For those who’re an investor who doesn’t have already got access to billions in capital, you could possibly probably learn a couple of things from the parents who do. Luckily, keeping tabs on the world’s most successful investors isn’t hard to do.
Every three months, people managing a portfolio value $100 million or more need to report their trading activity to the Securities and Exchange Commission. A fast take a look at the most recent disclosures shows a handful of billionaire investors bought thousands and thousands of shares of two dividend-paying stocks that currently offer ultra-high yields.
Shares of Pfizer (NYSE: PFE) and Annaly Capital (NYSE: NLY) offer yields which might be several times the typical stock within the benchmark S&P 500 index. Unfortunately, stocks rarely offer yields this high unless there’s an excellent reason to fret about their ability to keep up their payout.
Let’s take a look at their recent performance to search out out if following the lead of billionaire fund managers is sensible on your portfolio.
Annaly Capital
Annaly Capital is an actual estate investment trust (REIT) that buys mortgage-backed securities (MBSes) as an alternative of real estate. It earns a living within the margins between its short-term borrowing expenses and the interest it receives from the hopefully higher-yielding MBS in its portfolio.
At recent prices, Annaly shares offer a mind-blowing 13.6% yield. The large yield is attracting funds run by billionaires. Citadel Advisors, which is run by Ken Griffin, and Millennium Management, which is run by Israel Englander, bought shares in the primary quarter.
Annaly Capital doesn’t own real estate, so it has to make use of its MBS portfolio to secure loans. It doesn’t occur often, but once in a while, the worth of its MBS can dip. When this happens, lenders demand more capital, and the corporate can find yourself selling off portions of its portfolio at fire sale prices.
Before you jump as much as fill your portfolio with shares of Annaly Capital, it is important to appreciate the corporate has lowered its dividend by 45.8% since 2019. Investors who bought the stock and reinvested all of the dividends have gained only about 39% over the past decade.
While there’s an excellent likelihood that purchasing Annaly Capital now and holding over the long term also results in positive gains, the unpredictability of its dividend makes it a nasty selection for many income-seeking investors.
Pfizer
Throughout the first three months of 2024, John Overdeck and David Siegel of Two Sigma bought 18.9 million shares of Pfizer. The stock has fallen by greater than half since its peak in late 2021.
Pfizer’s been dropping because record-breaking sales of its COVID-19-related products evaporated faster than the market expected. Now that the worst is over, though, the stock looks like a terrific bargain.
Pfizer’s stock dropped, but the corporate still raised its dividend payout for the fifteenth consecutive yr last December. The stock offers a 6.2% yield at recent prices, which is about 4.6 times greater than you’d receive from the typical dividend payer within the S&P 500.
At recent prices, you may buy Pfizer for around 11.6 times forward-looking earnings expectations. That is an inexpensive valuation for a business you expect to grow at a snail’s pace. A take a look at this drugmaker’s recent performance and forward outlook suggests it can grow much faster than the market is expecting.
Pfizer invested heaps of COVID-19-related profits into recent drugs, lots of that are already available on the market. If we exclude COVID-19-related sales and the negative effects of a stronger U.S. dollar, first-quarter sales rose 11% yr over yr.
Pfizer has the longest list of progressive recent drugs within the pharmaceutical industry, and it’s still growing relatively quickly. The FDA approved nine recent medicines from the corporate in 2023, and so they’re poised to drive growth in the last decade ahead. Adding some shares to a diversified portfolio looks like a comparatively protected way for income-seeking investors to spice up their passive income stream.
Do you have to invest $1,000 in Annaly Capital Management immediately?
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Cory Renauer has no position in any of the stocks mentioned. The Motley Idiot has positions in and recommends Pfizer. The Motley Idiot has a disclosure policy.
2 Ultra-High-Yield Dividend Stocks Billionaires Are Buying Left and Right: Could They Be Smart Buys for You in July? was originally published by The Motley Idiot