11 High Yield Stocks to Consider Now
Approximately once per month I run a high-yield momentum screen using the free service on Finviz and post the results. Last month's list is here. Returns for the last month were 3.31% including dividends (2.52% before dividends) versus 3.23% for SPY and .19% for SDY, the S&P Dividend ETF. Once again he top performing stock from last month's list was Qwest Communications (Q) returning 7.95% excluding its $.08 dividend while Pepco Holdings (POM) was the worst performing at -3.45% (excluding its $.27 dividend). The strategy has done well this year and is one I continue to track because of its promise. In recent months I have also done a variation of this strategy with the Dividend Champions list in which I only search stocks that have had a history of raising dividends for 25+ years.
The screen looks for high yielding high momentum stocks. I screen the S&P 500 for stocks yielding greater than 4% and then ranked them by 6 month returns. There were 54 results (versus 55 last month) and per a previous article (see below for explanation), the highest momentum, high yield stocks have historically been the best performing so I have listed the top 20% based on 6 month returns, or 11 stocks.
The article in reference was a study done by Charles Schwab in which they studied the 1500 largest stocks by market capitalization from 1990-2009 and divided yielding stocks into 4 quadrants. They ranked the highest yielding stocks by 6 month price momentum, divided them into 5 segments, and found that highest yield stocks with the highest 6 month price momentum outperformed a) all other momentum segments (in other words, those high yield stocks with lower price momentum) and b) the annual return of the other yield quadrants.
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The screen looks for high yielding high momentum stocks. I screen the S&P 500 for stocks yielding greater than 4% and then ranked them by 6 month returns. There were 54 results (versus 55 last month) and per a previous article (see below for explanation), the highest momentum, high yield stocks have historically been the best performing so I have listed the top 20% based on 6 month returns, or 11 stocks.
The article in reference was a study done by Charles Schwab in which they studied the 1500 largest stocks by market capitalization from 1990-2009 and divided yielding stocks into 4 quadrants. They ranked the highest yielding stocks by 6 month price momentum, divided them into 5 segments, and found that highest yield stocks with the highest 6 month price momentum outperformed a) all other momentum segments (in other words, those high yield stocks with lower price momentum) and b) the annual return of the other yield quadrants.
As I have previously mentioned the screen is more of a trading strategy and less of an income strategy (unlike some of my dividend aristocrat screens & Dividend Champion screens which emphasize stocks that have a history of raising dividends), although the dividends do play an essential component in the overall returns. Thus, turnover could be high and the strategy is not for everyone. However, some months have shown relatively low turnover from month to month but this could change in the future.
Second, it is a screen and not a recommended or comprehensive portfolio. In other words, there could be sector imbalances so for investors looking to have exposure across different sectors and asset classes, this screen could potentially serve as a starting point for further research or one small piece to a much larger picture.
This strategy is one of several I track for free on the right hand column of my site.
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| Ticker | Company | Industry | Retirement Portfolios | Dividend Yield | Performance (Half Year) | 200-Day SMA | Price |
| Q | Qwest Communications International Inc. | Telecom Services - Domestic | Here | 4.37% | 43.16% | 31.00% | 7.33 |
| CTL | CenturyLink, Inc. | Telecom Services - Domestic | Here | 6.50% | 35.20% | 25.37% | 44.63 |
| PM | Philip Morris International, Inc. | Cigarettes | Here | 4.34% | 32.61% | 14.74% | 59 |
| WIN | Windstream Corporation | Telecom Services - Domestic | Here | 7.14% | 30.96% | 23.46% | 14 |
| CMS | CMS Energy Corp. | Diversified Utilities | Here | 4.48% | 28.14% | 14.75% | 18.76 |
| RAI | Reynolds American Inc. | Cigarettes | Here | 6.08% | 27.91% | 16.98% | 32.22 |
| MO | Altria Group Inc. | Cigarettes | Here | 6.12% | 26.98% | 11.68% | 24.85 |
| FTR | Frontier Communications Corporation | Telecom Services - Domestic | Here | 8.00% | 23.29% | 22.80% | 9.37 |
| VZ | Verizon Communications Inc. | Telecom Services - Domestic | Here | 5.73% | 22.84% | 15.38% | 34.04 |
| CNP | CenterPoint Energy, Inc. | Diversified Utilities | Here | 4.92% | 21.75% | 9.84% | 15.84 |
| SE | Spectra Energy Corp. | Oil & Gas Pipelines | Here | 4.08% | 21.26% | 12.66% | 24.53 |
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More on this topic (What's this?)
High Yield Stocks in 2010: Slow and Steady Wins the Race (Dividend Growth Investor, 1/3/11)
10 Higher Yield Dividend Stocks (Dividends Value, 1/25/11)
The case for dividend investing in retirement (Dividend Growth Investor, 12/8/10)
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