Fisher Asset Management, a fund managed by billionaire (and author and Forbes columnist) Ken Fisher, filed its 13F for the fourth quarter of last year in January. These filings from major investors disclose many of their long equity positions as of the end of the quarter. It turns out that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year (learn more about our findings on small cap stocks) and we think that other strategies are possible as well. In the case of notable investors such as Fisher we can also see what his “stock picks” in a number of categories were so that the broader investment community can research any interesting names. Here are Fisher’s five largest holdings by market value which pay a dividend yield of 3.5% or higher judging by current prices and recent dividend payments:
The largest single-stock holding in the fund’s portfolio was about 32 million shares of Pfizer Inc. (NYSE:PFE). Pfizer was the most popular healthcare stock among hedge funds in the fourth quarter of 2012 (see the ten most popular healthcare stocks) and pays a dividend yield of 3.6%. At a market capitalization of $200 billion and a beta of 0.7, Pfizer has a small amount of security from changes in the broader economy. The stock also carries trailing and forward P/E multiples of 14 and 12, respectively. Fisher has named it as his top stock pick for 2013 and it’s possible that it is a good value as well as a reliable income stock.
See three more dividend stocks from Fisher’s portfolio:
Fisher also liked Philip Morris International Inc. (NYSE:PM), increasing its stake in the international cigarette company by 5% to a total of 5.7 million shares. Philip Morris is another stock whose relationship to changes in the market is closer than would normally be expected for its industry, with a beta of 0.9. Its dividend yield of 3.7% is also below what we see at some other U.S. focused cigarette companies, though of course not low in absolute terms. Renaissance Technologies, founded by billionaire Jim Simons, was also buying Philip Morris last quarter (check out Renaissance’s stock picks).
GlaxoSmithKline plc (NYSE:GSK)’s dividend payments tend to fluctuate, but over the last four quarters it has made $2.35 in dividend payments and that equates to a yield of over 5% at the current price. The pharmaceutical company is bit more defensive in nature as well as its beta is 0.5, though revenue and earnings were both down in the fourth quarter of 2012 versus a year earlier. Arrowstreet Capital owned 6.3 million shares of GlaxoSmithKline at the end of the year, up slightly from the beginning of October.
The 13F disclosed a position of 7.8 million shares in Rio Tinto plc (NYSE:RIO), a global miner of aluminum and other minerals with a market capitalization of $96 billion. Obviously demand for basic materials is tied to macro factors and so Rio Tinto carries a beta of nearly 2, making it thoroughly unsuitable for investors who want to protect themselves from a downturn. However, the dividend yield is 3.5% and analysts consider it a potential value play with a forward P/E of only 7 and a five-year PEG ratio of 0.6. We would be skeptical of their bullishness but it’s possible Rio Tinto is at least worthy of further research.
Disclosure: I own no shares of any stocks mentioned in this article.
