Newmont Mining Corp (NEM), Iron Mountain Incorporated (IRM), American Eagle Outfitters (AEO): Hedge Funds Love These Dividend Stocks–And They’re On Sale Now

Fiscal Q2 (which ended in early August) was a struggle for American Eagle Outfitters (NYSE:AEO), with sales down slightly. This news helped continue the apparel retailer’s weak market performance so far this year; this drop in the stock price has resulted in a dividend yield of 3.4% as well as both trailing and forward earnings multiples of 13. We’re of course concerned by the fall in revenue, but it may be worth keeping an eye on American Eagle Outfitters (NYSE:AEO) to see if the market may have overreacted. Citadel Investment Group, managed by billionaire Ken Griffin, was among the 27 funds to report a position (find Griffin’s favorite stocks).

Natural gas and oil producer EnCana Corporation (USA) (NYSE:ECA) makes our list with 22 filers reporting a position in the stock in their 13Fs. The dividend yield here is 4.6%, as the stock has remained weak this year but the company has steadily paid quarterly dividends of 20 cents per share for nearly 4 years. At its current market capitalization of $13 billion, EnCana Corporation (USA) (NYSE:ECA) trades at 16 times consensus earnings estimates for 2014- this represents a premium to where larger oil majors trade, and also suggests that given the current dividend yield the payout ratio will be fairly high next year. Billionaire Steve Cohen’s SAC Capital Advisors was buying EnCana Corporation (USA) (NYSE:ECA) during Q2. Ray Dalio, Marty Whitman, and Arvind Sanger are also bullish about the stock.

Another poor performer in the market this year has been Domtar Corp (USA) (NYSE:UFS), a $2.2 billion market cap paper and packaging company. That industry has struggled in recent years; revenue fell 4% last quarter compared to the second quarter of 2012 and earnings remain low on a trailing basis. Wall Street analysts do expect considerable improvement next year- the forward P/E is only 11- and Domtar Corp (USA) (NYSE:UFS) does pay an annual yield of 3.2%. That yield may not be high enough to be worth the current risks to the company but it could prove a potential value play if it hits analyst targets for 2014.

Disclosure: I own no shares of any stocks mentioned in this article.