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Bill Ackman, the visionary founder and CEO of Pershing Square Capital Management, has not only gained fame for his bold market predictions but also for his strategic investment moves. With an estimated net worth of $400 million, Ackman’s investment prowess includes predicting the 2020 stock market collapse and making a remarkable 100-fold return in a week.
While Ackman is renowned for his market-timing acumen, he also reaps a steady stream of dividend income. Emphasizing the value of investing in large-cap industry leaders, he looks for companies that are “simple, predictable, free-cash-flow generative, dominant companies with a moat around them,” borrowing a phrase from Warren Buffett.
As of December 2, Ackman’s dividend dream team comprises four key stocks contributing to a substantial $97 million in annual dividend income.
1. Restaurant Brands International (NYSE: QSR)
Based in Canada, Restaurant Brands International operates some of the world’s largest fast-food chains, including Tim Hortons, Burger King, Popeyes Louisiana Kitchen, and Firehouse Subs. Ackman holds 23.35 million shares valued at $1.56 billion, generating a significant $51.37 million in annual dividend income. Restaurant Brands’ robust financials and a 10.9% YoY increase in consolidated systemwide sales make it a top pick for Ackman.
2. Lowe’s Companies Inc. (NYSE: LOW)
Ranked 39th on the Fortune 500 list, Lowe’s is a prominent U.S. home improvement retail chain with over 1,700 stores nationwide. Ackman’s ownership of 7.07 million shares, valued at over $1.4 billion, contributes nearly $31.1 million in annual dividends. Despite a 4.5% YTD share increase, Lowe’s allure lies in its high dividend payout.
3. Hilton Worldwide Holdings Inc. (NYSE: HLT)
Benefiting from the travel industry’s post-pandemic rebound, Hilton Worldwide has been a lucrative investment for Ackman. With 10.31 million shares valued at over $1.5 billion, Hilton generates $6.18 million in dividends, representing over 6% of Ackman’s total dividend income. Hilton’s strong financials and a 35% YTD stock increase underscore its attractiveness.
4. Canadian Pacific Kansas City Ltd. (NYSE: CP)
Operating a transnational railway connecting the U.S., Canada, and Mexico, Canadian Pacific Kansas City has become a strategic investment for Ackman. With 15.1 million shares valued at over $1.1 billion, Ackman earns nearly $8.5 million in annual dividends. Despite trading at a discount, Ackman sees CPKC’s attractive long-term earnings outlook and anticipates profitable growth.
While Ackman’s dividend dream team reflects his preference for stable and dominant companies, the debate surrounding the practicality of his $5 million financial security recommendation continues.
