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David Dreman, founder of Dreman Value Management, is also the author of four investment books and many scholarly articles. His new book, "Contrarian Investment Strategies: The Psychological Edge," will be published this week. In addition to publishing books and articles, he is also the writer of a column for Forbes, the co-editor of Journal of Psychology and Financial Markets and is on board of directors of the Institute of Behavioral Finance, which publishes Journal of Behavioral Finance. He is currently managing about $5 billion. He used to have $22 billion AUM in 2007 but he was hit hard by the financial crisi in 2008.

In this article, we are going to focus on the dividend stock picks of Dreman. All companies have at least $10 billion market cap and dividend yields of over 3%. As of September 30, 2011, Dreman Value Management invested at least $10 million in these positions.

Company Name

Ticker

Value

Activity

Dividend

ALTRIA GROUP INC

MO

33716

-1%

5.69%

CONOCOPHILLIPS

COP

29457

-1%

3.61%

PFIZER INC

PFE

28481

-11%

4.07%

GENERAL ELECTRIC

GE

23298

-1%

3.67%

PHILIP MORRIS

PM

20275

-1%

3.94%

INTEL CORP

INTC

19329

-1%

3.31%

NORTHROP GRUMMAN

NOC

15605

0%

3.44%

ALLSTATE CORP

ALL

13908

1%

3.03%

EMERSON ELECTRIC

EMR

12782

-1%

3.35%

The biggest high-dividend position in the latest 13F portfolio of Dreman is Altria Group Inc (NYSE:MO). As of September 30, Dreman Value Management reported to own $34 million worth of the MO shares. The stock has a dividend yield of 5.69%. It returned 9% since the end of September, versus 13.87% for SPY in the same period. Tom Russo’s Gardner Russo & Gardner also had $190 million invested in MO at the end of the third quarter.

Pfizer Inc (NYSE:PFE) also has a dividend yield of higher than 4%. It has a dividend yield of 4.07% and returned 23.43% since the end of the third quarter, beating the market by nearly 10 percentage points. At the end of September, Dreman disclosed owning $28.5 million worth of PFE shares. Ken Fisher’s Fisher Asset Management also had $389 million invested in PFE.

Another mega-cap dividend stock that Dreman is bullish about is General Electric Co (NYSE:GE). At the end of the third quarter, Dreman Value Management had $23 million invested GE. The stock has a dividend yield of 3.67% and gained 23.09% since the end of September, outperforming the market by more than 9 percentage points. GE is quite popular among hedge funds. There were 44 hedge funds with GE positions in their portfolios at the end of the third quarter, including Ken Fisher’s Fisher Asset Management, Bill Miller’s Legg Mason Capital Management, and Warren Buffett’s Berkshire Hathaway.

Other large-cap dividend stocks that Dreman likes include ConocoPhillips (NYSE:COP), Philip Morris International Inc (NYSE:PM) and Intel Corp (NASDAQ:INTC). During the past few years, central banks all over the world have been trying to stimulate the economy by using expansionary monetary policies. We are concerned that the Fed’s actions will lead to inflation in the near future. Therefore, we have been recommending investors play defensively by investing in dividend stocks. And one of the most practical ways of picking dividend stocks is to focus on the stock picks of good fund managers like David Dreman.



Disclosure: I am long PM, COP.

Source: David Dreman's High-Dividend Stock Picks