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We love high dividend stocks and consider them as one of the best options for conservative investors. We don’t like the Fed’s inflationary monetary policy and the 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. We track more than 300 hedge funds that mostly use fundamental analysis to make investment decisions. We look for at least a 5% dividend yield and $5 Billion in market cap (dividend yields were sourced from Google Finance). Here are the 30 dividend monsters that we maintain hedge funds love the most:

Company name

Symbol

Div yield (%)

No of Funds

Eli Lilly & Co.

LLY

5.33

30

Verizon Communications Inc.

VZ

5.42

28

Transocean LTD

RIG

5.28

27

AT&T Inc.

T

5.65

24

Altria Group, Inc.

MO

5.67

21

Annaly Capital Management, Inc.

NLY

13.9

21

CenturyLink, Inc.

CTL

7.41

18

PPL Corporation

PPL

5.17

17

AstraZeneca

AZN

6.12

15

FirstEnergy Corp.

FE

5.11

15

Penn West Petroleum Ltd

PWE

5.03

15

SeaDrill Limited

SDRL

9.08

15

Southern Copper Corporation

SCCO

6.17

15

Frontier Communications Corp

FTR

9.53

14

Duke Energy Corporation

DUK

5.4

13

Health Care REIT, Inc.

HCN

5.47

13

New York Community Bancorp

NYB

6.69

12

SCANA Corporation

SCG

5.02

12

Enterprise Products Partners

EPD

5.75

11

Reynolds American, Inc.

RAI

5.72

11

BCE Inc. (USA)

BCE

5.53

10

Windstream Corporation

WIN

7.67

10

HCP, Inc.

HCP

5.25

9

Progress Energy, Inc.

PGN

5.26

9

Sun Life Financial Inc. (USA)

SLF

5.17

9

Ameren Corporation

AEE

5.45

8

Plains All American Pipeline

PAA

6.2

7

Buckeye Partners, LP

BPL

6.25

6

Kinder Morgan Energy Partn

KMP

6.39

6

Magellan Midstream Partners

MMP

5.25

6

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. The stock performed better than the broader market, returning 5.9% since the end of first quarter. Jim Simons’ Renaissance had the largest position in LLY among the 300+ hedge funds we track. Actually, Simons likes to invest in high dividend stocks a lot (See Simons’ top stock picks).

Mega-cap telecom stocks Verizon and AT&T are also at the top of the list. Twenty-eight hedge funds favored VZ and twenty-four hedge funds favored T at the end of first quarter. Phill Gross’ Adage Capital had nearly $150 Million in VZ and $400 Million in T. VZ and T are also George Soros’ favorite high dividend stocks.

Transocean hiked its quarterly dividend to $0.79 per share earlier this year. The stock lost more than 22% since the end of first quarter and as a result of this RIG’s dividend yield exceeded our 5% threshold. Transocean also announced that it will spend $3.2 Billion on stock buybacks. There were 27 hedge funds that were bullish about RIG at the end of March. However, John Paulson is by far the most bullish hedge fund manager about Transocean. Paulson had more than $1.9 Billion in RIG at the end of March (Check out Paulson’s other billion-dollar positions)

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.

Source: 30 Dividend Earners That Hedge Funds Love