Billionaire John Paulson's Dividend Stock Picks

 |  Includes: BLK, JPM, SPY, WHR, WY
by: Insider Monkey

We aren’t pleased with the Fed’s expansionary monetary policies that punish savers and reward risk-takers. Investing in long-term Treasuries is no longer an alternative for conservative investors. The next best thing that they can do is to invest in high dividend stocks. We think dividend stocks will generate better returns than long-term treasury bonds over the next 10 years and we have been encouraging investors to purchase dividend stocks. One of the best ways to pick dividend stocks is to focus on what good hedge fund managers buy.

In this article, we are going to focus on the dividend stock picks of John Paulson. Paulson is one of the most followed money managers today. In 2007, his bets against subprime mortgages helped him make $3.5 billion and made him become famous as well. In 2010, he made another $5 billion by betting on gold. His fund did not perform well this year. As of September, the Advantage Plus Fund of Paulson lost about 46% through the end of November. Nevertheless, Advantage Plus still returned nearly 19% per year since its inception.

Below is a list of dividend stocks in the latest 13F portfolio of Paulson & Co. All companies have at least $2 billion market cap and over 3% dividend yield.

Company Name

























Click to enlarge

The biggest high dividend position in Paulson’s portfolio at the end of September was Weyerhaeuser Co (NYSE:WY). Paulson & Co reported to own $366 million worth of WY at the end of the third quarter. WY has a dividend yield of 3.35%. Since the end of September, it returned 16.29%, versus 10.43% for SPY during the same period. WY has a market cap of $9.61B and a P/E ratio of 22.68. Jean-Marie Eveillard is also bullish about WY. At the end of September, his First Eagle Investment Management invested $280 million in WY.

One mega-cap dividend stock in Paulson’s portfolio is JPMorgan Chase & Co (NYSE:JPM). As of September 30, Paulson & Co had $173 million invested in JPM. The banking giant has a dividend yield of 3.09% and it returned 8.24% so far since the end of the third quarter. JPM has a market cap of $122.81B and a P/E ratio of 6.89. Lee Ainslie’s Maverick Capital also invested $211 million in JPM at the end of September.

Another financial stock with high dividend that Paulson is bullish about is Blackrock Inc (NYSE:BLK), one of the best investment management firms in the world. Paulson & Co disclosed owning $146 million of BLK at the end of September. BLK has a dividend yield of 3.17% and returned 18.06% so far in the fourth quarter, beating the market by more than 7 percentage points. Bill Miller’s Legg Mason Capital Management invested $160 million in BLK at the end of the third quarter.

The only dividend stock with 4+% yield in Paulson’s portfolio is Whirlpool (NYSE:WHR). Nevertheless, we like all four of these dividend stocks. Paulson generally doesn’t buy dividend stocks for the yield, he buys because he thinks these stocks have the potential to appreciate significantly. We urge investors to take a closer look at these dividend stocks John Paulson likes.

Disclosure: I am long SPY.