This article is a continuation of a monthly series highlighting the top net payout yield stocks that was started back in June, 2012 (see article). The series highlights the best stocks for the upcoming month. Please review the original article for more information on the net payout yield concept.
Below are two charts highlighting the monthly returns of the top ten stocks from March (see list here). Due to limitations with YCharts, the chart was broken into the Top 5 and Next 5 lists.
The Top 5 stocks had a huge month after a weak February. Seagate Technology (NASDAQ:STX) and DirecTV (NASDAQ:DTV) had huge gains in March that easily offset the substantial 5% losses in February. DirecTV had a smashing 17.5% gain followed by 13.7% for Seagate. WellPoint (WLP) followed the February loss as well, with a 6.5% gain in March. Both Motorola Solutions (NYSE:MSI) and Kohl's (NYSE:KSS) also had small gains, though smaller than the 3.8% gain of the S&P 500.
The Next 5 stocks had a solid month with AmerisourceBergen (NYSE:ABC) beating the market with a 9% gain and Ameriprise Financial (NYSE:AMP) beating it with a 7.3% gain. The other three stocks slightly lagged the market by an average of 1% as Annaly Capital Management (NYSE:NLY), CA Technologies (NASDAQ:CA) and Viacom (NASDAQ:VIA) averaged gains of 2.75% for the month.
Even with only 5 out of 10 stocks beating the S&P 500, the list easily outperformed the market. Several stocks had material positive returns and no stocks had a loss allowing the big gainers to shine.
The list is full of financial and tech companies that most investors wouldn't touch when the month began. These results continue to highlight the concerns over the influx of tech companies in the top yielding stocks as those stocks continue to have wild swings defeating the conservative nature of this concept.
The list encountered some major changes since the March report as several left for dead companies joined the list after massive buybacks. American International Group (NYSE:AIG), General Motors (NYSE:GM), and Xerox (NYSE:XRX) jumped onto the list. Also ConocoPhillips (NYSE:COP) rejoined the list at 11.4% even as the company has reduced the buyback rate. On the flip side, AmerisourceBergen, Annaly Capital, Ameriprise Financial, and Viacom dropped off the list as the yields either slid due to stock gains or were surpassed by higher yielding stocks.
The average yields increased as the buyback portion jumped to 13.9% with the inclusion of the significant buybacks from AIG. Though the dividend part slipped to only 2.2%, the NPY increased by over 100 basis points to 16.2%.
Even after strong market gains for the first quarter of the year, the stocks on the Top Ten list continue to support yields exceeding 11%. In fact, the average yield increased for the month. These yields substantially exceed the 4-5% yields of the top large cap dividend stocks.
With the stock market hitting record highs, the top net payout yield stocks naturally went along for the ride.
As the Top Ten stocks average buyback yields is now approaching 14%, any market pullback in the Spring would allow the companies to purchase shares at cheaper levels. A perfect scenario for any long-term investors concerned that the market is extended after hitting record highs.
Disclosure: I am long AMP, CA, COP, DTV, KSS, MSI, NLY, WLP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.