Billionaire Jim Simons Locations Wager on Three Excessive-Yield Dividend Stocks
A rising tide lifts all boats, as President John Kennedy stated, and we’re seeing it now on Wall Street, as each the S&P 500 and the NASDAQ are close to document excessive ranges. The positive aspects are broad-based and actual, and mirror a rising optimism now that the election is behind us and a COVID-19 vaccine is in sight.So let’s look again, all the best way to 1973, when economist Burton Malkiel informed us that “a blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by the experts.” He was declaring the impact of random forces on a big sufficient pattern – and the stock market, with over 7,000 publicly traded equities, and much more hundreds of lively merchants working every day, is unquestionably a big sufficient pattern.However that was earlier than mathematician and code-breaker Jim Simons taught us all learn how to crunch the numbers. Simons acknowledged that individuals are not monkeys – and so have entry to info that transcends random results. He invented quantitative buying and selling, and altered the funding panorama endlessly.And again within the current, Simons revealed in his most up-to-date 13F filings three new stock positions that bear a better look. These are buy-rated stocks that boast no less than a 5% dividend yield and go up from there. We used TipRanks database to search out out what else makes these picks so compelling.Plains GP Holdings (PAGP)First up is Plains GP, an oil and gasoline midstream holding firm. Plains controls belongings within the oil and gasoline transport sector, the place it strikes the hydrocarbons from the effectively head manufacturing websites to the refineries, storage tank farms, and transport amenities. The corporate belongings embrace practically 19,000 miles of pipelines, 8,000 crude oil railroad tankers, practically 2,500 vehicles and tractor-trailers, and, on the rivers, 20 transport tugs and 50 barges. These belongings transfer oil and gasoline into and out of 148 million barrels worth of storage capability.PAGP took a tough hit earlier this yr from declines within the price of each oil and gasoline, and from decreased demand throughout the pandemic-inspired financial shutdowns. By Q2, income was down by greater than half, to $3.23 billion. The Q3 prime line exhibits the start of a restoration, with revenues coming in at $5.83 billion. Q3 EPS was flat sequentially, at 9 cents.The corporate’s stock price, as could be anticipated from the monetary efficiency, has failed to realize a lot traction because it fell final winter at first of the corona disaster. Shares in PAGP are down 52% to date this yr.The low share price, nonetheless, presents traders with a possibility. Clearly, Jim Simons would agree. His fund staked a place in PAGP by shopping for 1,045,521 shares of the stock. The holding is worth $8.44 million on the present share price.Plains GP has saved up its dedication to the dividend. The corporate minimize the fee from 36 cents per share to 18 cents for the April fee, however has saved it at that stage since then. The minimize saved the yield from exploding as share price fell, and saved the fee reasonably priced at present earnings ranges. The present fee annualizes to 72 cents per frequent share, and offers a yield of 8.3%.Raymond James analyst Justin Jenkins likes Plains for its means to generate cash. He writes, “PAGP’s cash movement profile has really improved this yr. Whereas 2021 will see extra headwinds to EBITDA than 2020, decrease capex and cost-cutting measures applied for the reason that pandemic nonetheless drive an FCF inflection. We now model Plains producing an all-in FCF surplus […] We proceed to consider the partnership’s outlook is significantly better than latest investor sentiment within the stock.”In step with these feedback, Jenkins charges PAGP a Purchase. His $9 price goal suggests it has room to develop ~10% from present ranges. (To look at Jenkins’ observe document, click on right here)Total, there are three latest critiques of PAGP on document, and all are Buys – making the analyst consensus right here a unanimous Robust Purchase. The stock is promoting for $8.17, and its $10 common price goal implies a one-year upside of 22%. (See PAGP stock evaluation on TipRanks)Granite Level Mortgage Belief (GPMT)Subsequent up, Granite Level Mortgage Belief, is a mortgage loan firm serving a US buyer base. The corporate invests in senior floating-rate industrial mortgages, in addition to originating and managing such loans. The corporate’s portfolio is valued at greater than $1.Eight billion.GPMT is displaying some strong messages in latest monetary