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Billionaire Jim Simons bets on 3 high-yield dividend stocks
A rising tide lifts all boats, as President John Kennedy said, and we are now seeing it on Wall Street as the S&P 500 and NASDAQ are near record highs. The gains are large and real, and reflect growing optimism now that the elections are behind us and a COVID-19 vaccine is in sight. So let’s go back to 1973, when economist Burton Malkiel told us that “a blindfolded monkey throwing darts at the financial pages of a newspaper might select a portfolio that would fit as well as a portfolio carefully. selected by experts. He was emphasizing the effect of random forces on a sufficiently large sample – and the stock market, with over 7,000 stocks listed on the stock exchange, and even over thousands of active traders working daily, is certainly a fairly large sample. code breaker Jim Simons taught us all to cross the numbers. Simons recognized that people are not apes – and therefore have access to information that transcends random effects. He invented quantitative trading and changed the investment landscape forever. And back in the present, Simons revealed in his latest 13F filings three new equity positions that deserve a closer look. These are stocks rated at buy that have a dividend yield of at least 5% and rise from there. We used the TipRanks database to find out what makes these choices so compelling. Plains GP Holdings (PAGP) First, Plains GP, a mid-size oil and gas holding company. Plains controls the assets of the oil and gas transportation sector, where it transports hydrocarbons from wellhead production sites to refineries, tank farms and transportation facilities. The company’s assets include nearly 19,000 miles of pipelines, 8,000 crude oil tankers, nearly 2,500 trucks and semi-trailers and, on rivers, 20 haulage tugs and 50 barges. These assets carry oil and gas in and out of 148 million barrels of storage capacity.PAGP was hit hard earlier this year by falling oil and gas prices and weaker demand during shutdowns. economic effects caused by the pandemic. In the second quarter, revenue was down by more than half to $ 3.23 billion. The top line for the third quarter shows the start of a recovery, with revenue of $ 5.83 billion. Third quarter EPS was stable sequentially at 9 cents. The company’s share price, as might be expected from financial performance, has failed to gain much ground since it fell last winter at the onset of the corona crisis. PAGP shares are down 52% so far this year, but the low stock price offers investors an opportunity. Obviously Jim Simons would agree. His fund placed a position in PAGP by buying 1,045,521 shares of the stock. The stake is worth $ 8.44 million at the current share price and Plains GP has maintained its commitment to the dividend. The company reduced the payment from 36 cents per share to 18 cents for the April payment, but has kept it there since then. The cut kept the yield from exploding as the stock price fell and kept the payout affordable at current income levels. The current payout annualizes to 72 cents per common share and yields an 8.3% return. Raymond James analyst Justin Jenkins loves Plains for its ability to generate cash. He writes: “PAGP’s cash flow profile has actually improved this year. While 2021 will see more headwinds for EBITDA than 2020, the decline in investments and cost-cutting measures implemented since the pandemic are still leading to an inflection in the FCF. We are now modeling the plains generating an all-inclusive FCF surplus […] We continue to believe that the outlook for the partnership is much better than recent sentiment among investors in the stock. Based on those comments, Jenkins awards PAGP a buy. Its price target of $ 9 suggests it has room for growth of around 10% from current levels. (To look at Jenkins’ track record, click here Overall, there are three recent PAGP reviews recorded, and all of them are buys – making the analyst consensus here a strong unanimous buy. The stock is selling at $ 8.17, and its target average price of $ 10 implies a one-year increase of 22%. (See PAGP market analysis on TipRanks) Granite Point Mortgage Trust (GPMT) Next, Granite Point Mortgage Trust, is a mortgage company serving a clientele American commercial mortgage rates, as well as the creation and management of these loans. The company’s portfolio is valued at over $ 1.8 billion. GPMT shows strong messages in its recent financial performance. exceeded profit forecasts, yielding 2 7 cents a share versus an estimate of 20 cents, for a 35% beat. Revenue increased year over year and the company ended the quarter with more than $ 353 million in cash and cash equivalents. This foundation allowed GPMT to retain its dividend, although the company adjusted the payment at 20 cents per common share. At that rate, it is annualizing to 80 cents and is earning 8.3%. This compares favorably to peers in the financial industry – and is over 4 times the average dividend found among S&P listed companies. Granite Point is another of Jim Simons’ new positions. The quantitative billionaire bought 155,800 shares of the real estate investment trust (REIT), for a stake that is now worth $ 1.48 million. Stephen Laws, covering this action for Raymond James, sees GPMT as a potential winner for dividend investors. He writes, “We expect net interest income to continue to benefit from LIBOR lending floors, and we are increasing our baseline earnings estimates to reflect this. While GPMT reinstated the quarterly dividend to $ 0.20 per share, the company still has about $ 29 million of undistributed taxable income as of September 30. With that in mind, we anticipate a special dividend of $ 0.40 per share to be declared before year end. The star analyst rates the stock outperforming (i.e. buying), and his price target of $ 11 implies 16% growth over the next few months. (To look at Laws’ track record, click here) This is another stock with a unanimous analyst rating – although the two recent buys make the consensus a moderate buy. The average price target matches Laws’ at $ 11, and indicates a 16% increase from the current price of $ 9.60. (See GPMT’s market analysis on TipRanks) Phillips 66 (PSX) Last on our list of new Simons buys is Phillips 66, the oil and gas giant. With more than $ 107 billion in annual revenues and over $ 58 billion in total assets, Phillips 66 is deeply involved in the production, refining and marketing of petroleum. The company is also heavily involved in the petrochemical industry, with low prices, economic shutdowns and unpredictable demand putting pressure on the PSX share price this year, and the stock has only partially rebounded. since fainting last winter. PSX is down 40% year-to-date, but is up 54% from its late March low. In the third quarter, Phillips 66 posted a 1 cent EPS loss – but c was much better than the lost 80 cents that had been expected. Revenue for the quarter was $ 15.93 billion, up 45% from the previous quarter. The company pays 90 cents per common share and has an 8 year history of maintaining reliable payouts with occasional increases. The annualized payout of $ 3.60 gives a return of 5.4%, well above the average utility sector return of 3.3%. Simons, for his part, was sufficiently impressed with this stock to buy 120,800 shares. It is an asset that is now worth $ 7.47 million. In his PSX review, Scotiabank’s Paul Cheng notes several key points, some of which may seem counterintuitive. “The passage of Election Day can actually trigger further purchases in the group even with a Biden victory. Contrary to popular belief, the sector has historically outperformed the general market in the first year of a new Democratic administration… Cyclical sectors could be in demand again as investors refocus their attention from election to availability vaccines, ”Cheng said. The analyst added: “… compared to other refiners, PSX should benefit more from a rising oil price environment given their large chemical and NGL operations.” To this end, Cheng credits PSX with outperforming (i.e. buying). It sets a price target of $ 79, indicating a potential upside of 25% for the next 12 months. (To look at Cheng’s track record, click here) Overall, Phillips 66 gets a big boost from Wall Street – as clearly shown by the stock’s 11 buy ratings, giving it a consensus of d Strong Buy analysts. (See PSX Stock Analysis on TipRanks) For great ideas for dividend-paying stocks trading at attractive valuations, visit TipRanks Best Stocks to Buy, a newly launched tool that brings together all the information about TipRanks stocks. Disclaimer: The opinions expressed in this article are those of the featured analysts only. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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