Few investment strategies are as long-term successful as buying dividend stocks, and the world’s most successful money managers know that.
Publicly traded companies that pay regular dividends are typically consistently profitable, demonstrating their ability to weather recessions. In other words, these are long-standing and proven businesses that tend to get stronger and more profitable over time. It’s also the type of stock that billionaire asset managers want to invest in during periods of heightened volatility, such as bear markets.
Thanks to the 13F filings open to the Securities and Exchange Commission, investors can easily track what Wall Street’s brightest minds have been buying and selling. High-yielding dividend stocks (those with yields above his 4%) were definitely on the menu.
Here are four high-yielding dividend stocks billionaires can’t stop buying.
AT&T: Yield 5.51%
The First Supercharged Income Stocks Billionaire Investors Couldn’t Get Enough Of Are Communications Stocks AT&T (T 1.39%)AT&T’s consistent cash flow and yield of 5.5% have lured billionaires Jim Simons of Renaissance Technologies and John Overdeck and David Siegel of Two Sigma Investments to sell 8.37 million shares each in the quarter ending September. Purchased 2.37 million shares.
Arguably, the push to 5G wireless download speeds is AT&T’s biggest catalyst. AT&T has invested heavily in upgrading its wireless infrastructure, and the payoff seems well worth the investment. Wireless service revenues grew 5.1% last year, and device replacement cycles encouraged users to take advantage of faster download speeds and consume more data. As data consumption increases, so does AT&T’s wireless service operating margin.
Additionally, AT&T continues to see strong growth in the broadband segment. The 280,000 AT&T Fiber additions in the fourth quarter represent the company’s 12th consecutive quarter of net additions of 200,000 and helped reach the fifth consecutive year in which at least one million net broadband customers were added. Broadband may not be the growth story it once was, but acquiring new personal and business customers is a way to boost operating cash flow and drive high-margin bundling opportunities.
AT&T also spun off content division WarnerMedia and merged with Discovery last April. warner bros discoveryWhen the merger went into effect, Warner Bros. Discovery assumed a certain amount of debt previously held by AT&T and paid AT&T cash. The net result is greater financial flexibility for AT&T.
Annaly Capital Management: Yield 15.37%
Another high-octane dividend stock that millionaire fund managers can’t stop buying is mortgage real estate investment trusts (REITs). Annalee Capital Management (NLY 0.71%)Billionaires Israel Englander of Millennium Management and Jim Simons of Renaissance purchased 2.61 million and 2.26 million shares respectively in the third quarter, thanks to Annaly’s absurdly high yield of 15.4%.
For mortgage REITs, last year probably couldn’t have been any worse. These are companies that borrow money at low short-term lending rates and use this capital to purchase high-yield, long-term assets such as mortgage-backed securities (MBS). Short-term borrowing costs skyrocketed as the U.S. Federal Reserve (Fed) rapidly raised interest rates and the U.S. Treasury yield curve inverted, pushing up Analee’s net interest margin (the average yield on assets held minus the average borrowing rate). things) have shrunk.
If there’s a silver lining for Annaly Capital Management, it’s that yield curve inversions usually don’t last long. Assuming the country’s central bank slows the pace of rate hikes at some point this year, the yield curve could stabilize and end the inversion, which could help Analy’s net interest margin.
Another consideration is that Annaly’s investment portfolio is heavily weighted in agency securities. “Agency” assets are federally insured in the unlikely event of default. This protection gives Annery’s management the confidence to deploy leverage to increase their profit potential.
Paramount Global: Yield 4.25%
Media companies are the third high-yielding dividend stocks attractive to billionaire investors Paramount Global (Para 5.04%)Billionaire Warren Buffett Berkshire Hathaway Millennium Israeli English bought 12.79 million and 712,000 shares of Paramount Global stock respectively in the third quarter.
The attraction of billionaires to legacy media stocks may have something to do with the current pessimism toward advertising-driven businesses. At the first signs of an economic downturn, advertising spending tapers off, so it’s not uncommon for traditional TV media companies to downplay it. The problem is that expansions last considerably longer than recessions. In other words, the advertising industry spends a disproportionate amount of time expanding compared to shrinking.
Paramount Global’s streaming service is also potentially attractive to billionaire investors. Paramount’s direct-to-consumer segment added 20 million new subscribers (67 million subscribers) from the same period last year through September 30, 2022, becoming the No. 1 ad-supported streaming service in the United States It offers a Pluto TV. If a recession hits the US, “free” will be a very attractive price.
In addition, Paramount Global’s Cinema Entertainment segment primarily includes Top Gun: MaverickIf U.S. box office earnings can continue to build off of pandemic lows, Paramount can rely on another source of consistent cash flow.
Ford Motor Company: Yield 4.65%
The fourth and final high-yielding dividend stock billionaires can’t stop buying is the auto giant ford motor company (F 5.38%)In the third quarter, billionaires Ken Fisher of Fisher Asset Management and Ken Griffin of Citadel Advisors bought 44.87 million and 9.75 million shares of Ford respectively.
If you’re wondering why super-successful billionaire investors are suddenly obsessed with legacy auto stocks, the answer may lie in the electrification of cars. Ford has allocated $50 billion by 2026 to cover research into electric vehicles (EVs), self-driving cars, and batteries. The company plans to introduce 30 new all-electric models between early 2025 and the end of 2025. Teslahas brand power that companies like Tesla don’t have.
In addition to the burgeoning EV segment, Ford continues to dazzle with its more traditional lineup. The F-Series pickup has been America’s best-selling truck for 46 consecutive years, and it’s not a truck, it’s a best-selling vehicle… vehicle — 41st consecutive year in the US. Trucks and his SUVs give automakers a lucrative margin over sedans. This makes the F-Series very important to Ford’s profitability and cash flow generation.
Finally, don’t miss Ford’s international opportunities. In particular, Ford has a chance to become an established player in China’s very young EV market. Ford has sold just over 600,000 of his cars in China in both 2020 and 2021. China could (pardon the pun) help facilitate Ford’s transition into an electrified future.
Sean Williams has held positions at AT&T, Annaly Capital Management, and Warner Bros. Discovery. The Motley Fool invests in and recommends Berkshire Hathaway and Tesla. The Motley Fool recommends Warner Bros. Discovery and recommends the following options: The Motley Fool’s U.S. headquarters has a disclosure policy.