Top 10 John Paulson Dividend Stocks

John Paulson founded Paulson & Co in 1994. He managed the fund well but he didn’t rise to fame until it became known that he had bet against subprime mortgages; Paulson rose to even greater infamy after he profited so well from those bets. Paulson took it a step further and bet on gold in 2010, a wager that made his fund $5 billion; its portfolio is currently valued at $29 billion. These are his top 10 dividend bearing stocks:

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  1. Anglogold Ashanti Ltd (AU) is Paulson’s second largest position; he owns a stake valued in the company valued at $1.68 billion. AU has a dividend yield of 0.60% and a market cap of $15.69 billion. It recently traded at $40.70 and has a price to earnings ratio of 22.08.
  2. Citigroup Inc. (C) is the third largest position (by value) in Paulson’s portfolio, at its current value of $1.4 billion. It has a dividend yield of 0.20% and a price to earnings ratio of 7.14. C has a market cap of $67.43 billion and recently traded at
    $23.11 per share. Bruce Berkowitz, Fairholme, is also a fan (see Berkowitz’s top stock picks).
  3. Anadarko Petroleum Corporation (APC) has  a dividend yield of 0.60%. It has a market cap of $30.13 billion and a price to  earnings ratio of 35.94. It recently traded at $60.53 a share. Paulson has $1.28 billion position in the company.
  4. Transocean Ltd Co (RIG) offers a dividend yield of 6.60%. It has a market cap of $14.68 billion and most recently traded at $45.91/share. Paulson has a stake in the company worth $1.2 billion. Jim Roumell, Roumell Asset Management is a fan of RIG as well (check out Roumell’s top picks).
  5. Capital One Financial Corp (COF)  has a dividend yield of 0.50% and a market cap of $17.21 billion. It has a price to earnings ratio of 5.06 and recently traded at $37.75. Paulson owns a $1.09 billion position in the company.
  6. Hartford Financial Services Group Inc. (HIG) is Paulson’s seventh largest position at $1.07 billion. HIG has a $6.65 billion market cap and a price to earnings ratio of 4.27. It has a 2.50% dividend yield and most recently traded at $14.92.
  7. Wells Fargo & Company (WFC) has a 2.00% dividend. It also boasts a market cap of $122.39 billion and a price to earnings ratio of 8.98. WFC recently traded at $23.18 a share. Paulson owns $942 million in the company after increasing his position in the company by 64% in the second quarter.
  8. Hewlett-Packard Company (HPQ) is a $43.73 billion market cap company. It has a 2.10% dividend yield and a price to earnings ratio of 5.17. It recently traded at $22.01. Paulson owns $855 million in the company. HPQ is also a favorite of Bill Miller, Legg Mason Capital Management (see Miller’s top picks).
  9. SunTrust Banks, Inc. (STI) recently traded at $16.92. It has a $9 billion market cap and a dividend yield of 1.10%. It has a price to earnings ratio of 20.89. Paulson owns an $829 million stake in the company.
  10. Bank of America Corporation (BAC) has a $55.42 billion market cap and a dividend yield of 0.70%. It most recently traded at $5.47 a share. Paulson owns a $662 million position in the company after decreasing his stake by 51% last quarter.

10 Best Stocks For 2012 Picked by Merrill Lynch

Earlier this month Bank of America/Merrill Lynch (BAC) strategist Savita Subramanian prepared a list of Merrill Lynch’s 10 favorite stocks for 2012. Merrill Lynch analysts predict a 12-month target return of 6.9% for SPY, while they expect a 30% return for the following 10-stocks:

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Lincoln National (LNC) is a multiple insurance and retirement businesses company. The company has a market cap of $5.6 billion. Merrill Lynch likes LNC because of the potential for dividends and buybacks. LNC lost 35% year to date. The stock has a beta of 2.62 and a dividend yield of 1.7%. It currently trades a 4.29 forward PE and an 8% expected EPS growth rate. Leon Cooperman’s Omega Advisors had the most shares among the hedge funds we track, with 2.71 million shares at the end of September.

