Bill Ackman, the maverick founder and CEO of Pershing Square Capital Management hedge fund, is renowned for his unconventional investment strategies and market foresight. Ackman’s track record includes predicting the March 2020 stock market collapse and reaping a staggering 100-fold return in just one week, and more recently, scoring a $200 million profit from his exit from 30-year U.S. Treasuries in October.
Beyond his market-timing prowess, Ackman strategically cultivates a consistent stream of dividend income. Advocating for investments in large-cap industry leaders that are “simple, predictable, free-cash-flow generative, dominant companies with a moat around them,” Ackman currently boasts a portfolio of eight companies generating $97 million in annual dividend income, with the lion’s share coming from four key stocks.
1. Restaurant Brands International (NYSE: QSR)
Based in Canada, Restaurant Brands International Inc. operates as one of the world’s largest fast-food chain operators, boasting brands like Tim Hortons, Burger King, Popeyes Louisiana Kitchen, and Firehouse Subs. Ackman holds a substantial 23.35 million shares of Restaurant Brands, valued at around $1.56 billion. The company’s annual dividend payout of $2.20 per share contributes $51.37 million to Ackman’s portfolio, representing over 52% of his total dividend income. Ackman highlights the company’s robust financials and a 10.9% YoY increase in consolidated systemwide sales for Q3 as key indicators of its attractiveness to income investors.
2. Lowe’s Companies Inc. (NYSE: LOW)
Ranked No. 39 on the Fortune 500 list, Lowe’s Companies Inc. stands out as a prominent home improvement retail chain in the U.S. Ackman’s Pershing Square owns 7.07 million Lowe’s shares, valued at over $1.4 billion. The company’s annual dividend of $4.40 per share generates nearly $31.1 million in dividend income for Ackman’s portfolio. Despite a 4.5% YTD increase in Lowe’s shares, trailing the S&P 500, its high dividend payout enhances its appeal as an investment option.
3. Hilton Worldwide Holdings Inc. (NYSE: HLT)
Benefiting from the post-pandemic travel industry rebound, Hilton Worldwide Holdings Inc. has contributed significantly to Ackman’s dividend income. Ackman holds 10.31 million Hilton shares, valued at over $1.5 billion, and has received $6.18 million in dividends, constituting over 6% of his total dividend income. Hilton’s impressive financials, with a 6.8% YoY rise in revenue per available room (RevPAR) in Q3, and a 35% YTD stock increase, position it favorably for continued growth.
4. Canadian Pacific Kansas City Ltd. (NYSE: CP)
Operating the first and only single-line transnational railway connecting the U.S., Canada, and Mexico, Canadian Pacific Kansas City Ltd. is a key player in Ackman’s dividend dream team. Ackman owns 15.1 million shares of the company, with a total investment exceeding $1.1 million. While the annual dividend per share is $0.56, Ackman’s substantial investment yields nearly $8.5 million in total dividend income. Despite trading at a discount, Ackman remains bullish on CPKC’s long-term earnings outlook, anticipating profitable growth and share price appreciation in the years ahead.
