Five Dividend Stocks Billionaire Steve Cohen Really Likes

Although his family office isn’t technically a hedge fund anymore (a settlement with the SEC saw to that), many on Wall Street still regard billionaire Steve Cohen‘s Point72 Asset Management as one of the savviest institutions in the marketplace. Not only does the firm have one of the better risk-adjusted performance metrics in the industry (Cohen became a billionaire 13 times over from managing money, albeit mostly while running SAC, his fund’s former moniker), but the best and brightest still work for Point72.

Given those facts, Insider Monkey has put together a list of some of Steven Cohen’s favorite dividend stocks, which are ConocoPhillips (NYSE:COP), KAR Auction Services Inc (NYSE:KAR), Tesoro Corporation (NYSE:TSO), Eli Lilly and Co (NYSE:LLY), and Schlumberger Limited. (NYSE:SLB). Let’s take a closer look at these stocks and see how they were being traded in the second quarter.

At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).

#5 Schlumberger Limited. (NYSE:SLB)

– Shares Held (as of June 30): 1.11 million
– Total Value (as of June 30): $87.46 million

Although crude oil is still more than 50% below its 2014 highs, Schlumberger Limited. (NYSE:SLB) has done well in 2016, with its stock rising by more than 11% year-to-date. One reason for the solid performance is that the oil service company’s management has successfully managed costs in the face of revenue declines. Another reason is that given its pricing power, investors expect Schlumberger to raise its prices when oil goes higher, which could be sooner rather than later, as many investors think that OPEC will eventually relent. That means the company’s current quarterly dividend of $0.50 per share, good for a 2.62% annual yield, looks safe. Point72 almost tripled its position in the company from March 31 to June 30, adding 722,950 shares in the second quarter.

#4 Eli Lilly and Co (NYSE:LLY)

– Shares Held (as of June 30): 1.35 million
– Total Value (as of June 30): $106.34 million

Cohen’s fund inched up its stake in Eli Lilly and Co (NYSE:LLY) by 9% in the second quarter, to 1.35 million shares worth over $106 million at the end of June. Although there are higher yields in biotech/healthcare (Eli Lilly pays a dividend of $2.04 per share a year, for a 2.59% yield), there are few drug companies that have as promising of a pipeline as Eli Lilly. According to recent commentary from its management team, Eli Lilly is still on track to launch drugs or molecules for at least two new indications/line extensions per year for the next seven years and management fully expects to announce annual dividend raises each year until 2020.

We’ll check out three more dividend stocks favored by Steve Cohen and his team on the next page.

#3 Tesoro Corporation (NYSE:TSO)

– Shares Held (as of June 30): 1.67 million
– Total Value (as of June 30): $124.91 million

Although refiners in general had a tough go of it from March 31 to June 30 due to the narrow crack spread for the period, Point72 was willing to buy the dip in Tesoro Corporation (NYSE:TSO). Cohen’s fund added a grand total of 1.625 million shares of the stock in the second quarter, multiplying its position by almost 40-times to 1.67 million shares. A potential reason for Cohen’s firm buying is that many in the industry expect the crack spread to improve as refiners cut down on production/utilization. Tesoro’s annual dividend of $2.20 per share, good for a 2.68% yield also helps.

#2 KAR Auction Services Inc (NYSE:KAR)

– Shares Held (as of June 30): 3.27 million
– Total Value (as of June 30): $136.36 million

Although it isn’t directly related to crude, many traders believe that KAR Auction Services Inc (NYSE:KAR) benefits from the lower prices at the pump. Because WTI and Brent are more than half the price of what they were three years ago, gasoline prices are cheaper, and people are driving more. The more people there are driving, means more used cars are being moved, and more business for KAR. Point72 more than doubled its position in the stock during the second quarter, increasing its holding by 127%. Despite the stock’s more than 13% rally this year, KAR shares still yield an attractive 2.77%.

#1 ConocoPhillips (NYSE:COP)

– Shares Held (as of June 30): 3.95 million
– Total Value (as of June 30): $172.11 million

Although Cohen’s fund trimmed its stake in the E&P by 8% from March 31 to June 30, Point72 nevertheless owned over 3.94 million Conoco shares worth over $172 million at the end of the second quarter. Like Point72, other funds in our system have mainly held on to their positions in the oil producer. Of the 749 hedge funds that we track which filed 13Fs for the June quarter, 43 funds owned $1.67 billion in ConocoPhillips (NYSE:COP) positions on June 30, which accounted for 3.10% of the float, compared to 45 funds with $1.47 billion in holdings on March 31. One reason Point72 is likely holding so many shares of ConocoPhillips is due to the stock’s attractive annual dividend payout of $1.00 per share, good for a 2.51% yield.

Disclosure: None