We track 13F filings from hedge funds and other notable investors such as billionaire Jeffrey Vinik (who has managed money for friends and family since closing his hedge fund in 2000) in order to help us develop investing strategies. We have found that the most popular small cap stocks among hedge funds outperform the S&P 500 by 18 percentage points per year on average (learn more about our small cap strategy), and we believe more techniques are possible as well. Investors can also mine 13F filings for free recommendations from top managers, including stocks which pay moderate to high dividend yields, and then do more research on any names which appear attractive. Here are five stocks which Vinik reported owning on his 13F with dividend yields above 2.5% (or see the full list of stocks from the filing):
Vinik’s largest single-stock holding was Barrick Gold Corporation (USA) (NYSE:ABX) at a position of 2.7 million shares. The gold miner’s share price has fallen 34% in the last year as market conditions have worsened; with the company paying a quarterly dividend of 20 cents per share, the yield stands at 3%. Of course, given how sensitive Barrick Gold Corporation (USA) (NYSE:ABX) is to gold prices it’s possible that the dividend could be cut. We’d note that Vinik owned a number of other gold stocks as well. Platinum Asset Management, managed by billionaire Kerr Neilson, reported owning 2.9 million shares at the end of December (find Neilson’s favorite stocks).
The filing showed that Vinik nearly doubled the size of his position in Packaging Corp Of America (NYSE:PKG) to a total of 1.8 million shares. The $4.3 billion market cap packaging products company pays a dividend yield of 2.8% going by current prices and dividend payments. Revenue and earnings grew at double-digit rates in the fourth quarter of 2012 versus a year earlier, but substantial growth is already priced in given the trailing earnings multiple of 26. Iridian Asset Management, managed by David Cohen and Harold Levy, had 3.4 million shares in its own portfolio according to its 13F.
Vinik cut his stake in International Paper Company (NYSE:IP), the $20 billion market cap paper company with a dividend yield of 2.6%, by 9% but still owned 1.7 million shares of the stock. The paper industry has not been doing too well recently, causing a number of special charges at International Paper Company (NYSE:IP). Wall Street analysts are optimistic, with their earnings expectations implying a forward P/E of 10 and a five-year PEG ratio of 0.4, though this is highly dependent on future improvements on the bottom line. Billionaire Dan Loeb’s Third Point initiated a position between October and December (research more stocks Loeb was buying).
LyondellBasell Industries NV (NYSE:LYB), with a yield of 2.7%, rounds out our list of Vinik’s dividend picks. The $34 billion market cap specialty chemicals company carries trailing and forward P/Es of 12 and 8, respectively, which would put it in value territory if the business could in fact deliver growth over the next couple years. The stock does tend to move in line with broader market indices, with a beta of 2.5. Viking Global, managed by billionaire Andreas Halvorsen and his team, disclosed ownership of 7.5 million shares in its own filing (see more stocks Halvorsen liked).
Disclosure: I own no shares of any stocks mentioned in this article.
