Wealthy individual Bill Ackman Purchased These Two Dividend-Yielding Shares Intensely in the Third Quarter
Variety, schm Variety. That appears to be the perspective of billionaire hedge fund manager Bill Ackman. His Pershing Square Capital Management possesses a total of 10 stocks. Two of those stocks are different share classes of the same company -- Google's parent company, Alphabet.
Ackman didn't establish any new positions during the third quarter of 2024. Nevertheless, he did purchase additional shares of two dividend stocks.
A renowned global investment firm
At the beginning of Q3, Brookfield Corporation (BN) was not among Ackman's largest holdings. However, it took the top spot by the end of the quarter (neglecting his stakes in Alphabet Class A and Class C shares).
Pershing Square purchased approximately 25.9 million shares of Brookfield in Q3, boosting its stake by almost 378%. The stock now constitutes 13.5% of the hedge fund's portfolio.
Brookfield is a dividend stock, but it's unlikely an income investor anywhere would get thrilled about the company's dividend. The projected dividend yield is a meager 0.55%.
However, investors might be intrigued by Brookfield's returns. The stock has grown at a compounded annual rate of around 18% over the past 30 years. Over the previous 12 months alone, Brookfield's shares have risen an astounding 70%.
A footwear and apparel manufacturer that Ackman apparently believes can "just do it"
Nike (NKE -1.16%) was one of Ackman's smallest holdings before July 2024. Nevertheless, the billionaire now has a much larger stake in the footwear and apparel giant. Pershing Square acquired over 13.2 million shares of Nike in Q3, increasing its position by roughly 436%.
Dividend investors will find more appealing aspects of Nike than they will with Brookfield Corporation. Nike's projected dividend yield is a commendable 2.11%. Amazingly, that's the second-highest dividend yield in Ackman's portfolio.
Unfortunately, Nike's shareholders have not been satisfied lately. The stock has plummeted 30% over the past 12 months. It's currently 60% below the peak it reached in late 2021.
In Nike's most recent quarter, revenue dropped 10% compared to the previous year. Diluted earnings per share also fell 26%. The company appointed a new CEO in October with the hope of rectifying the situation.
Since the late 1980s, Nike's slogan has been "Just Do It." Ackman seems to believe the company will be able to bring this phrase to life by turning things around. He may need to practice patience. CFO Matthew Friend stated last month: "A comeback of this scale requires time."
Are Brookfield and Nike astute choices now?
I suspect Ackman knows what he's doing with his aggressive purchases of Brookfield and Nike. However, my opinion is that most investors will only find one of these two stocks a wise investment choice right now -- and it's not Nike. Investing in turnaround stories isn't for the faint of heart.
Many growth investors should appreciate Brookfield, though. Management believes the company is in a stronger position than ever before to deliver returns of 15% or more per year on average. That's quite a feat considering Brookfield's excellent past performance. The keys to the company's success include investing in good businesses, managing them well, smart capital allocation, aligning employees with long-term objectives, and adapting to change. Brookfield should be able to continue doing all of this.
But if you're really after generous dividends, Brookfield's operating businesses could be more appealing. For instance, Brookfield Renewable Partners LP (BEP -1.00%) offers a projected distribution yield of 5.56%, while its corporate entity Brookfield Renewable (BEPC -1.81%) has a projected yield of 4.47%.
Investors might be interested in Brookfield's impressive returns, as the stock has grown at a compounded annual rate of around 18% over the past 30 years. However, the projected dividend yield is relatively low at 0.55%. (contains: investing, finance, money)
Ackman's aggressive purchases of Brookfield and Nike suggest he believes in their potential for future growth. Despite its current struggles, many growth investors might find Brookfield to be a wise investment choice due to its strong management and successful business strategies. (contains: investing, finance, money)
