The latest 13-F filings are out, and hedge funds have increased their positions in five dividend stocks that each yield over 4%. Without further ado, let’s take a closer look at the consensus hedge fund dividend picks, including AT&T Inc. (NYSE:T), Exelon Corporation (NYSE:EXC), Entergy Corporation (NYSE:ETR), Las Vegas Sands Corp. (NYSE:LVS), and Joy Global Inc. (NYSE:JOY).
But why do we track hedge fund activity? From one point of view we can argue that hedge funds are consistently underperforming when it comes to net returns over the last three years, when compared to the S&P 500. But that doesn’t mean that we should completely neglect their activity. There are various reasons behind the low hedge fund returns. Our research indicated that hedge funds’ long positions actually beat the market. In our back-tests covering the 1999-2012 period hedge funds’ top small-cap stocks edged the S&P 500 index by double digits annually. The 15 most popular small-cap stock picks among hedge funds also bested passive index funds by around 53 percentage points over the 36 month period beginning from September 2012 (see the details here).
#5 Joy Global Inc. (NYSE:JOY)
Number of Hedge Fund Holders (as of September 30): 28
Total Value of Hedge Fund Holdings (as of September 30): $254.33 million
Hedge Fund Holdings as Percent of Float (as of September 30): 17.40%
Hedge funds are buying the dip in mining equipment producer Joy Global Inc. (NYSE:JOY), as the number of funds long the stock increased to 28 from 19 in the second quarter. Because Joy Global shares have declined by 70% year-to-date due to the carnage that low commodity prices have inflicted on mining equipment producers, JOY now yields an attractive 5.96% dividend and trades at 11 times forward earnings. Although the company missed earnings and revenue expectations in the third quarter, Joy Global is still profitable with management guidance of $1.80 in EPS for 2015. Analysts expect Joy Global to earn another $1.21 in EPS next year, more than enough to cover the company’s dividend of $0.80 per year. If commodity prices rebound, look for Joy Global to do well.
Follow Joy Global Inc (NYSE:JOY)
Follow Joy Global Inc (NYSE:JOY)
#4 Las Vegas Sands Corp. (NYSE:LVS)
Number of Hedge Fund Holders (as of September 30): 29
Total Value of Hedge Fund Holdings (as of September 30): $260.58 million
Hedge Fund Holdings as Percent of Float (as of September 30): 0.90%
Like Joy Global, Las Vegas Sands Corp. (NYSE:LVS) is yet another casualty of China’s slowing economy. Whereas Joy Global shares declined due to flagging Chinese commodity demand, Las Vegas Sands shares have fallen 22% year-to-date, because of the Chinese government’s crackdown on corruption, which has led to fewer high roller visitors to Las Vegas Sands’ Macau casinos. Because of the stock’s decline, Las Vegas Sands now yields an attractive dividend of 5.97% and trades at a reasonable forward P/E of 17. Although Las Vegas Sands’ recent string of dividend raises may be a thing of the past given the challenging macro-economic climate, the company’s dividend is covered at the moment and the smart money is optimistic. The number of funds long the stock increased to 29 from 19 during the third quarter
