised a greater focus on shareholder returns.
Syngenta AG (ADR) (NYSE:SYT), a Swiss-based agri-business focused on crop productivity, is also one of Fisher’s positions that was markedly increased last quarter. Fisher hiked his Syngenta AG (ADR) (NYSE:SYT) stake by 24% in the quarter to some 881,667 shares. The company is attractive long-term based on the generally positive outlook for agri-businesses producing crop productivity and protection products amid a rise in emerging markets’ population and per capita incomes leading to higher food (including grains) consumption and planting. Last year, Syngenta AG (ADR) (NYSE:SYT) saw its sales rise 7% (10% in constant currency) to $14.2 billion and adjusted EPS jump 15%.
Sales growth rates in North and Latin Americas were 20% and 12%, respectively. The strong sales momentum has carried into 2013, with the first-quarter reported sales up 6% year-over-year (8% in constant currency). Syngenta AG (ADR) (NYSE:SYT)’s strong long-term outlook is reflected in the company’s goal to reach $25 billion in sales of its eight key crops by 2020 (from $13.4 billion in 2012). Since 2007, Syngenta AG (ADR) (NYSE:SYT)’s EPS grew at a CAGR of 14%, while its dividends grew at a CAGR of 17%. Last month, the company’s shareholders approved a 19% dividend increase. Currently, Syngenta AG (ADR) (NYSE:SYT) pays a dividend yield of 2.4% on a payout ratio of 50%.
BP plc (ADR) (NYSE:BP) was another Fisher’s position with a large first-quarter boost in ownership. Fisher hiked his share count in BP plc (ADR) (NYSE:BP) by 28,478% to nearly 1.47 million shares. The company looks like a good value, trading at only 8.7x forward earnings, below its peers on average, and 10% above book value. BP plc (ADR) (NYSE:BP) is severely bruised in the aftermath of the Deepwater Horizon disaster in 2010. As a result, it has been divesting assets—to the tune of $38 billion—in order to cover associated expenses. Despite the woes, the company has been showing solid financial performance. In the previous quarter, it realized an adjusted profit of $4.2 billion, down 9% year-over-year, but some 30% better than expected by Wall Street.
Both oil prices and production were lower. However, the company is planning to increase capacity and output, targeting upstream investments to drive growth in higher-margin areas. Thus, BP plc (ADR) (NYSE:BP) expects to see its operating cash flow swell by 50% in 2014 from 2011. On March 21, BP plc (ADR) (NYSE:BP) completed sale of its 50% interest in TNK-BP to Russia’s Rosneft for a total of $27.5 billion in cash and Rosneft shares. As a result, BP plc (ADR) (NYSE:BP) now owns 19.75% of Rosneft. BP pays a dividend yield of 4.9% on a payout ratio of 43%.
Final thoughts
Fisher’s moves can be a source of good ideas for research, given his track record as an investor. Testifying to his reputation in the investment arena is the fact that in 2010, Investment Advisor magazine named Fisher one of the 30 most influential figures in investment advisory industry over the last 30 years, and it’s always important to track hedge fund sentiment; discover the secrets of piggybacking here.
Disclosure: none
