Fixed income from an investment is something many retail investors look forward to, especially those who are unwilling to bet large sums of money on risky stocks. Keeping this in mind we looked through our database of more than 700 hedge funds and their equity holdings to uncover their most popular mid-cap dividend stocks. Read on to find out what they are.
Let’s first take a step back and analyze how tracking hedge funds can help an everyday investor. Through our research we discovered that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month on average between 1999 and 2012. On the other hand the most popular large-cap picks of hedge funds underperformed the same index by seven basis points per month during the same period. This is likely a surprise to many investors, who think of small-caps as risky, unpredictable stocks and put more faith (and money) in large-cap stocks. In forward tests since August 2012 these top small-cap stocks beat the market by an impressive 60.4 percentage points, returning 118% (read the details here). Follow the smart money into only their best investment ideas all while avoiding their high fees.
5. Centurylink Inc (NYSE:CTL)
Investors with Long Positions (as of June 30): 31
Aggregate Value of Investors’ Holdings (as of June 30): $279.79 Million
Despite a more than 15% drop in its stock price during the second quarter, the number of hedge funds with investments in Centurylink Inc (NYSE:CTL) increased from 26 at the end of March. However, the aggregate investment declined from $384.85 million. The world’s largest hedge fund, Bridgewater Associates, led by Ray Dalio, increased its stake in Centurylink Inc (NYSE:CTL) by 125% during the June quarter to 685,500 shares valued at $20.14 million. The $15.04 billion telecommunications company offers a dividend yield of 8.08%, the highest in this list. Although the first half of this year was marked with disappointment for the company, it plans to turn things around in the second half with job cuts, the renegotiation of a contract with a wireless provider, and changes to its sales force, which will now be chasing big businesses.
4. Kohl’s Corporation (NYSE:KSS)
Investors with Long Positions (as of June 30): 33
Aggregate Value of Investors’ Holdings (as of June 30): $612.41 Million
The number of hedge funds holding stakes in Kohl’s Corporation (NYSE:KSS) decreased from 37 at the end of March, and $917.86 million in total holdings at that time. The company’s stock price likewise plunged during the second quarter, by nearly 19%, and following disappointing financial results for the second quarter, the stock took another dive this month. The share price declines have however had the effect of pushing the company’s yield up to an attractive 3.48%, and could signal an intriguing entry point for the stock, as it now stands around its 52-week low. Donald Chiboucis‘ Columbus Circle Investors tops the list of hedgies in our database with investments in the company, holding some 2.50 million shares.
3. Marathon Oil Corporation (NYSE:MRO)
Investors with Long Positions (as of June 30): 33
Aggregate Value of Investors’ Holdings (as of June 30): $715.52 Million
Although the popularity of Marathon Oil Corporation (NYSE:MRO) dropped during the June quarter from 37 funds which had $806.25 million in holdings of the stock at the end of March, the stock still offers a sizable dividend yield of 5.26%. The stock price of the $11.33 billion energy company has cratered by more than 41% year-to-date and Marathon Oil Corporation (NYSE:MRO) was also downgraded by both Bank of America and Oppenheimer this month. The current low price oil environment has proved particularly harsh for the company. Dimitry Balyasny‘s Balyasny Asset Management is the largest stockholder of Marathon Oil Corporation (NYSE:MRO) within our database, holding about 4.94 million shares valued at $131.02 million.
2. Seagate Technology PLC (NASDAQ:STX)
Investors with Long Positions (as of June 30): 35
Aggregate Value of Investors’ Holdings (as of June 30): $614.84 Million
At the end of March a total of 39 funds had invested a total of $654.46 million in Seagate Technology PLC (NASDAQ:STX). The stock price of the provider of electronic storage products has slid by more than 23% year-to-date. The company increased its quarterly dividend by $0.11 to $0.54 in the fourth quarter last year and this currently offers a dividend yield of 4.32%. Susquehanna Financial Group recently revised down its price target for Seagate Technology PLC (NASDAQ:STX) to $60 from $62 while maintaining its ‘Neutral’ rating, as the firm believes that quarterly smartphone and tablet unit shipments for the second half will either be flat or dip. David Harding‘s Winton Capital Management is bullish on the company, raising its stake by 42% during the second trimester to 1.92 million shares.
1. The Western Union Company (NYSE:WU)
Investors with Long Positions (as of June 30): 35
Aggregate Value of Investors’ Holdings (as of June 30): $988.69 Million
The payment services company saw a surge in hedge fund interest during the second trimester, though not in share ownership, as only 26 investment firms had $1.06 billion in holdings of The Western Union Company (NYSE:WU) at the end of the first three months of 2015. The stock price has appreciated by about 3.63% so far this year. Barclays analyst Darrin Peller recently upgraded the stock to ‘Equal Weight’ from ‘Underweight’, sighting improving revenue growth prospects for the company’s customer-to-customer business, among other factors. However, there are also risks in the long run such as the growing popularity of PayPal and Xoom. Currently The Western Union Company (NYSE:WU) offers a dividend yield of 3.34%. Abrams Capital Management, which is led by David Abrams is a prominent shareholder of the company, holding about 21.61 million shares valued at $439.31 million.
Disclosure: None
