We have a look at the stocks yielding the most dividend returns in George Soros' portfolio. Most of the top-yielders are REITs, but familiar names Eli Lilly (LLY), AT&T (T) and Altria (MO) provide Soros' portfolio substantial dividend income. Here is what we found:
Frontier Communications (FTR): Soros increased his stake in Frontier by 150%, to 2.1 million shares. Frontier has paid quarterly dividends since 2004. The next ex-dividend date is March 7. The current yield is 7.9%. Revenues for the first nine months in 2010 are $1.596 billion. The same figure in 2009 is $2.438 billion. This is a marked 52% increase. However, EPS decreased from $0.37 to $0.18 in the first nine months of 2009 to 2010. Currently, shares trade at $8.03 with a P/E of 34. The company is the largest pure rural telecommunications carrier in the U.S.
Apollo Investment (AINV): Soros bought 10,900 shares of Apollo in the latest full quarter. This is a new buy for him. The company is a middle-market business developer, yielding 9.7%. The current ratio is .95, however, and operating and free cash flows are decidedly negative. The company has valuable assets, which we estimate could fetch just above book value at $9.5 per share. Forward earnings estimates appear high, but we think a mid-teens forward PE is not unreasonable if management is able to execute well.
Hospitality Properties Trust (HPT): Soros initiated a 9,900 share position in HPT in the latest quarter. The company's stock yields 7.9%, and has a current ratio of only .39. Operating cash flow is substantial enough to cover interest payments, however, and we consider the dividend to be in decent shape. The company's properties are managed by Marriott (MAR) and its affiliates, and very much remains leveraged to a comeback in hotel consumption.
Medical Properties Trust (MPW): Soros bought 13,800 shares of MPW in the latest full quarter, initiating a position in this healthcare REIT. The company has a 7.1% yield, and has a current ratio of 5.7- plenty of coverage to secure the yield. Operating cash flow is positive, and there is some room for increases in the dividend rate over the next few years. We value shares at $12 apiece using a dividend discount model.
Eli Lilly (LLY): Soros initiated a position with 6,175 new shares in the latest quarter. Lilly made $23 billion in revenues and $5.07 billion in profits in 2010, which are increases of 5.68% and 17.1%, respectively. In 2009, that was an increase of 7.15% in revenues, and $6.4 billion turn-around in profits from negative territory. The EBT margin was 28.28% in 2010, and 24.5% in 2009. EPS came in at $4.58, which implies a P/E of 7.54. However, guidance sets EPS range at $4.15 to $4.30. The put/call ratio is a relatively low 0.4.
On February 11, the company announced that Sue Mahony, currently Senior VP of Human Resources and Diversity, has been named Senior VP and President of Lilly Oncology. Mahony joined Lilly more than 10 years ago after a decade in sales and marketing roles in the United Kingdom and Europe in oncology and hematology and cardiovascular medicine for Amgen (AMGN), Bristol-Myers Squibb (BMY) and Schering-Plough (SGP). She was named general manager of Lilly Canada in 2008 after roles in global marketing and new product development, including a leadership role in the development of Cymbalta. Being promoted into Mahony's former role is Steve Fry, currently VP of Human Resources for two of Lilly's business areas, bio-medicines and emerging markets.
The share price has been relatively flat since the January 27 earnings release. Its market cap is $39.9 billion.
AT&T (T): Lately, Soros reduced his stake by 37% to around 1.2 million shares. AT&T has a brand value of $28.88 billion, the 10th most valuable brand name. In 2010, this company drew in $124.28 billion in revenues, which was +1.03%, after -0.81% in 2009. Moreover, the EBT margin in 2010 was 14.67%, and in 2009 it was 15.44%. GAAP EPS came in at $3.35, which was +58.02%, after -1.85% in 2009. This company has been showing new leadership in today’s market. In 2011, analysts expect non GAAP EPS between $2.26 (-1.7%) and $2.57 (+11.7%). In 2010, non GAAP EPS was $2.30. Q1 2011 results come out on April 20 with analysts expecting between $0.51 and $0.62. In comparison, EPS was $0.59 in Q1 2010. AT&T shares trade with a price to sales multiple of 1.4. From 2002 to 2007, the multiples were near 2. AT&T recently announced the purchase of T-Mobile. Sprint (S) is ranked #298 with a brand value of $3.53 billion. Good luck taking on AT&T and T-Mobile.
Altria Group (MO): Soros owns 9,500 shares of Altria. It is a new buy for the latest full quarter in 2010. As we wrote about here, Altria, which produces and sells popular tobacco products such as Marlboro and Parliament cigarettes, Copenhagen and Skoal smokeless tobacco, and more, offers a 6.10% dividend yield and has a market cap of just over $50B. The company has an impressive 84% ROE over the last 12 months, and, despite being a tobacco company, recently ranked 35th on a list of the 100 Best Corporate Citizens by Corporate Responsibility magazine.