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By Matt Doiron

We track quarterly 13F filings from hundreds of hedge funds, including billionaire David Harding's Winton Capital Management, as part of our work researching investment strategies. One of our conclusions has been that the most popular small cap stocks among hedge funds tend to outperform the S&P 500- by an average of 18 percentage points per year, and our own portfolio taking advantage of these techniques has turned in an excess return of 33 percentage points over the last 11 months. Learn more about imitating hedge funds' small cap picks.

When we looked through Winton's most recent 13F, for the second quarter of 2013, (review the full filing on the SEC's website), we noticed that the fund had included a number of high yield names among its top picks. We don't recommend blindly following these picks, but income investors may be interested in performing further research on any stocks which seem interesting. Here are the five stocks among the fund's ten largest holdings by market value which currently pay dividend yields of at least 3% (or see a history of Harding's stock picks):

Winton increased its stake in Kimberly-Clark (NYSE:KMB) to a total of over 670,000 shares between April and June. The $37 billion market cap personal products company, probably most notable for the Kleenex brand, increased its quarterly dividend payment to 81 cents per share earlier this year. This gives it an annual yield of 3.4%, and with a beta of essentially zero given its focus on personal products, it could be interesting from a defensive perspective. We would warn that similarly-minded investors have bid up the stock price to 20 times trailing earnings; note that this places the payout ratio close to 70%.

Another of Harding's top picks is Wisconsin Energy (NYSE:WEC), an electric and gas utility which primarily operates in Wisconsin. As with many utilities, the company combines a fairly high dividend yield (3.7% at current prices) with little dependence on economic conditions (the stock's beta is 0.1). Again, these features may make it of interest to an income or a defensive investor. However, the search for yield has resulted in Wisconsin Energy, whose net income was essentially flat last quarter compared to Q2 2012, to be valued at a trailing P/E of 17.

The fund owned about 950,000 shares of another electric and gas utility operating in the Great Lakes region: DTE Energy (NYSE:DTE), whose customer base is primarily located in southeastern Michigan. With its fourth dividend increase in three years this summer, DTE appears to be prospering despite the troubles of the Detroit region, and now pays a yield close to 4%. As might be expected for a utility, there has been little change in operating income so far this year compared to its levels a year ago. In addition, there is little exposure to macro factors here as well with a beta of 0.2.

Harding and his team were buying $14 billion market cap toy and games company Mattel (NASDAQ:MAT) last quarter, and at the beginning of July, owned 1.3 million shares of stock. The second quarter of 2013 went fairly poorly for Mattel; while revenue was roughly unchanged versus a year earlier, higher SGA expenses resulted in a 24% fall in profits. Investors believe that the company will recover (and we'd note that Q1's performance was better than that in the prior year period), and so it trades at 19 times its trailing earnings. Mattel has also been aggressive in paying out dividends, and its current yield is 3.5%.

Pinnacle West (NYSE:PNW) rounds out our list of Winton's dividend picks, as the fund owned 1.1 million shares of the Arizona-focused electric utility, according to the filing. The company's sales and earnings have been up modestly, going by recent reports, though Wall Street analysts are projecting a small decrease in earnings per share for 2014 (making the forward P/E 15). Pinnacle West's dividend yield is 4%, and it might be worth looking into why the sell-side expects the company's net income to decline, as in income terms, it seems interesting, even for a utility.

Source: 5 Dividend Picks From David Harding's Winton Capital Management