Billionaire Jim Simons’ Top High-Dividend Stock Picks

Most individual investors invest in dividend-paying stocks to benefit from the steady streams of dividend checks, but can also take advantage of stock price appreciation as well. However, one should bear in mind that dividend-paying stocks tend to act as a supplement for bonds. The odds of the Federal Reserve raising interest rates this year are relatively high, which could put some downward pressure on dividend stocks. The reason this may happen is because the fixed-income asset class will become more attractive when interest rates rise, so investors may decide to unload their dividend-paying holdings. Even so, it might take quite some time until fixed-income investments become more attractive than dividend-paying stocks, which means that they are still an attractive investment in the forthcoming future. Billionaire hedge fund Renaissance Technologies LLC, founded by “Quant King” Jim Simons, reecently has submitted its 13F filing for the third quarter with the U.S. Securities and Exchange Commission. Hence, the following article will lay out the top dividend-paying stocks owned by Renaissance at the end of the September quarter.

At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read more details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 102% and beating the market by more than 53 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.

#5 Novartis AG (ADR) (NYSE:NVS)

Shares Owned by Renaissance Technologies (as of September 30): 1.68 Million Shares

Value of Renaissance’s Position (as of September 30): $154.65 Million

Current Dividend Yield: 3.24%

Renaissance Technologies lifted its position in Novartis AG (ADR) (NYSE:NVS) by 495,800 shares during the third quarter, which accounted for 0.37% of its entire portfolio on September 30. The Switzerland-based healthcare company pays out an annualized dividend of $2.8169 per share, which generates a current dividend yield of 3.24%. In fact, the company has increased its dividend per share each year since its inception back in 1996. Meanwhile, the stock is down nearly 7% year-to-date, and is currently trading at a reasonable trailing price-to-earnings ratio of 21.84. This compares with a trailing P/E of 22.70 for the companies included in the S&P 500. Ken Fisher’s Fisher Asset Management reported owning 6.13 million shares in Novartis AG (ADR) (NYSE:NVS) through the 13F filing for the September quarter.

#4 AbbVie Inc. (NYSE:ABBV)

Shares Owned by Renaissance Technologies (as of September 30): 2.93 Million Shares

Value of Renaissance’s Position (as of September 30): $159.63 Million

Current Dividend Yield: 3.39%

The multi-billion dollar hedge fund upped its holdings in AbbVie Inc. (NYSE:ABBV) by a whopping 2.93 million shares during the September quarter, as it owned a mere 8,200 shares as of June 30. The research-based biopharmaceutical company recently announced that its Board of Directors declared a quarterly cash dividend of $0.57 per share, up from $0.51 per share paid in the previous quarter. It is also worth mentioning that AbbVie has increased its dividend by more than 42% since the company became independent in 2013. The freshly-upped quarterly dividend generates a current dividend yield of 3.39%. At the same time, several analysts at well-known financial services firms recently asserted their confidence in the company’s long-term outlook, which includes strong sales growth of its flagship product Humira. Meanwhile, the shares of AbbVie are 8% in the red year-to-date, after jumping 24% since the company released its strong third-quarter financial results. Samuel Isaly’s Orbimed Advisors owns 6.94 million shares in AbbVie Inc. (NYSE:ABBV) as of September 30.

#3 Entergy Corporation (NYSE:ETR)

Shares Owned by Renaissance Technologies (as of September 30): 2.47 Million Shares

Value of Renaissance’s Position (as of September 30): $160.67 Million

Current Dividend Yield: 5.17%

At the end of October, Entergy Corporation (NYSE:ETR) declared a quarterly dividend of $0.85 per share, which gives its stock a dividend yield of 5.17%. Jim Simons’ hedge fund significantly increased its exposure to the integrated energy company during the third quarter by 1.02 million shares, despite its disappointing performance. In the meantime, the shares of Entergy have lost 25% since the beginning of the year. Just recently, the company raised its full-year operating earnings guidance to the range of $5.50 to $6.10 per share, from the previously-anticipated range of $5.10 to $5.90. Richard S. Pzena’s Pzena Investment Management held its position in Entergy Corporation (NYSE:ETR) unchanged during the third quarter at 796,411 shares.

#2 Ventas Inc. (NYSE:VTR)

Shares Owned by Renaissance Technologies (as of September 30): 3.16 Million Shares

Value of Renaissance’s Position (as of September 30): $177.24 Million

Current Dividend Yield: 5.84%

Multi-billion dollar Renaissance Technologies cut its stake in Ventas Inc. (NYSE:VTR) by 38,183 shares during the September quarter, remaining with roughly 3.16 million shares. The healthcare real estate investment trust has experienced a terrible year in terms of stock performance, with its shares declining by 30% year-to-date. The REIT issues an annualized dividend distribution of $2.92 per share, which offers its stock a dividend yield of 5.84%. At the end of October, BMO Capital Markets cut its price target on the stock to $61 from $65, citing disappointing third-quarter financial results. The REIT reported earnings per share of $0.07 on revenue of $827.6 million, compared to analysts’ estimates of EPS of $0.28 on revenue of $826.6 million. Jeffrey Furber’s AEW Capital Management slightly increased its position Ventas Inc. (NYSE:VTR) during the third quarter, ending the three-month period with 2.34 million shares.

#1 Duke Energy Corp (NYSE:DUK)

Shares Owned by Renaissance Technologies (as of September 30): 3.06 Million Shares

Value of Renaissance’s Position (as of September 30): $220.46 Million

Current Dividend Yield: 4.9%

Duke Energy Corp (NYSE:DUK) represents the fifteenth-largest equity holding in Renaissance’s portfolio at the end of the third quarter. Jim Simons’ hedge fund firm increased its holdings in the energy company by 916,100 shares during the latest quarter. Duke Energy pays out an annualized dividend of $3.30 per share, and has paid cash dividends for 89 consecutive years. Consequently, the energy company offers a current dividend yield of 4.9%. The stock is down nearly 20% for the year, but it is currently trading an attractive P/E ratio of 19.91. The largest electric power company in the U.S. has a forward P/E ratio of 13.92 (the S&P 500 has a ratio of 17.25), which might point to the fact that the stock is slightly undervalued at the moment relative to the broader market (assuming that analysts’ earnings estimates are accurate). Cliff Asness’ AQR Capital Management owned 1.02 million shares in Duke Energy Corp (NYSE:DUK) as of June 30.

Disclosure: None