JPMorgan Chase & Co. (JPM), Occidental Petroleum Corporation (OXY), Pfizer Inc. (PFE): Billionaire David Shaw’s 3% Yield and Higher Picks

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We track 13F filings from hedge funds and other notable investors in our database, aiding us in our work developing investing strategies (we have found, for example, that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year). We can also look at individual filings to see top managers’ favorite stocks in a number of categories, including stocks which pay substantial dividend yields, as a way to provide initial ideas which investors can research further if they like the company’s prospects. Here are billionaire David Shaw’s hedge fund D.E. Shaw’s five largest positions as of the end of December in stocks which pay dividend yields of 3% or higher (or see the full list of D.E. Shaw’s stock picks):

The fund nearly doubled the size of its position in Occidental Petroleum (NYSE:OXY) between October and December, closing out the year with 3.9 million shares in its portfolio. Like many oil majors, Occidental currently carries fairly low earnings multiples though its trailing P/E of 14 actually represents a premium to competitors such as Exxon Mobil and Chevron. Occidental pays a dividend yield of 3.1%, though of course the company’s fortunes do depend on oil prices (and therefore, to some extent, on macro activity).

David ShawD.E. Shaw also liked Philip Morris (NYSE:PM), increasing its stake in the internationally focused cigarette company (sibling company Altria Group focuses on selling Philip Morris products domestically) to a total of nearly 3 million shares. The yield here is 3.7%; that is lower than at some other cigarette companies, but still quite strong and in theory the international operations have better growth prospects. Earnings rose 11% in the fourth quarter of 2012 versus a year earlier, though revenue growth was more modest.

General Electric (NYSE:GE) was another of the fund’s favorite stocks according to the 13F. The company did not experience much growth in 2012 as a whole, though in Q4 it did experience somewhat stronger financials than in the fourth quarter of 2011. GE pays a dividend yield of 3.3%, though we’re a bit skeptical as to whether or not it is a value stock at a trailing P/E of 18. Fisher Asset Management, managed by billionaire Ken Fisher, owned over 30 million shares of GE at the end of 2012 (find Fisher’s favorite stocks).

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