Multi-Billion Dollar Value Investing Fund Is Betting Big on These Dividend Stocks

Royal Dutch Shell plc (ADR) (NYSE:RDS.A)‘s stock has slid by over 22% since the beginning of the year, and with the company paying a quarterly dividend of $0.94 per share, the stock trails a dividend yield of 7.21%. Royal Dutch Shell plc (ADR) (NYSE:RDS.A) also opted to cut its expenses, but to maintain the high dividend. However, the last financial report showed a loss of $7.40 billion, on the back of a huge impairment charges, compared to a profit of $4.5 billion a year earlier. Even excluding one-time and other items, the adjusted income slumped by 70% on the year to $1.80 billion. The drop in profits raises serious questions regarding the company’s ability to keep paying dividends, although Pzena seems to be betting on the rebound of the sector as also added 1.78 million shares to its stake in Royal Dutch Shell plc (ADR) (NYSE:RDS.A) and reported holding 9.27 million shares worth $439.19 million.

In Wal-Mart Stores, Inc. (NYSE:WMT) Pzena also increased its stake by 22% on the quarter to 6.32 million shares, valued at $410.04 million. The stock has taken a hit recently on the back of the financial guidance provided by the company. Wal-Mart Stores, Inc. (NYSE:WMT) said in its last earnings report that its revenue in the fiscal 2016 would remain flat, with a stronger US dollar, which affects the one-third of its revenue generated outside the US (read more here). The company also estimates higher operating expenses on the back of increases in wages that would offset the sales growth. Nevertheless, amid a 31% drop since the beginning of the year, the stock sports a 3.33% dividend yield and is trading at around 12.30 times earnings. Nigel Greig and Kenneth Cowin’s Gabalex Capital is also bullish on Wal-Mart Stores, Inc. (NYSE:WMT), holding 500,000 shares as of September 30.

Staples, Inc. (NASDAQ:SPLS) is a specialty retailer that Pzena is bullish on, and with a dividend yield of 3.64% it is also one of its top dividend picks. The fund reported holding almost 25.50 million shares of Staples, Inc. (NASDAQ:SPLS), worth $299.11 million shares; it added 3.31 million shares to the holding during the third quarter. Analysts currently project a slight decline in Staples, Inc. (NASDAQ:SPLS)’s revenue as larger companies like Wal-Mart or Amazon.com, Inc. (NASDAQ:AMZN) cut into the share of specialty retailers. However, the acquisition of Office Depot Inc (NASDAQ:ODP) announced in February might remedy the situation, consolidating the office supplies retail segment if it receives the approval of the Federal Trade Commission.

Disclosure: none