Farallon's Dividend Stock Picks

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Includes: BP, ECA, MSFT, NYX, SNY
by: Insider Monkey

Billionaire Thomas Steyer is the founder of Farallon Capital Management, one of the largest hedge funds in the world. Investors have been paying special attention to dividend stocks as the Fed pushed down the yields of both short-term and long-term treasury bonds through various quantitative easing interventions.

Below we compiled a list of Steyer’s stocks that have large market caps and have at least 3% dividend yields. Larger cap stocks are more likely to be around in 10 years time and 3% dividend yield is 50% more than what the 10-year treasuries offer. Hedge funds generally don’t invest in dividend stocks for the safety and the dividend yield. They invest in these stocks for potential capital gains. We believe these five stocks are likely to deliver capital gains on top of the 3+% dividend yield they are delivering.

Microsoft Corporation (NASDAQ:MSFT) develops, licenses, and supports a range of software products and services for various computing devices worldwide. It has a dividend yield of 3.1%. It has a market cap of $216.19 billion and a P/E ratio of 9.34. The stock gained 4.05% so far in the fourth quarter, underperforming the market by 7.35%. Steyer held a $112 million position in MSFT shares. Ken Fisher had $444 million invested in MSFT at the end of September.

BP p.l.c. (NYSE:BP) provides fuel for transportation, energy for heat and light, retail services, and petrochemicals products. It had a dividend yield of 3.93%. It has a market cap of $134.95 billion and a P/E ratio of 5.91. The stock gained 19.57% so far in the fourth quarter, outperforming the market by 8.17%. Steyer reported to have nearly $65 million invested in BP shares. Bill Miller had $75 million invested in BP at the end of September.

Encana Corporation (NYSE:ECA) engages in the exploration for, development, production, and marketing of natural gas and natural gas liquids primarily in Canada and the United States. It has a dividend yield of 4.17%. It has a market cap of $14.11 billion and a P/E ratio of 54.15. Steyer had nearly $14 million invested in ECA shares. However, the stock lost 0.21% since the end of the third quarter, underperforming the market by 11.61%. Jim Simons largely increased his holding of EAC by 4-fold and had $22 million invested in ECA shares at the end of September.

NYSE Euronext (NYSE:NYX), through its subsidiaries, operates securities exchanges. It operates various stock exchanges, including the New York Stock Exchange (NYSE), NYSE Arca, Inc., and NYSE Amex LLC in the United States; and five European-based exchanges that comprise Euronext N.V. It had a dividend yield of 4.4%. It has a market cap of $7.14 billion and a P/E ratio of 11.17. The stock gained 17.25% so far in the fourth quarter, outperforming the market by 6.15%. Steyer had $5.6 million invested in NYX shares. Leon Cooperman also initiated a brand new $21 million position in NYX during the third quarter.

Sanofi-Aventis (NYSE:SNY) engages in the discovery, development, and distribution of therapeutic solutions to improve the lives of everyone. The company offers a range of healthcare assets, including a broad-based product portfolio in prescription drugs, OTC/OTX, generics, vaccines, and animal health. It had a dividend yield of 4.96%. It has a market cap of $95.38 billion and a P/E ratio of 14.89. The stock gained 8.32% so far in the fourth quarter, underperforming the market by 3.08%. Steyer had $4.8 million invested in SNY shares. Ken Fisher had $483 million invested in SNY at the end of September. Warren Buffett had $133 million invested in SNY.

Disclosure: I am long MSFT.