Several weeks after the end of each quarter, hedge funds and other major investors are required to file 13Fs with the SEC; we collect these filings in our database, which we use to develop investing strategies (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 techniques are possible as well). We can also look for individual managers’ top picks in a number of areas, including dividend stocks, so that investors can research any names which sound interesting. Here are five stocks which John Levin’s Levin Capital Strategies reported owning at the beginning of January which feature dividend yields of 3.5% or higher according to current prices and recent dividend policy (or see the full list of stocks Levin reported owning):
The fund reported a position of 3.1 million shares in Verizon Communications Inc. (NYSE:VZ) at the end of the fourth quarter of 2012. Verizon Communications Inc. (NYSE:VZ) not only pays a high dividend yield- close to 4%- it also has little sensitivity to the broader economy as shown by the beta of 0.3. Investors should be aware that the company has been trying to buy the remainder of Verizon Communications Inc. (NYSE:VZ) Wireless from Vodafone (NYSE:VOD) and there has been some speculation that it would pay with stock. Renaissance Technologies, founded by billionaire Jim Simons, increased its stake in Verizon Communications Inc. (NYSE:VZ) during Q4 to 2.3 million shares (check out Renaissance’s stock picks).
Levin and his team cut their stake in Merck & Co., Inc. (NYSE:MRK) by 16% but still owned 3.1 million shares of the drug manufacturer according to the filing. Large healthcare companies such as Merck & Co., Inc. (NYSE:MRK) also tend to be insulated from macro factors, and so the beta here is 0.4; income or defensive investors might therefore consider it as well as Verizon Communications Inc. (NYSE:VZ), though we would advise looking into the cause of the company’s recent decline in net income. Merck & Co., Inc. (NYSE:MRK) had made our list of the most popular healthcare stocks among hedge funds in Q4 (here are more healthcare stocks hedge funds loved).