💸 12 Dividend Stocks Hedge Funds Love
Plus the power of compounding...
Today is Dividend Day.
The series where I teach you 5 things about dividend investing in less than 5 minutes.
1️⃣ Hedge Funds Top Holdings
The image below shows the most held stocks hedge funds.
A few interesting things?
The top holdings look an awful lot like the top holdings of the S&P 500
12 of the 14 companies pay a dividend (yes, even NVIDIA…)
The two that don’t?
Berkshire Hathaway and Amazon.
2️⃣ The Power of Patience
This picture shows why starting early with investing really matters.
It’s all because of compound interest (where your money earns more money over time).
Two Investors:
One starts at age 25, invests for 10 years and stops.
The other starts at 35 and invests for 30 years.
The result?
The investor that started earlier has over $175,000 more, despite investing less.
The lesson:
Start early.
The longer you invest, the more your money can grow.
3️⃣ An Investing Quote
Compounding truly makes patience a virtue in investing.
Mohnish Pabrai says that you don’t get rich by trading stocks all the time.
You get rich by holding them and letting them grow.
Think long-term.
Be patient, and let your money grow.
“You don’t make money when you buy stocks. And you don’t make money when you sell stocks. You make money by waiting.”
-Mohnish Pabrai
4️⃣ Why Dividends Matter
Guinness Global Investors is an investment management firm specializing in high-conviction equity strategies.
They focus on quality companies with sustainable business models.
They also wrote a great article on why Dividends matter.
Here’s the conclusion:
‘In short, dividends still matter to investors because they offer a more systematic approach to reach financial goals over the more common ‘buy low, sell high’ strategy, allowing the more patient investor either to maximise their long-term gains through dividend reinvestment or enjoy an extra source of income, according to preference.’
Dividends give you flexibility and reward long-term investing.
The image shows that the longer you’re invested, the more dividends contribute to your returns.
Click the image to read the article.
5️⃣ Example of a Dividend Stock
In honor the power of compounding, we’ll use the Dividend King with the longest streak of dividend raises - 70 years.
American States Water (AWR) is a utility company that distributes water and provides electric service in California.
They prioritize reliable service and environmental sustainability to meet the needs of their customers while responsibly managing resources.
Profit Margin: 20.2%
Forward PE: 23.2x
Dividend Yield: 2.4%
Payout Ratio: 56.3%
That’s it for today!
P.S…
Pieter and I are hosting a free webinar this Thursday, June 19th at 2:00 PM EDT (8:00 PM CEST)
It’s all about using the power of compounding with Quality Investing and Dividend Growth Investing to grow your wealth.
Register here:
Used sources
Interactive Brokers: Portfolio data and executing all transactions
Finchat: Financial data