Is David Tepper an income investor? Nope. The hedge fund manager (and Carolina Panthers owner) probably doesn’t factor dividends into his considering much, if the least bit, when picking stocks.
Nevertheless, that doesn’t imply Tepper doesn’t own a great deal of dividend stocks. There are more of them inside the billionaire’s Appaloosa Management hedge fund than it’s possible you’ll think. He’s invested 38% of his portfolio in these five dividend stocks.
1. Meta Platforms
Meta Platforms (NASDAQ: META) ranks as the best holding in Tepper’s Appaloosa hedge fund. As of Sept. 30, 2023, it owned 1.95 million shares — greater than 11.5% of the overall portfolio on the time.
Until recently, Meta wouldn’t have made a list featuring Tepper’s dividend stocks. Nevertheless, the social media leader announced on Feb. 1, 2024 that it’s initiating a quarterly dividend of $0.50 per share. This translates to a dividend yield of around 0.44%. It isn’t great, nevertheless it surely’s a start.
2. Microsoft
Microsoft (NASDAQ: MSFT) trails Meta as Tepper’s second-largest position. Appaloosa owned 1.64 million shares of the technology giant on the tip of the third quarter of 2023, enough to make up nearly 10.2% of the hedge fund’s portfolio.
Many big tech corporations don’t pay dividends. Microsoft, though, initiated a dividend program way back in 2003.
Its dividend currently yields 0.74%. The company has increased its dividend payout by a robust 168% over the past 10 years.
3. Nvidia
Nvidia (NASDAQ: NVDA) is just not the third-largest position for Tepper. That honor belongs to Amazon.
Nevertheless, the graphics processing unit (GPU) maker is the billionaire’s No. 4 holding, comprising 8.8% of his total portfolio. Appaloosa owned 1.02 million shares of Nvidia on the tip of Q3.
Unlike Amazon, Nvidia pays a dividend. Granted, it is just not an infinite one: The chipmaker’s dividend yield is barely 0.02%. Still, the company has increased its payout by 88% since initiating a dividend program in 2015. With a dividend payout ratio of barely over 2%, the company could easily boost its dividend quite a bit more if it chooses.
4. Intel
Intel (NASDAQ: INTC) is Appaloosa’s ninth-largest holding, lagging behind several stocks that don’t pay dividends. On the tip of the third quarter of 2023, the hedge fund owned 6.25 million shares of Intel, representing nearly 4.4% of its portfolio.
Ordinarily, Intel’s dividend yield of near 1.2% wouldn’t be anything to get passionate about. As compared with most of Tepper’s top holdings, though, this yield looks implausible.
Nevertheless, there’s a yellow flag to note: Intel slashed its dividend payout by greater than 65% last 12 months as a part of an even bigger cost-cutting effort.
5. Federal Express
Not every dividend stock that Tepper owns is inside the tech sector. Federal Express (NYSE: FDX) ranks as his tenth largest position. As of Sept. 30, 2023, Tepper’s hedge fund owned 650,000 shares of FedEx, making up 3.4% of its portfolio.
FedEx’s dividend yield of over 2.1% is type of respectable. So is the company’s payout ratio of under 29%.
Arguably, probably the greatest thing about FedEx’s dividend program is its track record of dividend increases. Over the past 10 years, the shipping and logistics giant has boosted its dividend payout by a whopping 740%.
The proper of the bunch
I might not recommend buying any of those stocks solely for his or her dividends. Nevertheless, several of them should deliver strong growth over the next decade and beyond.
If I had to decide on just one as probably the greatest of the bunch, I’d go together with Meta Platforms. I like Microsoft and Nvidia, too, but Meta has been underrated by Wall Street, in my view. The company’s recent blowout quarterly results underscore how much potential it has.
Do you could have to speculate $1,000 in Meta Platforms immediately?
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Idiot’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of directors. Keith Speights has positions in Amazon, Meta Platforms, and Microsoft. The Motley Idiot has positions in and recommends Amazon, FedEx, Meta Platforms, Microsoft, and Nvidia. The Motley Idiot recommends Intel and recommends the subsequent options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short February 2024 $47 calls on Intel. The Motley Idiot has a disclosure policy.
Billionaire David Tepper Has Invested 38% of His Portfolio in These 5 Dividend Stocks was originally published by The Motley Idiot