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2 Ultra-High-Yield Dividend Stocks Billionaires Are Surprisingly Selling,

One of the greatest things about putting your money to work on Wall Street is that there are countless strategies that can make you richer. Regardless of your risk tolerance or area(s) of focus, there are almost certainly individual stocks or exchange-traded funds that can help you grow your wealth.

But among these many strategies, few compare with the robust long-term returns generated by purchasing and holding high-quality dividend stocks.

Last year, investment advisory firm Hartford Funds, in collaboration with Ned Davis Research, released a report (“The Power of Dividends: Past, Present, and Future”) that detailed the various ways dividend-paying stocks have outperformed non-payers over lengthy timelines. In particular, companies that regularly pay a dividend have delivered a 9.17% annualized return over the last half-century (1973-2023), and did so while being 6% less volatile than the benchmark S&P 500. By comparison, non-payers produced a more modest 4.27% annualized return over 50 years and were 18% more volatile than the broad-based S&P 500.

Two red dice that say buy and sell being rolled across paperwork displaying financial information and charts.

Image source: Getty Images.

Despite this outperformance, Wall Street’s smartest investors are torn on which dividend stock can make investors richer. Based on recently filed Form 13F filings, which detail the trading activity of top institutional investors during the March-ended quarter, billionaire investors were especially active buying and selling ultra-high-yield dividend stocks. An “ultra-high-yield” stock is one with a yield that’s at least four times greater than the S&P 500 (i.e., higher than 5.35%).

The March quarter saw prominent billionaire money managers surprisingly sell two supercharged dividend stocks, while piling into another with a yield that’s near 15%!

Ultra-high-yield dividend stock No. 1 billionaires are selling: Realty Income (5.71% yield)

Arguably one of the biggest surprises following the filing of 13Fs last week was that some of Wall Street’s wisest billionaire investors dumped their shares of premier retail real estate investment trust (REIT) Realty Income (NYSE: O). During the first quarter, three billionaires sent this monthly dividend payer to the chopping block, including (total shares sold in parenthesis):

  • Israel Englander of Millennium Management (507,406 shares)

  • Ray Dalio of Bridgewater Associates (188,865 shares)

  • Steven Cohen of Point72 Asset Management (161,835 shares)

Both Dalio and Cohen completely exited their fund’s stakes in Realty Income, whereas Englander’s fund reduced its position by 58%.

The culprit for this selling may very well be stubbornly high core inflation. Inflation remaining above the Federal Reserve’s long-term target can have two deleterious effects on Realty Income. First, there’s the real risk that higher shelter expenses could reduce discretionary spending and tip the U.S. economy into a recession. The first notable decline in U.S. M2 money supply since the Great Depression implies the economy is far more fragile than economic data suggests.

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