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SAC Capital was founded by Steven Cohen in 1992. It's a diversified hedge fund that makes use of fundamental and qualitative methods of analysis. Cohen and his business partners at SAC Capital are the largest investors of the firm. They account for approximately 60% of the firm’s assets. Over the years, SAC has become known to have one of the most consistent performances. Over its two decades in business, the firm has generated average annual returns of nearly 30%. In 2010, SAC Capital reported gains of 16%, after fees. The figure is a percentage point higher than the S&P 500 (NYSEARCA:SPY) return of 15.1%.

Cohen is among the most prominent individuals in the financial world. He is the 114th richest man in the world with a net worth of $8 billion. In 2010, he is said to have taken home $1 billion in personal compensation along with a $1 billion paycheck. Recently, prosecutors have been trying to tie the illegal insider trading cases to Cohen. However, he has a very low probability of actually ending up in jail. We discussed the reasons in our article Is This the Beginning of the End for Steve Cohen’s SAC Capital?

We compiled Cohen’s dividend stock picks at the end of March. We required a minimum dividend yield of 4% (market data is obtained from Finviz). Here are Cohen's favorite dividend stock picks:

Stock

Market Cap

P/E

Dividend Yield (%)

Return (week)

(Billions)

CENTURYLINK INC (NYSE:CTL)

20

14.1

8.69

-3.69

BRISTOL MYERS (NYSE:BMY)

45.1

13.8

4.99

-6.47

HEALTH CARE REIT INC (NYSE:HCN)

7.7

180.8

6.59

-9

CONOCOPHILLIPS (NYSE:COP)

86.1

7.9

4.21

-11.13

PPL CORP (NYSE:PPL)

14.8

10.3

5.46

-7.14

AMERICAN ELEC PWR (NYSE:AEP)

16.5

11.2

5.37

-6.49

LORILLARD INC (NYSE:LO)

13.8

13.7

5.21

-6.74

KINDER MORGAN (NYSE:KMP)

23

120.2

6.6

0.46

TRANSOCEAN LTD (NYSE:RIG)

16.2

N/A

6.22

-13.93

NOVARTIS A G (NYSE:NVS)

124.9

12.9

4.33

-8.95

PG&E CORP (NYSE:PCG)

15.8

14.7

4.64

-3.14

NYSE EURONEXT (NYSE:NYX)

7

12.3

4.47

-13.99

SANOFI AVENTIS (NYSE:SNY)

85.3

13.6

5.77

-15.88

HSBC HLDGS PLC (HBC)

148.2

9.8

4.34

-15.56

INTEL CORP (NASDAQ:INTC)

105.7

9.1

4.21

-8.62

MERCK & CO INC NEW (NYSE:MRK)

92

32.4

5.1

-8.84

ENTERGY CORP NEW (NYSE:ETR)

10.7

8.6

5.51

-6.16

ENI S P A (NYSE:E)

69

7.2

7.96

-15.71

LILLY ELI & CO (NYSE:LLY)

39.9

8.1

5.68

-7.56

WASTE MGMT INC DEL (NYSE:WM)

13.5

14.5

4.74

-7

NATIONAL GRID PLC (NYSE:NGG)

32.3

8.9

6.35

-8.52

RAYTHEON CO (NYSE:RTN)

13.8

7.3

4.41

-9.91

PFIZER INC (NYSE:PFE)

134.7

15.9

4.69

-5.44

NEW YORK CMNTY BA (NYB)

5.2

9.9

8.44

-8

KIMBERLY CLARK (NYSE:KMB)

24.6

14.8

4.47

-3.07

TELEFONICA S A (NYSE:TEF)

86.6

6.3

10.4

-13.45

EXELON CORP (NYSE:EXC)

26.7

10.1

5.21

-7.37

MAXIM INTEGRATED (NASDAQ:MXIM)

6.4

15.6

4.05

-4.1

DUKE ENERGY (NYSE:DUK)

23

11.2

5.8

-5.17

DOMINION RES (NYSE:D)

26.7

15.9

4.25

-4.73

Centurylink is a leading integrated communications company. CTL recently traded at $33.38 and has an 8.69% dividend yield. CTL lost 3.69% during the past seven days. The stock has a market cap of $20 billion and P/E ratio of 14.1 Cohen had $212 million invested in CTL shares. Jim Simons’ Renaissance Technologies is other high profile hedge fund with a CTL position at the end of March (see Simons’ top holdings).

Bristol Myers Squibb recently traded at $26.46 and has a 4.99% dividend yield. BMY lost 6.47% during the past seven days. The stock has a market cap of $45.1 billion and P/E ratio of 13.8. Cohen had $97 million invested in BMY shares.

Health Care Reit is an equity real estate investment trust. HCN recently traded at $43.4 and has a 6.59% dividend yield. HCN lost 9% during the past seven days. The stock has a market cap of $7.7 billion and P/E ratio of 180.8. Cohen had $77 million invested in HCN shares.

ConocoPhillips recently traded at $62.71 and has a 4.21% dividend yield. COP lost 11.13% during the past seven days. The stock has a market cap of $86.1 billion and P/E ratio of 7.9. Cohen had $42 million invested in COP shares. Fourteen hedge funds had COP among their top 10 holdings. Hedge funds collectively own 1% of COP’s outstanding shares. Warren Buffett’s Berkshire, First Eagle and D.E. Shaw had large holdings in COP at the end of March.

PPL provides electricity and delivers natural gas in the northeastern and northwestern United States. PPL recently traded at $25.62 and has a 5.46% dividend yield. PPL lost 7.14% during the past seven days. The stock has a market cap of $14.8 billion and P/E ratio of 10.3. Cohen had $28 million invested in PPL shares.

On July 29 Cramer said the following about PPL Corp:

Pennsylvania Power and Light ... I used to pay them for years and years. Very reliable, very good and it yields more than 5%. I'd pull the trigger right here. I like these stocks tonight.

American Electric Power recently traded at $34.27 and has a 5.37% dividend yield. AEP lost 6.49% during the past seven days. The stock has a market cap of $16.5 billion and P/E ratio of 11.2. Cohen had $27 million invested in AEP shares.

We like dividend stocks because they perform better than the rest of the market on the average. They also beat the market by a large margin in bear markets.

Disclosure: I am long CTL, COP.

Source: Steven Cohen's Favorite Dividend Stocks