Israel Englander founded Millennium Management in 1989 and the hedge fund has since grown to over $10 billion in assets under management. Thanks to its strong performance, Englander is a billionaire and therefore one of the investors who we follow particularly closely in our database of quarterly 13F filings (which we also use to develop investing strategies, including our finding that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year). When we went through Millennium’s most recent filing we noticed a number of high yield stocks; income investors may want to use these initial ideas as a starting point for further research. Here are our thoughts on the fund’s five largest positions in stocks which currently pay dividend yields of 3% or higher (or see the full list of Englander’s stock picks).
Chemicals giant yielding 3%.
Englander and his team nearly tripled their stake in $38 billion market cap specialty chemicals company LyondellBasell Industries NV (NYSE:LYB), which currently yields 3%. As a chemicals company, LyondellBasell Industries NV (NYSE:LYB) is tied to overall macro demand and as a result its beta is 2.5; as we’ll see, this is in contrast to the rest of the fund’s dividend picks which tend to be more defensive in nature. Improved margins carried the company to a sharp rise in earnings in the first quarter of 2013 versus a year earlier. Billionaire Andreas Halvorsen’s Viking Global reported a position of 13 million shares in LyondellBasell Industries NV (NYSE:LYB) in its own 13F (find Halvorsen’s favorite stocks).
Millennium increased the size of its position in American Electric Power Company Inc (NYSE:AEP) to a total of 2.9 million shares. The $22 billion market cap company- which acts as an electric utility, and has an integrated operation transporting coal on inland U.S. waterways- recently increased its quarterly dividend payments to 49 cents per share. At current prices this makes for a yield of 4.5%, which we’d say is fairly high even for a utility. American Electric Power also features a beta of only 0.3, reflecting little dependence on overall economic conditions.
The fund disclosed ownership of 1.5 million shares of NextEra Energy, Inc. (NYSE:NEE), up 30% from what it had owned at the beginning of 2013. Formerly known as FPL Group (and Florida Power & Light prior to that), NextEra is an electric utility which has been moderately increasing its dividend payments in recent years; quarterly payments are currently 66 cents, up from 50 cents three years ago. At current prices the annual yield is 3.4%, and income investors might want to look into the likelihood of NextEra increasing its dividend further in the future.