Dividend stocks aren’t just for income investors. Want proof? Let’s take a look at Ken Griffin’s purchase of Citadel Hedge Fund in the second quarter of 2024.
Mr. Griffin’s net worth is $43 billion. It’s no exaggeration to say that he doesn’t need dividend income and is by no means an income investor. But the billionaire stocked up on at least one high-dividend stock in the second quarter.
Big-ticket acquisition of major pharmaceutical company
Griffin went on a big buying spree in the second quarter. He increased his stakes in 35 of Citadel’s top 50 hedge funds by more than 20%.
Most of those purchases weren’t in high-dividend stocks. One notable exception, however, was Griffin’s huge acquisition of a major pharmaceutical company. pfizer (New York Stock Exchange: PFE). pharmaceutical company’s Future dividend yield That’s high at 5.8%.
During the second quarter, Mr. Griffin bought an additional 7.89 million shares of Pfizer stock. This increased Citadel’s stock by 63%. Pfizer currently ranks 14th in position and 12th in shareholdings among hedge funds (top 2 shares in overall holdings are as follows) Exchange Traded Fund (ETF)).
Mr. Griffin has a long history with Pfizer. He first initiated a position in pharmaceutical stocks in the second quarter of 2013. Over the years, the billionaire hedge fund manager has increased and decreased Citadel’s stake in Pfizer. But these days, he seems to be fully on board with the Big Pharma bandwagon. Griffin has increased his position at Pfizer for six consecutive quarters.
Why does Griffin like Pfizer?
To my knowledge, Mr. Griffin has not publicly commented on the reasons for aggressively increasing Citadel’s position at Pfizer. However, you can make some educated guesses.
I’m sure he likes the company’s generous dividend. To be sure, Griffin is not an income investor. But he certainly recognizes that Pfizer’s nearly 6% dividend yield gives it a head start on achieving market-beating total returns.
Valuation may also be a top consideration for billionaire investors. Pfizer stock is still about 50% below the all-time high it set in late 2021. The company’s forward price/earnings ratio (PER) is 10.3 times, which is significantly lower than its price/earnings ratio (PER). S&P500 The expected earnings multiple for the Healthcare segment is 19.6x.
Griffin values diversification. Citadel’s portfolio includes a whopping 5,816 stocks. The addition of Pfizer’s position may have been partly to increase the hedge fund’s exposure to healthcare, particularly the pharmaceutical industry.
But ultimately, Griffin invests in certain stocks because he thinks they will make money. I think he likes Pfizer’s long-term growth prospects. Griffin said it’s important to understand the challenges facing drug makers, including declining sales of the company’s COVID-19 products and the impending patent cliff that will see some of its best-selling drugs lose patent exclusivity. have sufficient insight. But he is also aware of the efforts Pfizer has made to overcome these challenges, including significant investments in research and development and acquisitions to strengthen its pipeline.
Should I also buy Pfizer stock?
You shouldn’t buy or sell certain stocks just to follow in the footsteps of wealthy famous investors like Ken Griffin. However, the trades of successful investors may give you good ideas to consider. Should I also buy Pfizer stock?
Growth investors probably won’t find Pfizer all that appealing. I think this big pharma company will see solid growth over the next few years, but it won’t be enough to keep up with many tech and other high-growth stocks.
Highly risk-averse investors may want to keep Pfizer on the sidelines as well. A drug company’s pipeline candidates could fail in clinical trials, causing stock prices to fall. For a large company with a deep pipeline like Pfizer, this is less of an issue, but it’s definitely something to keep in mind.
Pfizer, on the other hand, may be a better fit for value investors. As mentioned above, the stock price is relatively cheap. If the company’s new products and late-stage pipeline programs live up to their potential, Pfizer’s stock could recover nicely over the rest of the decade.
And one group of investors that absolutely loves Pfizer is income investors. Pfizer’s yield is unusual. The company appears to be in a strong position to maintain its dividend. No, dividend stocks aren’t just for income investors. But high-dividend stocks with a long track record of success, like Pfizer, are typically better suited for income investors than other types of investors.
Should I invest $1,000 in Pfizer right now?
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Keith Spates I have a position at Pfizer. The Motley Fool has a position in and recommends Pfizer. The Motley Fool has Disclosure policy.
Billionaire Ken Griffin fell in love with this high-dividend stock. Should I do that? Originally published by The Motley Fool
https://finance.yahoo.com/news/billionaire-ken-griffin-loaded-high-080500151.html
