One of our most popular professional portfolios is that of John Paulson's Paulson & Co. Today, we're singling out some of Paulson's top dividend stock picks.
What follows is a closer look at five stocks among the top 30 that we track that sport current yields of 1.1% or higher. They all comprise at least 1.5% of Paulson's portfolio as of the recently-reported quarter ended March 31, 2015, and are ordered here by increasing position size.
5. Cablevision
Cablevision (CVC - Get Report) has a current yield of 2.3%, paying a quarterly dividend of 15 cents a share.
The stock comprises 0.8% of Paulson & Co.'s portfolio as of March 31. The 8.4 million-share position represents an decrease of 5.3 million shares, or 38.7%, over the previous quarter.
TheStreet Ratings team rates Cablevision Systems as a Hold with a ratings score of C. TheStreet Ratings team has this to say about its recommendation:
"We rate Cablevision Systems (CVC) a hold. The primary factors that have impacted our rating are mixed, with some indicating strength, some showing weaknesses, and with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
"We rate Cablevision Systems (CVC) a hold. The primary factors that have impacted our rating are mixed, with some indicating strength, some showing weaknesses, and with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, CVC's share price has jumped by 36.77%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- Despite its growing revenue, the company underperformed as compared with the industry average of 6.8%. Since the same quarter one year prior, revenues slightly increased by 2.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for Cablevision Systems is rather high; currently it is at 50.71%. Regardless of CVC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.76% trails the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Media industry. The net income has significantly decreased by 50.3% when compared to the same quarter one year ago, falling from $89.76 million to $44.63 million.
- Net operating cash flow has decreased to $215.34 million or 24.04% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
You can view the full analysis from the report here: CVC Ratings Report
4. Computer Sciences
Computer Sciences (CSC - Get Report) has a current yield of 1.4%, paying a quarterly dividend of 23 cents a share.
The stock comprises 1.4% of Paulson & Co.'s portfolio as of March 31. The 4.2 million-share position was a new buy for the fund in the recently-reported quarter.
TheStreet Ratings team rates Computer Sciences as a hold with a ratings score of C+. TheStreet Ratings team has this to say about its recommendation:
"We rate Computer Sciences (CSC) a hold. The primary factors that have impacted our rating are mixed, with some indicating strength, some showing weaknesses, and with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings team include:
"We rate Computer Sciences (CSC) a hold. The primary factors that have impacted our rating are mixed, with some indicating strength, some showing weaknesses, and with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings team include:
- The debt-to-equity ratio is somewhat low, currently at 0.91, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.24, which illustrates the ability to avoid short-term cash problems.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 21.5%. Since the same quarter one year prior, revenues fell by 12.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the IT Services industry and the overall market, Computer Sciences' return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for Computer Sciences is rather low; currently it is at 16.36%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 0.30% significantly trails the industry average.
You can view the full analysis from the report here: CSC Ratings Report
3. Grifols
The stock comprises 3.1% of Paulson & Co.'s portfolio as of March 31. The 17.8 million-share position represents an increase of 9,600 shares, or 0.05%, over the previous quarter.
TheStreet Ratings team rates Grifols SA as a buy with a ratings score of B. TheStreet Ratings team has this to say about its recommendation:
"We rate Grifols SA (GRFS) a buy. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings team include:
"We rate Grifols SA (GRFS) a buy. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings team include:
- Grifols SA's earnings per share declined by 14.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, Grifols SA increased its bottom line by earning $1.66 versus $1.39 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus $1.66).
- The revenue fell significantly faster than the industry average of 22.0%. Since the same quarter one year prior, revenues fell by 11.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The gross profit margin for Grifols SA is rather high; currently it is at 52.25%. Regardless of GRFS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GRFS's net profit margin of 14.14% is significantly lower than the industry average.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, GRFS has underperformed the S&P 500 Index, declining 23.60% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
You can view the full analysis from the report here: GRFS Ratings Report
2. Extended Stay America
Extended Stay America (STAY - Get Report) has a current yield of 3.8%, paying a quarterly dividend of 17 cents a share.
The stock comprises 4.9% of Paulson & Co.'s portfolio as of March 31. The fund maintained a 47.7 million-share position from the previous quarter.
TheStreet Ratings team rates Extended Stay America as a sell with a ratings score of D-. TheStreet Ratings team has this to say about its recommendation:
"We rate Extended Stay America (STAY) a sell. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings team include:
"We rate Extended Stay America (STAY) a sell. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings team include:
- STAY has underperformed the S&P 500 Index, declining 21.59% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- The debt-to-equity ratio is very high at 3.62 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- When compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, Extended Stay America's return on equity is below that of both the industry average and the S&P 500.
- 49.58% is the gross profit margin for Extended Stay America which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.49% trails the industry average.
- Net operating cash flow has increased to $102.69 million or 41.60% when compared to the same quarter last year. In addition, Extended Stay America has also vastly surpassed the industry average cash flow growth rate of -72.82%.
You can view the full analysis from the report here: STAY Ratings Report
1. Time Warner Cable
Time Warner Cable (TWC - Get Report) has a current yield of 1.6%, paying a quarterly dividend of 75 cents a share.
The stock comprises 6.8% of Paulson & Co.'s portfolio and is the fund's third-largest holding as of March 31. The fund maintained an 8.7 million-share position from the previous quarter.
TheStreet Ratings team rates Time Warner Cable as a buy with a ratings score of B+. TheStreet Ratings team has this to say about its recommendation:
"We rate Time Warner Cable (TWC) a buy. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings team include:
"We rate Time Warner Cable (TWC) a buy. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings team include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 6.8%. Since the same quarter one year prior, revenues slightly increased by 3.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, TWC's share price has jumped by 27.07%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- Time Warner Cable's earnings per share declined by 6.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, Time Warner Cable increased its bottom line by earning $7.17 versus $6.71 in the prior year. This year, the market expects an improvement in earnings ($7.21 versus $7.17).
- Net operating cash flow has slightly increased to $1,508.00 million or 7.94% when compared to the same quarter last year. Despite an increase in cash flow, Time Warner Cable's average is still marginally south of the industry average growth rate of 13.98%.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Media industry and the overall market, Time Warner Cable's return on equity significantly exceeds that of both the industry average and the S&P 500.
You can view the full analysis from the report here: TWC Ratings Report
By Stockpickr Staff
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