30 Dividend Monsters That Hedge Funds Love the Most

|
 |  Includes: AEE, AGNC, ARCC, BCE, BPL, CIM, CINF, CTL, DUK, EPD, FE, FTR, HCN, HCP, LLY, MO, NLY, NYCB, PAA, PBI, RAI, RRD, SCCO, SDRL, SNH, T, TEG, VZ, WIN
by: Insider Monkey

We love high dividend stocks and consider them as one of the best options for conservative investors. We don't like Fed's inflationary monetary policy and Federal government's huge budget deficits. We think high dividend yielding stocks will perform much better than the 10-year Treasuries over the next 10 years.

One of the ways of picking the best dividend stocks is to invest in what prominent hedge funds like. Insider Monkey tracks more than 300 hedge funds that mostly use fundamental analysis to make investment decisions. We look for at least a 5% dividend yield and $3 Billion in market cap. Here are the 30 dividend monsters that hedge funds love the most:

Stock

Ticker

Yield

Hedge Funds

Eli Lilly & Co.

LLY

5.1

30

Verizon Communications Inc.

VZ

5.3

28

AT&T Inc.

T

5.5

24

Altria Group, Inc.

MO

5.5

21

Annaly Capital Management, Inc.

NLY

13.8

21

American Capital Agency Corp.

AGNC

18.7

18

CenturyLink, Inc.

CTL

6.7

18

Pitney Bowes Inc.

PBI

6.1

16

Chimera Investment Corporation

CIM

14.2

15

FirstEnergy Corp.

FE

5.0

15

RR Donnelley & Sons Company

RRD

5.1

15

SeaDrill Limited

SDRL

7.9

15

Southern Copper Corporation (NYSE:USA)

SCCO

5.7

15

Frontier Communications Corp

FTR

8.6

14

Duke Energy Corporation

DUK

5.2

13

Health Care REIT, Inc.

HCN

5.6

13

New York Community Bancorp, Inc.

NYB

6.1

12

Ares Capital Corporation

ARCC

8.5

11

Enterprise Products Partners LP

EPD

5.8

11

Reynolds American, Inc.

RAI

5.4

11

BCE Inc. (USA)

BCE

5.4

10

Windstream Corporation

WIN

7.5

10

Cincinnati Financial Corporation

CINF

5.3

9

HCP, Inc.

HCP

5.2

9

Progress Energy, Inc.

PGN

5.2

9

Senior Housing Properties Trust

SNH

6.4

9

Ameren Corporation

AEE

5.2

8

Integrys Energy Group, Inc.

TEG

5.2

8

Plains All American Pipeline, LP

PAA

6.3

7

Buckeye Partners, LP

BPL

6.4

6

Click to enlarge

Eli Lilly is the most popular high-dividend stock among hedge funds. There were 30 different hedge funds with LLY positions at the end of March. Collectively hedge funds own 1% LLY's outstanding shares. Jim Simons' Renaissance and Ron Gutfleish's Elm Ridge have large positions in LLY. Verizon is the second most popular dividend monster. The stock has a 5.3% dividend yield and there were 28 hedge funds in VZ at the end of March. Phill Gross' Adage Capital had $149 Million in Verizon and George Soros had a $65 Million position. Billionaire investor Leon Cooperman also started a brand new $78 Million position in Verizon during the first quarter. The other telecom giant AT&T and Altria had 5.5% dividend yields and are among the top 5 high dividend stocks that hedge funds love.

Naturally there will be smaller number of hedge funds in smaller companies, but they will own a larger share of these stocks. Cincinnati Financial has a market cap of $4.9 Billion and there were 8 hedge funds with CINF positions totaling $400 Million. These hedge funds own 8% of CINF's outstanding shares. In this respect, CINF is the most popular stock among hedge funds. Jean-Marie Eveillard's First Eagle is the most bullish fund about CINF. Another stock that fits the bill is RR Donnelley. Hedge funds own 4% of RRD's outstanding shares. Ken Brodkowitz's Newland Capital and Richard Schimel's Diamondback Capital are among the hedge funds that are bullish about RRD.

We think a portfolio of these 30 stocks will provide ample diversification for investors and their high dividend yields will deliver better returns that long-term treasury bonds. Another important point about investing in these stocks is that hedge funds don't usually buy these for dividends, they buy these for capital gains. That's why we also think these stocks will most likely deliver attractive returns through capital gains.

Disclosure: I am long T, FE, CTL, FTR.