Billionaire David Tepper has 38% of his portfolio invested in these 5 dividend stocks

Is David Tepper an income investor? Hedge fund managers (and owners of the Carolina Panthers) probably don’t factor in dividends, or at all, when picking stocks.

But that doesn’t mean Tepper doesn’t own a ton of dividend stocks. There are more people in this billionaire’s Appaloosa Management hedge fund than you might think. He invests his 38% of his portfolio in these 5 dividend stocks.

1. Metaplatform

meta platform (meta -0.40%) It ranks among the top holdings of the Teppers Appaloosa Hedge Fund. As of September 30, 2023, the company held 1.95 million shares, which accounted for more than 11.5% of its total portfolio at the time.

Until recently, Meta would not have produced a list featuring Tepper’s dividend stocks. However, the social media leader announced that it will begin paying a quarterly dividend of $0.50 per share on February 1, 2024. This translates into a dividend yield of approximately 0.44%. It’s not great, but it’s a start.

2.Microsoft

microsoft (MSFT 1.55%) This is Tepper’s second position after Meta. Appaloosa held 1.64 million shares of the tech giant’s stock at the end of the third quarter of 2023, enough to account for nearly 10.2% of the hedge fund’s portfolio.

Many large technology companies don’t pay dividends. However, Microsoft launched a dividend program in his 2003 year.

The current dividend yield is 0.74%. The company has increased its dividend by 168% over the past 10 years.

3. Nvidia

Nvidia (NVDA 3.58%) It’s not Tepper’s third-biggest position.That honor is Amazon.

However, the graphics processing unit (GPU) maker is the billionaire’s fourth-largest holding, accounting for 8.8% of his overall portfolio. Appaloosa held 1.02 million shares of NVIDIA stock at the end of the third quarter.

Unlike Amazon, Nvidia pays a dividend. True, this is no big deal. The chipmaker’s dividend yield is just 0.02%. Still, the company has increased its dividend by 88% since launching its dividend program in 2015. The dividend payout ratio is just over 2%, and the company can easily increase its dividend further if it so desires.

4. Intel

intel (INTC 1.91%) is Appaloosa’s ninth-largest holding, trailing several stocks that don’t pay dividends. At the end of the third quarter of 2023, hedge funds held 6.25 million shares of Intel stock, nearly 4.4% of their portfolios.

Normally, Intel’s nearly 1.2% dividend yield wouldn’t be all that exciting. But compared to most of Tepper’s major holdings, this yield looks great.

However, there are yellow flags to watch out for. Intel cut its dividend by more than 65% last year as part of a massive cost-cutting effort.

5. Federal Express

Not all of Tepper’s dividend stocks are in the tech sector. federal express (FDX 0.36%) It ranks as his 10th largest position. As of September 30, 2023, Tepper’s hedge fund held 650,000 shares of FedEx, representing 3.4% of its portfolio.

FedEx’s dividend yield of over 2.1% is quite respectable. The company’s dividend payout ratio is also less than 29%.

Perhaps the best thing about FedEx’s dividend program is its track record of increasing dividends. Over the past decade, the shipping and logistics giant has increased its dividend by 740%.

best friends

We do not recommend buying these stocks solely for their dividends. But some of them should deliver strong growth over the next decade or more.

If I had to choose one best of all, I would choose the Meta platform. I also like Microsoft and Nvidia, but the way I see it, Meta is undervalued on Wall Street. The company’s recent impressive quarterly results highlight just how much potential it has.