29 Cheap High Dividend Yielding Stocks Smart Money Is Betting On

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 |  Includes: COP, CVX, DD, EXC, INTC, LLY, LMT, MPC, SCCO
by: Insider Monkey

During the past few years, the market has been hit by one crisis after another and central banks all over the world have been continuously applying expansionary monetary policies. We do not like Fed's inflationary policies and we are concerned that these policies will lead to inflation. We think fixed income securities are overpriced and they do not provide inflation protection. On the other hand, dividend stocks are able to generate decent returns and protect investors from the inflationary risks.

Below, we compiled a list of 29 cheap dividend US stocks that hedge funds lost most. We should note that aggregate hedge fund positions usually don't change dramatically from quarter to quarter. So, most of these stocks are still very popular among hedge funds. These stocks have a market cap of higher than $2 Billion, a dividend yield of at least 3% and a P/E ratio of lower than 15. The market data is sourced from Finviz. We ranked them by the number of hedge funds reported to own these stocks at the end of the third quarter last year.

Ticker

Company

Dividend Yield

No of HF

P/E

(NASDAQ:INTC)

Intel Corporation

3.26%

42

11.15

(NYSE:CVX)

Chevron Corporation

3.09%

38

7.78

(NYSE:DD)

DuPont

3.41%

33

13.07

(NYSE:COP)

ConocoPhillips

3.73%

32

9.06

(NYSE:MPC)

Marathon Petroleum

3.06%

31

4.34

(NYSE:LMT)

Lockheed Martin

4.90%

30

10.25

(NYSE:NYX)

NYSE Euronext, Inc.

4.35%

30

11.27

(NYSE:IP)

International Paper Co.

3.31%

27

10.21

(NYSE:NLY)

Annaly Capital

13.93%

27

8.53

(NYSE:AEO)

American Eagle Outfitters,

3.37%

26

13.76

(NYSE:CVC)

Cablevision Systems

4.26%

26

14.1

(NYSE:LLY)

Eli Lilly & Co.

4.88%

25

9.59

(NYSE:RTN)

Raytheon Co.

3.48%

24

9.76

(NYSE:CAG)

ConAgra Foods, Inc.

3.56%

23

14.91

(NYSE:EXC)

Exelon Corporation

5.23%

23

11.07

(NYSE:CNP)

CenterPoint Energy, Inc.

4.12%

22

10.59

(NYSE:AEP)

American Electric Power

4.55%

21

12.68

(NYSE:PPL)

PPL Corporation

5.00%

21

10.61

(NYSE:MTB)

M&T Bank Corporation

3.44%

19

11.79

(NYSE:CNK)

Cinemark Holdings Inc.

4.44%

18

14.44

(NASDAQ:HAS)

Hasbro Inc.

3.63%

18

11.37

(NYSE:HUN)

Huntsman Corporation

3.63%

18

14.71

(NYSE:WDR)

Waddell & Reed Financial

3.84%

18

12.29

(NASDAQ:MAT)

Mattel Inc.

3.18%

17

14.31

(NYSE:CMS)

CMS Energy Corp.

3.87%

16

14.1

(NYSE:EIX)

Edison International

3.21%

16

13.74

(NASDAQ:FNFG)

First Niagara Financial

6.68%

16

14.3

(NYSE:HRB)

H&R Block, Inc.

4.88%

16

12.32

(NYSE:SCCO)

Southern Copper Corp.

7.36%

16

12.37

Click to enlarge

The most popular cheap dividend stock among hedge funds is Intel Corp (INTC). There are 42 hedge funds with INTC positions at the end of September last year. For example, Ken Fisher's Fisher Asset Management had $414 million invested in INTC at the end of the third quarter. Jim Simons' Renaissance Technologies and Warren Buffett's Berkshire Hathaway both invested about $200 million in INTC. The stock was up 21.75% so far since the end of September, versus 15.18% for SPY in the same period. It has a dividend yield of 3.26%, and a relatively low P/E ratio of 11.15.

Another mega-cap cheap dividend stock that hedge funds love is Chevron Corp (CVX). The stock has a market cap of $209B. As of September 30, 2011, there are 38 hedge funds reported to own CVX in their 13F portfolios. For example, Bill Miller's Legg Mason Capital Management had $125 million invested in CVX at the end of September. Since then, the stock returned 14.27%, slightly lower than the 15.18% of the market. But the low P/E ratio of the stock, together with its popularity among hedge funds, indicates some form of perceived value of CVX. CVX has a P/E ratio of only 7.78 and a dividend yield of 3.09%.

Marathon Petroleum Corporation (MPC) has a very low P/E ratio of only 4.34. The stock is also quite popular among hedge funds. There are 31 hedge funds disclosed owning MPC at the end of September last year. For instance, John Burbank's Passport Capital initiated a brand new $100+ million position in MPC over the third quarter. The stock has a dividend yield of 3.06% and it returned 21.43% so far since the end of the third quarter, beating the market by more than 6 percentage points.

Other large-cap cheap dividend stocks that many hedge funds are bullish about include ConocoPhillips (COP), Eli Lilly & Co (LLY), EI Du Pont De Nemours and Company (DD), Southern Copper Corp (SCCO), Exelon Corporation (EXC), and Lockheed Martin Corporation (LMT). We like dividend stocks. The fat dividends they pay will generate better returns than long-term treasury bonds. They are also very likely to deliver decent capital gains as hedge funds usually buy stocks for capital gains rather than dividends. Moreover, a portfolio of 29 stocks will provide enough diversification for investors. Therefore, we strongly encourage investors to do some deep research on these cheap dividend stocks for their own portfolios.

Disclosure: I am long COP.