With the stock market at all-time highs, many of the world’s richest and most successful investors are flocking to high-yield shares. They are doing this for two reasons. (1) They know that, historically, dividends make up a large part of long-term investor returns. (2) With the stock market at all-time highs, safe-dividend paying stocks are just about the only safe place to park a billion-dollar portfolio should a bear market arrive.
And while the rich are indeed different than the rest of us, this is one case where it will probably bay to “do as the billionaires do.”
Here are three stocks that have either been recently added or added-to in the portfolio of today’s top billionaire investors.
Atlantica Yield PLC (NASDAQ: AY) by David Tepper
Appaloosa Management LP, owned by David Tepper, bought about 6.29% stake in Atlantica Yield in February 2018. The number of shares owned was further increased from 3.54 million to 3.83 million in May 2018.
David Tepper is arguably one of the greatest hedge fund managers of all time and is known for the quality of his insights.
Atlantica Yield owns renewable energy, power generation, electric transmission and water assets. Atlantica Yield has benefitted from the upturn in the renewable energy sector, which has coincided with David Tepper’s acquisition. He was also attracted to the company’s dividend yield which currently sits at 9.74%.
Atlantica Yield promises an attractive total return for investors in the years ahead and management has publicly stated that it has an 80% target payout ratio. Its existing portfolio and planned acquisitions in the years ahead also mean its payout will grow in grow by 8-10% per year through FY 2022. With growth like that, you can be sure Tepper expect to not only make money off the dividend but price appreciation as well.
The almost 6% stake bought by David Tepper in Atlantica Yield is a strong endorsement. It should also be noted that the hedge fund manager has approximately 10% of his portfolio in the energy sector. So not only is Tepper telling you to take a close look at Atlantica but at the energy sector as a whole.
Shell Midstream Partners (NYSE: SHLX) by T. Boone Pickens
In the first quarter of 2018, T. Boone Pickens increased his holdings in Shell Midstream Partners by 67% and owns 250,000 units. T. Boone Pickens is a business magnate and financier, who is most famous as an oil tycoon. When Pickens makes a move, it pays to pay attention. Shell is one of the higher growth pipeline MLPs, and given its growth plans, Pickens decided to up his holdings.
Shell Midstream Partners owns, operates, develops and acquires pipelines and other midstream assets. The worldwide demand for oil and other forms of energy has grown in the past decade, and the effect has shown in the stock performance of Shell. The company has reported net income of $86.4 million and total assets of $1.4 billion in 2017. The company has made acquisitions like interests in Triton, LOCAP and the Permian Basin.
Along with the stock prices, Shell exhibits a sizeable 6.3% dividend yield. The dividend yield is expected to keep growing at a high rate. Boone Pickens’ investment has further affected the market sentiments to believe in the company and help it grow further.
All in all, Shell Midstream Partners is a profitable business in a profitable industry. Thanks to the boom in the oil & gas industry again pipelines like Shell can charge premium prices.
Anyone with an eye for growing dividends should follow Picken’s lead. T. Boone Pickens is as seasoned as they come.
CVR Energy (NYSE: CVI) by Carl Icahn
Carl Icahn owns about 82% stake in CVR Energy; a refining and fertilizer producer based in Sugar Land, TX. Historically, Carl Icahn is an activist investor, one who also happens to be one of the 50 richest men in the world. He has a background in energy, consumer goods, and manufacturing – which makes CVR Energy an investment right up his alley.
CVR Energy is a petroleum refining and nitrogen fertilizer manufacturing company. The entire industry has recently benefitted from the regulations of the Environment Protection Agency that has reduced the burdens off the shoulders of the refining companies. Regulatory compliance costs have been fallen and with the growing US economy demand for petroleum products has been on the rise. CVR Energy reported strong financials in March 2018 with net income of $0.39 per share and sales of $1.54 billion.
Shares are performing well and have risen 25% in the last three months. CVR recently declared a quarterly dividend of $0.75 per share, which is a 50% increase from the previous dividend of $0.5 per share. Its annual divided dividend yield is about 6.2% and is expected to keep growing. Carl Icahn and any investor that follows him into the shares will benefit not only from continued share price gains but above-average dividend yield growth.
Lastly, Carl Icahn’s unusually-high stake in CVR Energy is a strong endorsement that he’s in it for the long term – and investors looking for high-quality dividend stocks should be as well.