During the recent market turmoil, the financial markets have been hit by one crisis after another. Most people are pessimistic about the economy. Central banks all around the world have been trying to stimulate the economy by applying inflationary monetary policies. One result of the Fed’s monetary policy is ultra-low yielding long-term Treasuries. It doesn’t make sense to invest in 10-year Treasuries for the long-term. With the low interest rates, investors are better off by investing in high-dividend stocks.
We ran a screen for stocks that were rated 5 stars, or “strong buy,” by Standard & Poor’s, and compiled a list of 5 large-cap dividend stocks that offer dividend yields greater than 5%.
|Enterprise Products Partners L.P.||EPD||43B|
|Kinder Morgan Energy Partners LP||KMP||29B|
|Altria Group, Inc.||MO||59B|
|Vodafone Group Plc (ADR)||VOD||140B|
1. Enterprise Products Partners L.P. (EPD) is a midstream natural gas company. The company has a market cap of $43 billion, and gained 18% in 2011. In addition to its good performance, EPD offers a 5.15% dividend yield. S&P recommends a 12-Mo. return target of 10% for EPD. At the end of the third quarter 2011, EPD was in 10 hedge funds, amongst those we track. Total hedge fund investment in the company was $116 million at the end of September. Osterweis Capital had $64 million invested in EPD at the end of September.
2. Kinder Morgan Energy Partners LP (KMP) is a pipeline transportation and energy storage company. It has a market cap of $29 billion and advanced a whopping 28% in 2011. The stock also has a dividend yield of 5.41%. S&P projects a 13% return for KMP over the next 12 months. Cliff Asness had a small position in KMP last year (see billionaire Cliff Asness’ favorite stocks).
3. Altria Group, Inc. (MO) is the largest cigarette producer in the United States. The company has a $59 billion market cap. Its share price advanced 28% last year. The stock has a dividend yield of 5.73%. S&P gives MO a 12-month target return of 5%, but it’s still a good dividend stock pick. MO was popular with hedge funds during the third quarter 2011. Twenty-eight hedge funds had a total of $518 million invested in MO at the end of September, including Cliff Asness, Ken Griffin, and Jim Simons (see billionaire Ken Griffin’s top stock picks).
4. AT&T Inc. (T) is a worldwide telecommunications service provider. It has a market cap of $180 billion and offers a dividend yield of 5.79%. In 2011, AT&T successfully beat the market by returning 9%. S&P suggests it a 12% expected return over the next 12 months. Phill Gross and Robert Atchinson, Cliff Asness, and D. E. Shaw each had large stakes in the stock at the end of the third quarter.
5. Vodafone Group Plc. (VOD) is a global wireless telecommunications services company. The company has a market cap of $140 billion, and offers a dividend yield of 5.42%. Last year VOD returned 16%. S&P expects VOD to return 22% over the next 12 months. At the end of the third quarter 2011, thirty-five hedge funds were invested in VOD. Total hedge fund exposure in VOD at that time was slightly less than $1 billion. Boykin Curry, Mason Hawkins, and Jim Simons had large stakes of VOD as of the end of September (see billionaire Jim Simons’ top stocks).