This 149-Bagger Has Been Buying Verizon, Schlumberger, and DuPont

Does this 4.5% dividend yield interest you?

Mar 11, 2014 at 5:16PM

The latest 13F season is here, when many money managers issue required reports on their holdings. It can be worthwhile to pay attention, as you might get an investment idea or two by seeing what some major investors have been buying and selling.

For example, consider Appaloosa Management, founded by investing giant David Tepper and known for investing in the debt of companies in distress. Tepper's investing history includes debt and stock in companies such as Enron and Worldcom. He made billions on bank stocks in 2009 after they had imploded and before they recovered. In a letter to shareholders last year, Tepper noted that had one invested $1 million in his hedge fund in 1993, it would have grown to $149 million over the past 20 years. Investing in the S&P 500 instead would have left you with $5.3 million. Tepper's performance reflects an average annual net gain of 28%. Wow.

Appaloosa Management's latest 13F report shows that it has initiated new positions in Verizon Communications (NYSE:VZ), Schlumberger N. V. (NYSE:SLB), and E.I. DuPont de Nemours and Company (NYSE:DD).

Verizon offers investors more than its fat 4.5% dividend yield. Its fourth quarter was its fourth in a row to feature double-digit earnings growth, with earnings up 74% over year-ago levels. Operating revenue for the quarter was 3.4% higher than in the year before at $31.1 billion. For the full year, free cash flow surged 45% between 2012 and 2013. Verizon recently bought the 45% of Verizon Wireless that it didn't own from Vodafone. Bulls like Verizon for the fat margins and growth rate of Verizon Wireless, as well as its dividend. Analysts at Morgan Stanley and JPMorgan Chase recently rated the stock favorably, too.

Energy services giant Schlumberger has many investors excited thanks to great potential in shale, which might fuel earnings for years to come. The company's fracking technology is helping to grow the natural-gas business, and its geographic diversification has it profiting all over the globe. Its fourth quarter was solid, featuring revenue up 7.5% over year-ago levels and earnings up 28%. Schlumberger stock yields 1.7%, which reflects a recent 28% dividend increase. The $121 billion company also aims to buy back some $10 billion worth of its stock. Schlumberger's forward price-to-earnings ratio of 13.5 suggests that it's appealingly valued despite having risen 21% over the past year.

DuPont's operations are more far-flung than you probably think, including agriculture (where it's a player in seeds and genetically modified organisms), industrial biosciences, nutrition and health, performance materials, and pharmaceuticals. The company's revenue growth has been slowing, so it has been restructuring itself, in part via spin-offs and also by investing in advanced biofuels, among other things. It has been becoming less of a chemicals company and more of an agricultural one. DuPont's fourth-quarter revenue was up 6% over year-ago levels, and its operating earnings per share nearly tripled. DuPont stock yields 2.7%.

Here Are Nine More Big Dividends
Dividend stocks as a group handily outperform their non-dividend-paying brethren. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

Selena Maranjianwhom you can follow on Twitter, owns shares of JPMorgan Chase and Verizon Communications. The Motley Fool recommends Vodafone and owns shares of JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers