5 Dividend Ideas From Billionaire Ken Fisher's Picks

Includes: ABT, INTC, JNJ, PFE, SNY
by: Rash Menaria

Fisher Investments is a Woodside, California-based investment advisory firm founded by billionaire Kenneth Fisher. Fisher Investments manages $33 billion worth of equity assets, primarily adhering to a value-oriented approach, managing U.S., international and global portfolios.

I discussed Fisher Investments' Top Buys and Top Sells in my previous articles. In addition, for investors seeking yield it is also interesting to have a look at Ken Fisher's top dividend holdings. The following is a list of Fisher Investments' top holdings with good dividend yields, as released in its most recent 13F filing with the SEC.



Shares Held as on 12/31/2011


Johnson & Johnson




Abbott Laboratories




Pfizer Inc.




Intel Corporation








Johnson & Johnson engages in the research and development, manufacture and sale of various healthcare products worldwide. It operates in three segments: Consumer, Pharmaceutical and Medical Devices and Diagnostics.

J&J's recent earnings results and guidance for 2012 show signs of improving fundamentals across its businesses. On the pharmaceutical front, in 2011, J&J received key product approvals for several of its drugs including Incivo, Zytiga, Edurant and Xarelto. These launches are expected to drive solid growth and improve margins through 2012. There is also sequential improvement on McNeil's situation as J&J works through its Consent Decree with FDA. Looking at its MD&D business, volume trends seem to be improving as physician office visits are stabilizing.

Despite FX pressures and a tough environment, J&J has posted good top line growth in Q4 and is expected to continue to outperform its peers, driven by a robust pipeline of drugs in the near term. I recommend a buy.

Abbott Laboratories is a global diversified pharmaceutical and healthcare product company. It engages in the discovery, development, manufacture and sale of healthcare products worldwide. The company's drug portfolio includes Humira, Norvir, Depakote and Synthroid. Abbott is also a leading player in nutritional supplements and diagnostic systems.

I like Abbott because of the announced spin-off of its pharmaceutical business. This move is likely to create more value for the shareholders through focused execution and better use of capital. The spin-off is expected to occur by the end of this year.

From the fundamental perspective also, Abbott's business is seeing good trends. Abbott reported strong Q4 2011 results ahead of street's estimates and provided a healthy 2012 guidance driven by organic growth and higher gross margins. Going forward, Abbott is expected to continue delivering solid earnings results, as Humira is likely to continue to post strong sales with market gains in underpenetrated markets and Abbott's recent global expansion in emerging markets. Abbott management also noted that they will resume share buyback in 2012, hinting that its stock is currently undervalued.

Pfizer is a research-based, global biopharmaceutical company. Pfizer's stock price has seen a good 20% appreciation in last 6 months, and I expect it to continue its upward trend going forward. I am bullish on Pfizer because of management's commitment to enhancing shareholder value through dividend and buybacks, and the company's improving product pipeline. Pfizer increased its quarterly dividend by 10% to $0.22 from $0.20 in Q4, and authorized an additional $10 billion share repurchase program with $5 billion in repo expected for 2012.

Pfizer is likely to generate ~$20B in free cash flow in 2012, so even with the dividend of ~$6.5B and share buyback of $5B, there is still plenty of room for inorganic growth through M&A. In addition, Pfizer entering an interesting new product launch cycle with four $1 bn-plus opportunities including Xalkori, Eliquis, tofacitinib, and Prevnar 13 adult, which could provide organic growth catalysts for the company.

Intel is the world's largest supplier of semiconductor chips. The company designs and manufactures microprocessors, boards, and semiconductor components that are used in computers, servers, and networking and communication products. The company is the world's largest supplier of microprocessors, with a worldwide market share of more than 75%.

Intel reported good Q4 results and gave better than expected guidance for 2012. The Enterprise and emerging market strength pushed its PC sales while strong data traffic drove Data Centre revenues. Going forward, improving trends in Cloud and High Performance Computing are expected to drive server processor growth. The company's recent QLogic acquisition has increased its breadth of product line and strengthened its position in super computing market.

Intel's Data Centre Capex guidance further supports the server processors' growth and upside potential to its margins in 2012. With new product cycles (Ivy Bridge, Romley and Medfield) and investments in its manufacturing and R&D capabilities, Intel is expected to gain market share against its competitor AMD.

Intel is committed to returning cash to its shareholders with a healthy 3.1% dividend yield and $4 billion in stock repurchases last year. It has authorization for further $10 billion repurchase. Even with modest PC trends, the server markets growth provides with considerable upside potential for its near term earnings and multiple expansion.

Sanofi is a global pharmaceutical company with its headquarters in Paris, France. It has five divisions: Pharmaceuticals, Vaccines, Generics, Animal Health and Consumer Health. Sanofi is trading at a discount to its peers, at a forward P/E of 9x, and has a dividend yield of ~3.6%. I believe the company is undervalued, and the market is not pricing its 2013 onward growth outlook driven by new businesses: vaccines, emerging markets, consumer health, animal health, generics.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.