Marathon Oil Corp (MRO) is an international energy company with a market cap of $19.34. Merrill Lynch likes MRO because of the high yield. MRO has returned 21% so far in 2011. It has a beta of 1.24 and a dividend yield of 2.2%. Its forward PE is 6.83, and its EPS is expected to grow at 5%. Cliff Asness’ AQR Capital Management had 2.62 million shares in the stock, after the firm doubled its position during the third quarter.

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CenturyLink Inc. (CTL) is an integrated communications company. The company has a market cap of $22.21 billion. Merrill Lynch says the company is cheap and has a high dividend yield. It has a beta of 0.54, and an extremely high dividend yield of 8.2%. So it’s a good choice for defensive investors who are looking for alternatives for long-term Treasuries. The stock has a forward PE of 13.04, and an expected EPS growth rate of 3%.Phill Gross and Robert Atchinson’s Adage Capital Management had 2.50 million shares in the stock as of September 30th.

Apple Inc. (AAPL) The iPad and iPhone maker returns 18% so far in 2011. It has a market cap of $366.24 billion. Merrill Lynch is positive on Apple’s growth potential in the PC and handset markets. AAPL has a beta of 0.82, and trades at a forward PE of 11. Its EPS is expected to grow by 22% annually in the next five years, which is the highest among all the 10 stocks in this list. AAPL does not pay any dividends. One third of the hedge funds we track had positions in AAPL at the end of the third quarter. The biggest hedge fundshareholder is Ken Griffin, whose Citadel Investment Group had 2.43 million shares in AAPL.

Air Products & Chemicals, Inc. (APD) is basic material provider which supplies products to a wide range of industries. APD has a market cap of $17.74 billion, and has lost 9% year to date. Merrill Lynch likes APD because the company may benefit from the recovery of the global industrial economy and from the rising global energy prices. The stock has a forward PE of 13.62 and its EPS is expected to grow at 10%. In addition, it has a dividend yield of 2.8%. Ric Dillon’s Diamond Hill Capital reported 1.68 million shares in his 13F portfolio in the third quarter.

CBS Corp (CBS) is a mass media company. The stock has a market cap of $16.98 billion. Merrill Lynch believes CBS “has solid fundamentals across the board and has the support from an announced $1.5 billion share repurchase authorization”. CBS has returned 31% in 2011, so it has the best performance among the 10 stocks. The stock currently trades at a 13.04 forward PE and a 14% expected EPS growth rate. The stock also has a dividend yield of 1.60%. Among CBS’s stakeholders, Ken Heebner’s Capital Growth Management took the largest portion, with 6.56 million shares at the end of the third quarter.

Eli Lilly & Co (LLY) specializes in pharmaceutical products. The stock has a market cap of $47.34 billion. Merrill Lynch believes LLY is a high quality, inexpensive stock. The stock returned 23% in 2011. LLY has a beta of 0.67 and a forward PE of 9.39. Its expected EPS growth rate is negative, but the stock has a 4.8% dividend yield. Jim Simons’ Renaissance Technologies was LLY’s biggest hedge fund stakeholder in the third quarter. The firm had 7.10 million shares in the stock at the end of September.

Union Pacific Corp (UNP) is a transportation company. It has a market cap of $48.74. Merrill Lynch says UNP will benefit from its improved operations. UNP has earned 9% so far in 2011. The stock has a forward PE of 15.1 and an expected EPS growth rate of 14%. It also has a 2.4% dividend yield. So the stock might be a solid investment opportunity. Chris Hohn’s Childrens Investment Fund increased its position by 34% and had 3.61 million shares in UNP at the end of September.

Altria Group Inc. (MO) is the largest cigarette producer in the United States. The stock has a market cap of $61.20 billion. Merrill Lynch believes MO’s shareholders can earn from the price growth, cost cutting and share repurchases. The stock has returned 25% year to date. It trades at a 14.42 forward PE and a 7% expected EPS growth rate. MO is a good dividend stock which has a 5.6% dividend yield, so it might be a great alternative to long-term Treasuries. Tom Russo’s Gardner Russo & Gardner had the most among hedge fund investors, with 7.10 million shares.

