Although his family office isn’t technically a hedge fund anymore (a settlement with the SEC saw to that), many on Wall Street still regard billionaire Steve Cohen‘s Point72 Asset Management as one of the savviest institutions in the marketplace. Not only does the firm have one of the better risk-adjusted performance metrics in the industry (Cohen became a billionaire 13 times over from managing money, albeit mostly while running SAC, his fund’s former moniker), but the best and brightest still work for Point72.
Given those facts, Insider Monkey has put together a list of some of Steven Cohen’s favorite dividend stocks, which are ConocoPhillips (NYSE:COP), KAR Auction Services Inc (NYSE:KAR), Tesoro Corporation (NYSE:TSO), Eli Lilly and Co (NYSE:LLY), and Schlumberger Limited. (NYSE:SLB). Let’s take a closer look at these stocks and see how they were being traded in the second quarter.
At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).
#5 Schlumberger Limited. (NYSE:SLB)
– Shares Held (as of June 30): 1.11 million
– Total Value (as of June 30): $87.46 million
Although crude oil is still more than 50% below its 2014 highs, Schlumberger Limited. (NYSE:SLB) has done well in 2016, with its stock rising by more than 11% year-to-date. One reason for the solid performance is that the oil service company’s management has successfully managed costs in the face of revenue declines. Another reason is that given its pricing power, investors expect Schlumberger to raise its prices when oil goes higher, which could be sooner rather than later, as many investors think that OPEC will eventually relent. That means the company’s current quarterly dividend of $0.50 per share, good for a 2.62% annual yield, looks safe. Point72 almost tripled its position in the company from March 31 to June 30, adding 722,950 shares in the second quarter.
#4 Eli Lilly and Co (NYSE:LLY)
– Shares Held (as of June 30): 1.35 million
– Total Value (as of June 30): $106.34 million
Cohen’s fund inched up its stake in Eli Lilly and Co (NYSE:LLY) by 9% in the second quarter, to 1.35 million shares worth over $106 million at the end of June. Although there are higher yields in biotech/healthcare (Eli Lilly pays a dividend of $2.04 per share a year, for a 2.59% yield), there are few drug companies that have as promising of a pipeline as Eli Lilly. According to recent commentary from its management team, Eli Lilly is still on track to launch drugs or molecules for at least two new indications/line extensions per year for the next seven years and management fully expects to announce annual dividend raises each year until 2020.
We’ll check out three more dividend stocks favored by Steve Cohen and his team on the next page.