In the intricate world of investing, where billionaire investors rarely showcase their craft for a live audience, a glimpse into their quarterly trading activities provides a unique window. In the third quarter, several billionaire money managers made substantial investments in two ultra-high-yield dividend stocks, sparking interest among everyday investors. Let’s delve into these stocks to assess if following in the footsteps of billionaire investors is a wise move for 2024.
- AGNC Investment Corp (NASDAQ: AGNC):
- Current Yield: 14.4%
- Investment Insight: Billionaires Jeff Yass (Susquehanna), John Overdeck, and David Siegel (Two Sigma Investments) collectively purchased millions of shares.
- Business Model: AGNC is a real estate investment trust (REIT) specializing in mortgage-backed securities, offering a yield that caught the attention of investors.
- Risk Factors: Despite reliable cash flows, AGNC faces challenges, such as increased interest expenses in 2022 and 2023. Its dividend has decreased by one-third over the past five years, making it a consideration for diversified portfolios managed by professional teams rather than individual investors seeking a reliable income stream.
- Medical Properties Trust (NYSE: MPW):
- Current Yield: 12%
- Investment Insight: Philippe Laffont (Coatue Management) and Israel Englander (Millennium Management) made substantial investments in this REIT, focusing on hospitals and related facilities.
- Business Model: Medical Properties Trust manages a diverse portfolio of 441 buildings worldwide, typically securing long-term net leases with hospital operators.
- Risk Factors: Despite its focus on net leases and a diverse portfolio, Medical Properties Trust faced challenges, leading to a 48% reduction in its dividend in September. Approximately one-fifth of its assets are leased by Steward Health, a troubled tenant facing payment delays and legal issues. While the REIT continues to meet its reduced dividend obligation, cautious consideration is advised, especially for retirees seeking highly reliable dividend payments.
Conclusion: While these ultra-high-yield dividend stocks have attracted billionaire investments, individual investors should carefully assess their risk tolerance and investment goals. Diversified portfolios managed by professional teams may find value in these stocks, but everyday investors, particularly those seeking a reliable income stream, need to weigh the associated risks and consider alternatives. As with any investment decision, thorough research and consideration of individual financial circumstances are crucial.
