Billionaire David Tepper has invested 38% of his portfolio in these 5 dividend stocks

Billionaire David Tepper has invested 38% of his portfolio in these 5 dividend stocks

Is David Tepper an Income Investor? No. The hedge fund manager (and owner of the Carolina Panthers) probably doesn’t factor dividends into his thinking much, if at all, when picking stocks.

However, that doesn’t mean Tepper doesn’t own plenty of dividend stocks. There are more of them at the billionaire’s Appaloosa Management hedge fund than you might think. He has invested 38% of his portfolio in these five dividend stocks.

1. Meta Platforms

Meta Platforms (NASDAQ: META) is listed as the top holding in Tepper’s Appaloosa hedge fund. As of September 30, 2023, it owned 1.95 million shares — more than 11.5% of the total portfolio at the time.

Until recently, Meta would not have listed Tepper’s dividend stocks. However, the social media leader announced on February 1, 2024 that it is initiating a quarterly dividend of $0.50 per share. This translates into a dividend yield of around 0.44%. It’s not great, but it’s a start.

2. Microsoft

Microsoft (NASDAQ: MSFT) behind Meta as Tepper’s second largest position. Appaloosa owned 1.64 million shares of the tech giant at the end of 2023Q3, enough to make up nearly 10.2% of the hedge fund’s portfolio.

Many large technology companies do not pay dividends. However, Microsoft started a dividend program in 2003.

Its dividend currently yields 0.74%. The company has increased its dividend payout by an impressive 168% over the past 10 years.

3. Nvidia

Nvidia (NASDAQ: NVDA) it is not the third largest position for Tepper. That honor belongs to him Amazon.

However, the graphics processing unit (GPU) maker is the billionaire’s No. 4 holding, accounting for 8.8% of his total portfolio. Appaloosa owned 1.02 million shares of Nvidia at the end of the third quarter.

Unlike Amazon, Nvidia pays a dividend. Granted, it’s not huge: the chipmaker’s dividend yield is just 0.02%. However, the company has increased its payout by 88% since starting a dividend program in 2015. With a dividend payout ratio of just over 2%, the company could easily increase its dividend much more if it wanted to.

4. Intel

Intel (NASDAQ: INTC) it’s Appaloosa’s ninth-largest holding, trailing several non-dividend-paying stocks. At the end of the third quarter of 2023, the hedge fund owned 6.25 million shares of Intel, which represented nearly 4.4% of its portfolio.

Ordinarily, Intel’s dividend yield of close to 1.2% wouldn’t be anything to get excited about. However, compared to most of Tepper’s flagship properties, this yield looks fantastic.

However, there is one yellow flag to note: Intel cut its dividend payout by more than 65% last year as part of a larger cost-cutting effort.

5. Federal Express

Not every dividend stock Tepper owns is in the technology sector. Federal Express (NYSE: FDX) ranks as his 10th largest position. As of September 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 quite respectable. So is the company’s wage ratio below 29%.

Perhaps the best thing about FedEx’s dividend program is its history of dividend growth. Over the past 10 years, the shipping and logistics giant has increased its dividend payout by 740%.

Best of the bunch

I wouldn’t recommend buying any of these stocks just for their dividends. However, some of them should provide strong growth over the next decade and beyond.

If I had to pick just one as the best of the bunch, I’d go with Meta Platforms. I like Microsoft and Nvidia too, but Meta is undervalued by Wall Street, in my opinion. The company’s recent quarterly results underscore just how much potential it has.

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Randi Zuckerberg, a former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Amazon, Meta Platforms and Microsoft. The Motley Fool has positions in and recommends Amazon, FedEx, Meta Platforms, Microsoft and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 Intel calls, long January 2025 $45 Intel calls and short February 2024 $47 Intel calls. The Motley Fool has a disclosure policy.

Billionaire David Tepper Has 38% of His Portfolio Invested in These 5 Dividend Stocks was originally published by The Motley Fool

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