Xcel Energy Inc. (XEL): is an electric power and natural gas supplier. The company has a market cap of 13.09. The analyst believes XEL has a solid investment in wind generation program and multi-state utility model. XEL has gained 15% year to date. It now trades a 15.14 forward PE and a 5% expected EPS growth rate. The stock has a 0.29 beta and a 3.90% dividend yield. Jim Simons was bullish about the stock. His Renaissance Technologies initiated a brand new position of 610 thousand shares in XEL during the third quarter.

Overall these seem to be solid stock picks with potential to deliver solid returns. However, we don’t think that these picks have much chance in beating the S&P 500 index by 25 percentage points in 2012. We think Apple (AAPL) and CBS have the potential to beat the market by more than 10 percentage points. Higher dividend stocks will probably beat the market if there is a huge decline in the S&P 500 index, but in an increasing market high dividend stocks will probably underperform the market.

Insiders Are Selling These 4 Dividend Stocks

There are many reasons why insiders sell stock in their own company. Some decide to diversify their holdings, others may do it for tax reasons, while many investors see a rally in the company’s stock as excessive and find the current price level as a good opportunity to unload their shares. Insider sales could be potential red flags, sending a strong signal to investors that, perhaps, now may be a good time to sell the shares. Here are four dividend-yielding stocks that recently insiders have been selling heavily.

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FirstEnergy (FE) is a $20.3 billion diversified energy company providing electric power to 6 million customers in six U.S. states. The utility company pays a dividend yield of 4.6% on a payout ratio of 81%. FirstEnergy’s peers Dominion Resources (D) and American Electric Power Co. (AEP) pay dividend yields of 3.9% and 4.7%, respectively. The company’s shares have hit 52-week high of $48.49 and are up 13.3% from the beginning of the year.

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Since the beginning of May, there have been four insider sales of FirstEnergy stock. (read the rest of the article here)

Top 10 Warren Buffett Dividend Stocks

Warren Buffett, the “Sage of Omaha”, is one of the world’s premier fund managers. The first 50 years of his career was record-breaking, earning him nods from his investing peers, as well as the mainstream media. His performance since the turn of the century has been down to say the least; Warren Buffett’s alpha dropped from 10-12% per year to around zero. However, he still has a good eye for large cap, dividend yielding stocks. Here is a list of his top 10 dividend stocks:

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1. Coca-Cola Company (KO), the famous soft drink company, is Buffett’s largest stock. His position is valued at $13.4 billion. It recently traded at $65.42 and has a dividend yield of 2.80%. The stock has a $150.21 billion market cap and a price to earnings ratio of 12.19. Boykin Curry of Eagle Capital Management is also a fan.

2. Procter & Gamble Co. (PG) is a global consumer packaged goods company and it is Buffett’s fourth largest position at $4.88 billion. PG has a market cap of $172.67 billion and a dividend yield of 3.30%. It recently traded at $62.84 and has a price to earnings ratio of 15.99.

3. Kraft Foods, Inc. (KFT) is Buffett’s fifth largest position; he owns a $3.5 billion stake in the company. KFT is a food manufacturing company and has a market cap of $58.42 billion and a price to earnings ratio of 18.90. It has a dividend yield of 3.50%. It recently traded at $33.08 a share.

4. Johnson & Johnson (JNJ) is one of the world’s leading healthcare companies. Buffett owns a $2.8 billion position in the company. JNJ offers a dividend yield of 3.60%. It boasts a market cap of $170.12 billion and a price to earnings ratio of 14.85. JNJ recently traded at $62.08.

5. ConocoPhillips (COP) is a global energy company. It has a dividend yield of 4.20% and a market cap of $83.74 billion. COP has a 7.69 price to earnings ratio; it recently traded at $60.99 per share. Buffett owns a more than $2 billion stake in the company.

