In mid May, Bridgewater Associates, a large hedge fund managed by billionaire Ray Dalio, filed its 13F with the SEC. Even though the information in 13Fs is a bit old- this most recent filing discloses many of Bridgewater’s positions in U.S. stocks as of the end of March- we’ve found that there are still a few uses for these filings. For one, we have found that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year and think that more strategies are possible as well. In addition, we also think it’s useful to review individual filings to see what top managers are doing in the market. When going through Bridgewater’s 13F we noticed a number of high yield stocks among its top picks; here are the fund’s five largest positions in stocks with dividend yields of at least 3% (or see the full list of Dalio’s stock picks):
Bridgewater reported a 38% increase in its holdings of Intel Corporation (NASDAQ:INTC) to a total of over 1 million shares. Intel Corporation (NASDAQ:INTC) currently pays a dividend yield of 3.7%, as its stock price has been about flat in the last year due to concerns about how the company will handle a declining PC industry. In the first quarter of 2013, revenue fell slightly versus a year earlier contributing to a 25% decrease in net income. Billionaire Ken Fisher’s Fisher Asset Management owned a little less than 19 million shares of Intel Corporation (NASDAQ:INTC) at the end of March (find Fisher’s favorite stocks).
Dalio and his team were buying Lockheed Martin Corporation (NYSE:LMT) between January and March, closing the quarter with about 220,000 shares in their portfolio. Markets are concerned that the aerospace and defense company will see a decline in business as the federal government cuts military spending, and so both the trailing and forward P/E multiples are 12. This is despite the fact that investors are generally piling into high-yield names, with Lockheed Martin Corporation (NYSE:LMT) offering investors a yield of 4.3%. We think that this makes it a good prospect for income investors.
$21 billion market cap telecommunications company CenturyLink, Inc. (NYSE:CTL) was another of Bridgewater’s high yield stock picks; with quarterly dividend payments of 54 cents, the current yield is over 6%. We would warn potential investors, however, that the dividend was recently cut to that level from 72.5 cents and even as it stands dividend payments seem to be higher than the company’s trailing earnings- this suggests that further cuts to the dividend are possible. CenturyLink, Inc. (NYSE:CTL) has a somewhat low beta of 0.6, making it a potential defensive pick.