Benzinga - by AJ Fabino, Benzinga Staff Writer. Retail traders, the growing group of non professional investors who buy and sell stocks hoping to sell at a higher price than they bought, seem to have forgotten a very basic and initial rule of investing: Buy and Hold.
Before you say to yourself, "I've been holding Telsa Inc (NASDAQ:TSLA) stock for 8-months!" The average holding period for a stock in the U.S. is just 10 months, down from 5 years back in the 1970s, according to data from eToro.
Moreover, without a buy-and-hold strategy, you might be overlooking a highly profitable mode of income. It’s worth noting that esteemed hedge fund managers, such as Warren Buffett and Ray Dalio, are certainly not overlooking it.
This isn’t about volatile short squeezes or options trading; it’s about the reliable and steady dividends.
Here's some anecdotal evidence that should wake you up to how much you may be missing out on: year to date, Apple Inc (NASDAQ:AAPL) has handed over $645,350,303.61 to Buffett’s Berkshire Hathaway Inc (NYSE:BRK) (NYSE:BRK) solely in dividends.
There are some 3,460 active hedge funds in the U.S. as of this year, many of which are lapping up fee-free quarterly dividend payments in the millions.
Also Read: If You Invested $1,000 In SPY And QQQ When Michael Burry Went Big Short In 2020, Here’s How Much You’d Have Today
So who's raking in that cash, and what stocks are they holding?
Dalio's Bridgewater Associates, one of the world's largest hedge funds with $124 billion in assets under management (AUM), got paid nearly $51 million in dividends year-to-date just from its top-5 holdings:
iShares Core MSCI Emerging Markets ETF (NYSE:IEMG)
iShares Core S&P 500 ETF (NYSE:IVV)
Procter & Gamble Co (NYSE:PG)
Johnson & Johnson (NYSE:JNJ)
PepsiCo, Inc (NASDAQ:PEP)
Bill Ackman's Pershing Square Capital, with $10.8 billion AUM as of the second quarter, was paid more than $14.3 million in dividends over the course of the second quarter with just three stocks:
Restaurant Brands International Inc (NYSE:QSR)
Lowe’s Companies Inc (NYSE:LOW)
Hilton Hotels Corporation Common Stock (NYSE:HLT)
David Tepper's Appaloosa Management, with $5.39 billion AUM as of the second quarter, enjoyed nearly $4.1 million in dividend payments from just four companies:
Nvidia Corp (NASDAQ:NVDA)
Qualcomm Inc (NASDAQ:QCOM)
FedEx Corp (NYSE:FDX)
Apple Inc
Even the more contrarian hedge funds like Michael Burry's Scion Asset Management collected $164,835.25 in dividend payments from just a few stocks over the second quarter:
Star Bulk Carriers Corp (NASDAQ:SBLK)
Safe Bulkers Inc (NYSE:SB)
Signet Jewelers Ltd (NYSE:SIG)
CVS Health Corp (NYSE:CVS)
While retail traders juggle the adrenaline rush of short-term plays, institutional giants are quietly reaping the benefits of time-tested wisdom: compound interest through dividends.
As the modern trading ecosystem becomes even more rapid-paced, it’s worth revisiting the age-old strategy of Buy and Hold. Because, at the end of the day, quick gains pale in comparison to the steady flow of dividends that the stalwarts of the industry are banking on.
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