MSFT, BP, INTC, CVX Among Our 10 Cheap Dividend Stocks Loved by the Hedge Fund Industry

Page 1 of 2

We have found ten cheap dividends stocks that hedge funds were in love with during the third quarter. Dividends play a big role in total stock market returns, hence the reason we have a special appreciation for those stocks that have solid dividend yields—especially in our current low rate environment. In a span that covers the last 30 years leading up to 2012, the Wall Street Journal notes that dividend-paying stocks have returned an average of 8.9% annually, compared to 1.8% for non-dividend paying stocks.

To add to this notion, the dividend stocks we have found are also trading cheap relative to the market with P/E ratios less than 15x earnings. Each stock listed has a market cap of more than $30 billion, a dividend yield of at least 3% and more than 30 hedge funds (of the funds we track; see our full list here) holding ownership. We have ranked these stocks by the number of hedge funds reported to own these stocks at the end of the third quarter, from largest to smallest.

RENAISSANCE TECHNOLOGIES

The most popular cheap dividend stock among hedge funds is Microsoft Corporation (NASDAQ:MSFT). There were 96 hedge funds with Microsoft positions at the end of September. The tech giant pays a dividend that yields 3.5% and trades at only 14.4x earnings. Microsoft is expected to see revenues up 8.5% in 2013 and then 7% in 2014. Driving this growth will be its Windows operating system, expected to see segment revenues up 18% in 2013. Microsoft trades in line with its major tech peers at just over 14x earnings, but is very cheap on a forward basis at 8x earnings. Microsoft is billionaire Jim Simons’ top pick (check out all his top picks).

The second most popular dividend paying stock among hedge funds is Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX). Freeport saw 49 funds as owners at the end of 3Q, and pays a dividend yield of 3.2%. Its 12.6x P/E is below top competitor Southern Copper’s 16x mark, and its 8x forward P/E makes the mining company a solid value play in our opinion. Freeport is one of the world’s largest copper producers and is expected to grow revenues 30% in 2013 after a drop of 14% in 2012. Global economic strengthening should help drive 2013 revenue increases as copper prices are lifted on the back of increased copper demand.

BP PLC (NYSE:BP) is expected to continue its $45 billion asset sale and annual production growth of 1% over the next five years. BP had 44 funds as owners at the end of 3Q and also trades among the cheapest in its industry at 7.6x. After a brief suspension of its dividend, BP has paid a quarterly dividend since the beginning of 2011 and pays the highest dividend yield of our ten stocks at 5.2%. BP plans to modernize 50% of its U.S. downstream assets and sell the rest, while already boasting over $15 billion in cash at the end of the third quarter. BP is one of Seth Klarman’s 3Q value plays; Klarman is the author of Margin of Safety and is the manager of one of the world’s largest hedge funds, The Baupost Group (check out all his new value picks).

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Biggest Airports in the World

The 5 Most Gang Infested Cities In America

The 34 Smartest Countries in the World

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!