We track 13F filings from hedge funds and other notable investors as part of our work researching investing strategies (we have found, for example, that the most popular small cap stocks among hedge funds outperform the S&P 500 by 18 percentage points per year on average). We can also use our database to look at individual funds’ filings and see their favorite stocks in a number of areas, including those which pay high dividend yields. Blindly following these managers isn’t always wise but 13Fs can be a useful source of ideas for further research. Read on for five of billionaire David Harding’s Winton Capital Management’s top picks as of the end of December with dividend yields of 4% or higher (or see the full list of stocks Winton reported owning)
The fund’s largest holding by market value was its approximately 780,000 shares of Consolidated Edison, Inc. (NYSE:ED). The $18 billion market cap utility pays a dividend yield of 4% at current prices and dividend levels. As might be expected for a utility the stock’s beta is also low, at 0.1, making Consolidated Edison, Inc. (NYSE:ED) a decent choice for defensive investors as well. At 16 times earnings it may be a bit expensive for a low-to-no-growth company for a pure value investor, however. Renaissance Technologies, founded by billionaire Jim Simons, owned 1.3 million shares at the end of December (find Renaissance’s favorite stocks).
Ameren Corp (NYSE:AEE), an $8.4 billion market cap utility, was another of Winton’s favorite stocks with the filing disclosing ownership of about 990,000 shares. The dividend yield here is high even for a utility, at 4.6%, though of course that market capitalization makes Ameren Corp (NYSE:AEE) smaller than many of its peers. The company also experienced a decline in sales in its most recent quarter compared to the same period in the previous year. Billionaire Israel Englander’s Millennium Management was buying shares of Ameren between October and December (check out Englander’s stock picks).
According to the 13F, the fund nearly doubled the size of its position in AT&T Inc. (NYSE:T) to about 860,000 shares. AT&T is a popular income pick, with the large telecom currently paying a yield of 4.7%; defensive investors will note that the stock price has only a weak relationship to movements in broader market indices as well. At a market cap of about $210 billion, AT&T Inc. (NYSE:T) trades at 14 times analyst consensus earnings for 2014. Fisher Asset Management, which is managed by billionaire Ken Fisher and his team, had 6.1 million shares in its portfolio at the beginning of January (research more stocks Fisher likes).
Winton owned a little over 630,000 shares of The Southern Company (NYSE:SO), another large utility which pays a high dividend yield (4.1% going by recent numbers) and is also well insulated from economic activity (the stock’s beta is 0.1). As a result, it too is a stock that income or defensive investors should consider, even though by traditional value standards The Southern Company (NYSE:SO) appears pricy at a trailing P/E of 18. Billionaire Stanley Druckenmiller, who used to manage his own fund as well as serve as a portfolio manager for George Soros, initiated a position in Southern during Q4 (here are more stocks Druckenmiller was buying).
Disclosure: I own no shares of any stocks mentioned in this article.
