3 Dividend Stocks Billionaire Ken Fisher Loves

Yield is only half the story. Being able to boost it is even better. See why Qualcomm, Comcast, and Disney look appealing for income investors.

Jan 30, 2014 at 10:33AM

When it comes to dividend stocks, bigger isn't always better. Instead of focusing on yield alone, savvy investors find companies with the ability to both back and boost their dividends. Here are three under-the-radar dividend stocks at the top of billionaire Ken Fisher's holdings.

Qualcomm (NASDAQ:QCOM) develops new technologies and then licenses the rights to use its patented technology. For example, networks being upgraded to 4G (fourth-generation) are based on a technology developed by Qualcomm. By holding the patents, Qualcomm collects royalties from smartphone and tablet makers that use it. Also, as Android-based devices, which commonly run on Qualcomm's Snapdragon chip, continue to snatch market share, Qualcomm will likely benefit.

The tech giant's dividend yields 1.9%, but the real power of its dividend is its growth story. The tech company recently raised it by more than 40% and has doubled it over the past five years. Better yet, the payout ratio for Qualcomm's dividend is 31%, indicating the company has plenty of room to further grow its dividend. Fisher also likely finds the company's forward P/E ratio of 13 especially enticing.

Comcast (NASDAQ:CMCSA) is the largest cable-operator in the United States. The company acquired full ownership of NBC Universal last year. Watch for Comcast to deliver improved operating margins at NBC Universal as it integrates operations. Also, look for a potential partnership with Netflix that could enhance both companies' content distribution and marketing abilities.

The telecom behemoth's dividend yields 1.5%, which it has increased by nearly 140% in five years. Its 38% dividend payout ratio allows room for the company to increase the dividend, which is well-supported by strong cash flow and earnings. As Comcast's margins grow, the company will have even more leeway to increase its dividend.

Disney's (NYSE:DIS) massive empire, which includes a world-renowned brand, theme parks, television, and movies, yields a diversified stream of revenue. Disney's sometimes-overlooked cable networks account for almost half of company revenue and two-thirds of operating profit. And Disney's successful Lucasfilm, Marvel, and Pixar acquisitions are generating seemingly endless billion-dollar movie franchises and assets that will likely create shareholder value for years to come.

Disney's dividend yields a mere 1.2%. Its payout ratio is a healthy 22%, which leaves lots of room for further growth. The company increased its dividend 15% last year and has doubled its dividend in the past three years. Not only does Fisher love Disney, but our Motley Fool CAPS community has crowned it a five-star (out of five) stock. 

Foolish final thoughts
Savvy investors like Fisher don't ignore companies with a lower initial dividend. By overlooking companies that pay smaller yields, you may be missing out on the best dividend growth stocks of the coming decade.

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Nicole Seghetti owns shares of Comcast. Follow her on Twitter @NicoleSeghetti. The Motley Fool recommends Netflix and Walt Disney. The Motley Fool owns shares of Netflix, Qualcomm, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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