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Lorillard Inc. (LO), American Capital Agency Corp. (AGNC), Annaly Capital Management, Inc. (NLY): 5 Dividend Monsters Hedge Funds Love The Most

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Several weeks after the end of each quarter, hedge funds and other major investors are required to file 13Fs with the SEC, disclosing many of their long equity holdings as of the end of the previous quarter. While the information in these filings is a bit old, there are a few ways to make use of it. For one, we have found that the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year, and we think that other strategies are possible as well.

We can also use our database to compile investor interest in individual stocks and pick out the most popular stocks in a number of categories. Here are the five most popular stocks which both have a market capitalization of at least $5 billion and which currently pay a dividend yield of at least 5%:

Top dog


Twenty-four filers in our database reported owning Lorillard Inc. (NYSE:LO), a $16 billion market cap cigarette company. In addition to high yields, cigarette companies are known for being defensive in nature and Lorillard Inc. (NYSE:LO) is no exception with a beta of 0.4. In addition, the stock is actually trading close to value levels even as investors have generally bid up high-yielding investments; the current valuation represents a trailing P/E of 14. Renaissance Technologies, whose founder Jim Simons is now a billionaire, increased its stake in Lorillard Inc. (NYSE:LO) during Q1 to a total of 4.5 million shares see Renaissance’s stock picks.

The best of the rest

Hedge funds also liked American Capital Agency Corp. (NASDAQ:AGNC), a real estate investment trust which primarily invests in mortgage-backed securities. Real estate investment trusts receive favorable tax treatment conditional on distributing a large share of taxable income to shareholders, which often results in high yields. American Capital Agency Corp. (NASDAQ:AGNC) has been making quarterly payments of $1.25 per share each of the last four quarters (though this is down a bit from what it was previously paying) and that makes for a dividend yield of over 15%. However, the nature of its business makes the company’s cash flows fairly risky.

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