efficiency. The corporate beat the forecasts on earnings, reporting 27 cents per share towards a 20-cent estimate, for a 35% beat. Revenues had been up year-over-year, and the corporate completed the quarter with over $353 million in cash and cash equivalents.That basis allowed GPMT to maintain its dividend, though the corporate did regulate the fee to 20 cents per frequent share. At that price, it annualizes to 80 cents and yields a hefty 8.3%. This compares favorably to monetary sector friends – and is greater than 4x larger than the typical dividend discovered amongst S&P listed corporations. Granite Level is one other of Jim Simons’ new positions. The quant billionaire purchased up 155,800 shares of this actual property funding belief (REIT), for a stake that’s now worth $1.48 million. Stephen Legal guidelines, protecting this stock for Raymond James, sees GPMT as a possible winner for dividend traders. He writes, “We anticipate web curiosity earnings to proceed to profit from LIBOR loans in flooring, and are growing our core earnings estimates to mirror this. Whereas GPMT reinstated the quarterly dividend of $0.20 per share, the corporate nonetheless has roughly $29 million of undistributed taxable earnings at September 30. Given this, we anticipate a particular dividend of $0.40 per share to be declared previous to year-end.”The 5-star analyst charges the stock an Outperform (i.e. Purchase), and his $11 price goal implies 16% progress over the subsequent months. (To look at Legal guidelines’ observe document, click on right here)That is one other stock with a unanimous analyst ranking – though the 2 latest Buys make the consensus view a Reasonable Purchase. The typical price goal matches Legal guidelines’, at $11, and signifies a 16% upside from the present buying and selling price of $9.60. (See GPMT stock evaluation on TipRanks)Phillips 66 (PSX)Final on our record of Simons’ new purchases is Phillips 66, the oil and gasoline large. With over $107 billion in annual revenues, and greater than $58 billion in complete belongings, Phillips 66 is deeply concerned in oil manufacturing, refining, and advertising. The corporate additionally has a big presence within the petrochemical business.The low costs, financial shutdowns, and unpredictable demand have put strain on PSX’s share price this yr, and the stock has solely partly rebounded from final winter’s swoon. PSX is down 40% year-to-date, but it surely’s up 54% from its late-March trough.Within the third quarter, Phillips 66 noticed an EPS lack of 1 cent – however that was much better than the 80-cent misplaced which had been forecast. Revenues for the quarter got here in at $15.93 billion, up 45% from the earlier quarter.The corporate pays out 90 cents per frequent share, and has an 8-year historical past of conserving a dependable fee with occasional will increase. The annualized fee of $3.60 provides a yield of 5.4%, effectively above the utility sector common yield of three.3%.Simons, for his half, was impressed sufficient by this stock to buy 120,800 shares. That’s a holding now worth $7.47 million.In his observe on PSX, Scotiabank’s Paul Cheng notes a number of key points, together with some that may appear counterintuitive. “Passing of Election Day may really set off new shopping for within the group even with a Biden win. Opposite to the widespread perception, the sector has traditionally outperformed the overall market within the first yr of a brand new Democrat Administration… Cyclical sectors might be in demand once more as traders re-focus their consideration from the election to vaccine availability,” Cheng opined. The analyst added, “…relative to different refiners, PSX ought to profit extra from a rising oil price setting given their massive chemical and NGL operations.”To this finish, Cheng charges PSX an Outperform (i.e. Purchase). He units a $79 price goal, indicating an upside potential of 25% for the subsequent 12 months. (To look at Cheng’s observe document, click on right here)All in all, Phillips 66 get a broad-based thumbs-up from Wall Street – as clear from the 11 Purchase rankings on the stock, giving it a Robust Purchase analyst consensus. (See PSX stock evaluation on TipRanks)To seek out good concepts for dividend stocks buying and selling at engaging valuations, go to TipRanks’ Greatest Stocks to Purchase, a newly launched software that unites all of TipRanks’ fairness insights.Disclaimer: The opinions expressed on this article are solely these of the featured analysts. The content material is meant for use for informational functions solely. It is rather vital to do your individual evaluation earlier than making any funding.