6. M&T Bank Corporation (MTB) provides commercial and retail banking. It has a 4.00% dividend yield and recently traded at $68.52 a share. It has a market cap of $8.61 billion and a price to earnings ratio of 9.66. Buffett owns $471.7 million in the company. MTB is also a favorite of Jean-Marie Eveillard, First Eagle Investment Management.

7. Sanofi Aventis (SNY) is a global healthcare services company. Buffett owns $163 million in the company. SNY offers a 4.00% dividend yield and a price to earnings ratio of 14.61. It has a market cap of $85.58 billion and recently traded at $31.88.

8. General Electric Co. (GE) is a diverse company; it provides media, technology and financial services worldwide. Buffett owns $146.7 million in the company. GE has a dividend yield of 3.990% and recently traded at $14.69 per share. It has a $155.72 billion market cap and a price to earnings ratio of 11.56.

9. United Parcel Service, Inc. (UPS) is a global package delivery service that delivers a 3.30% dividend yield. It has a market cap of $61.02 billion and a price to earnings ratio of 15.33. UPS is Buffett’s 19th largest position by value, at $104 million. It recently traded for $62.22/share.

10. GlaxoSmithKline (GSK), the drug manufacturer, is Buffett’s 21st largest position at $64.8 million. GSK has an impressive dividend yield of 5.00%. It recently traded at $40.53. GSK boasts a market cap of $103.56 billion and a price to earnings ratio of 20.66. Ken Fisher, Fisher Asset Management is also a fan.

Is JNJ A Good Stock To Buy?

“Is JNJ A Goog Stock To Buy” was written 2 years ago. Please read on and share your thoughts with us.

Johnson & Johnson (JNJ) is a high dividend stock. With a dividend yield of 3.52%, it is popular among defensive investors who seek to protect themselves from inflation. Additionally, the company has more than 250 operating companies conducting business worldwide. Therefore, it is also a good choice for investors who want to have foreign market exposure. JNJ is very popular among hedge funds. Warren Buffett had $2.8 billion invested in JNJ. Ken Fisher, Ric Dillon, Bill Miller, Jean-Marie Eveillard and many other famous hedge fund managers were also bullish about the stock. We are going to take a closer look at Johnson and its comparable companies, including Abbott Laboratories (ABT), Covidien (COV), and Novartis AG (NVS) to determine which stocks promise higher returns for investors.

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The company reported revenues of $16 billion for the third quarter of 2011. Second quarter operating income declined 19% to $3.7 billion. The company has $10.95 billion in net cash on its balance sheet. Its EPS is $4.90 during the past 12 months. Johnson is expected to earn $4.97 in 2011 and $5.24 in 2012. The stock recently traded at $64.78. Its current PE ratio is 15.77.

Valuation:

Johnson’s earnings are expected to grow at 6% over the next five years. This implies that its PE ratio using its 2014 earnings is around 11.00. Abbott’s expected growth rate is 8.11% and its corresponding PE ratio is 9.10. Covidien is expected to grow at 11.29% and its PE ratio using its 2014 earnings is around 8.70. Navartis is expected to grow by 5.45% over the next 5 years and its PE ratio using its 2014 earnings is around 8.78. Johnson looks overvalued compared to other stocks in the group. Covidien and Navartis seem to be trading at a discount as their PE ratios in 2014 are below 9.

Volatility:

Volatility is generally used as a measure of risk. Johnson’s beta is 0.62, Abbott’s beta is 0.31, Covidien’s beta is 0.90 and Navartis’ beta is 0.67. All these stocks are less risky than the market and Abbott is the most stable one. Johnson’s beta is the second lowest among the group, which means that investors bear relatively low risk purchasing JNJ.

Hedge Fund Ownership:

Stocks that are favored by hedge funds tend to outperform the market by a few percentage points on the average. Johnson was the most popular stock among hedge funds at the end of second quarter. It was held by 57 hedge funds. Abbott was the second popular stock. 39 hedge funds were bullish about it. Ken Fisher, Ric Dillon, and Bill Miller were bullish about both JNJ and ABT. There are 33 hedge funds bullish about Covidien and 21 bullish about Navartis.

Insider Purchases:

Stocks purchased by insiders tend to outperform the market on the average. Johnson and Covidien both were purchased by one insider during the past six months. Other stocks do not have insider purchases during the same period.

Overall our analysis points out that Johnson & Johnson is a bit overvalued compared to other stocks in the group. However, other statistics of the stock beat its comparables. JNJ has low risk and is the most popular stock among hedge fund managers and corporate insiders, indicating some form of perceived value in the stock. We like Johnson & Johnson and we urge investors to do an in-depth analysis of the stock for their portfolios.

Is Halliburton A Good Stock To Buy?

“Is Halliburton A Good Stock To Buy?” was written 2 years ago when it was trading at $35. We’d like to hear your thoughts.

Halliburton (HAL) is an oilfield services company. It conducts business in approximately 80 countries in North America, Latin America, Europe, Africa and Asia. Investors who want to protect themselves from the decline in dollar can gain foreign markets exposure buy purchasing HAL stocks. Halliburton has produced a positive trend in earnings per share over the past five quarters and has posted better than expected results. Ken Fisher initiated a brand new $280+ million in HAL during the second quarter. Ken Griffin also had over $100 million invested in the stock. We are going to take a closer look at Halliburton and its comparable companies in the Oil & Gas Equipment & Services industry, including Baker Hughes Incorporated (BHI), Schlumberger Limited (SLB), and National Oilwell Varco (NOV) to determine which stocks promise higher returns for investors.

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The company reported revenues of $6.55 billion for the third quarter of 2011. Second quarter operating income rose 43% to $1.2 billion. The company has $1.64 billion in net debt on its balance sheet. Its EPS is $3.04 during the past 12 months. Halliburton is expected to earn $3.35 in 2011 and $4.13 in 2012. The stock recently traded at $35.06. Its current PE ratio is 12.68.

Valuation:

Halliburton’s earnings are expected to grow at 18% over the next five years. This implies that its PE ratio using its 2014 earnings is around 6.10. BHI’s expected growth rate is 23% and its corresponding PE ratio is 6.39. Schlumberger is expected to grow at 22.33% and its PE ratio using its 2014 earnings is around 8.82. NOV is expected to grow by 18% over the next 5 years and its PE ratio using its 2014 earnings is around 8.73. Halliburton looks undervalued compared to other stocks in the group. BHI is also trading at a discount assuming its growth estimate is accurate.

Volatility:

Volatility is generally used as a measure of risk. Halliburton’s beta is 1.64, BHI’s beta is 1.57, Schlumberger’s beta is 1.42 and NOV’ beta is 1.52. Halliburton looks to be the most risky stock in the group. Schlumberger has the lowest risk compared to the comparables but it is still more volatile than the market.

Hedge Fund Ownership:

Stocks that are favored by hedge funds tend to outperform the market by a few percentage points on the average. Schlumberger was the most popular stock among hedge funds at the end of second quarter. It was held by 49 hedge funds. Halliburton was the second popular stock. 42 hedge funds were bullish about it. There are 33 hedge funds bullish about BHI and 31 bullish about NOV. Ken Fisher was bullish about HAL, SLB and NOV.

Insider Purchases:

Stocks purchased by insiders tend to outperform the market on the average. Schlumberger was purchased by one insider during the past six months. Other stocks do not have insider purchases during the same period.

Schlumberger beat other stocks in Volatility, Hedge Fund Ownership and Insider Purchases, but its 2014 PE ratio is unfortunately the highest. On the other hand, Halliburton is the most undervalued stock in the group. Strong hedge fund interests in HAL also indicated some form of perceived value in the stock. We like Halliburton and we strongly urge investors to do an in-depth analysis of the stock for their portfolios.