19 High Yield Stocks that Historically Outperform

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 |  Includes: CAG, CMS, DTE, EIX, EQR, ES, EXC, FPL-OLD, HCN, HCP, LEG, MRK, PLD, POM, RRD, SE, SUN, TEG, VTR
by: Scott's Investments

In early October I detailed 2 high yield investment strategies (part 1 and 2) that have had a history of outperformance. Below is the list of stocks meeting the two strategies criteria as of the close on November 6th. Obviously, past performance does not mean these strategies will continue to outperform in the future. However, a variety of momentum strategies (part 1) have been detailed extensively on Scott's Investments and the high yield momentum strategy is similar in nature to other successful momentum strategies.

The first screen looks for high yielding high momentum stocks. I screened the S&P 500 for stocks yielding greater then 4% and then ranked them by 6 month returns. There were 59 results and per article 1, the highest momentum, high yield stocks have historically been the best performing so I have listed the top 20% (based on 6 month returns) of results, or 12 stocks. I have also included the percent each stock is above the 200 day moving average for informational purposes:
Ticker Company Free Trend Analysis Dividend Yield Performance (Half Year) 200-Day SMA Price
RRD R.R. Donnelley & Sons Company Here 4.96% 62.64% 56.30% 20.98
PLD ProLogis Here 5.18% 41.74% 30.86% 11.58
VTR Ventas Inc. Here 5.24% 39.60% 27.39% 39.13
MRK Merck & Co. Inc. Here 4.66% 37.05% 16.79% 32.59
LEG Leggett & Platt, Incorporated Here 5.35% 32.52% 26.41% 19.44
HCP HCP, Inc. Here 6.63% 32.08% 21.15% 27.75
EQR Equity Residential Here 4.68% 30.54% 22.54% 28.85
HCN Health Care REIT Inc. Here 6.45% 29.82% 17.89% 42.14
DTE DTE Energy Co. Here 5.53% 27.29% 22.12% 38.34
TEG Integrys Energy Group, Inc. Here 7.61% 27.13% 15.73% 35.75
POM Pepco Holdings, Inc. Here 7.08% 27.06% 12.71% 15.26
SE Spectra Energy Corp. Here 5.17% 26.74% 18.48% 19.34
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The second screen looks for stocks in the S&P 500 yielding greater than 3.5%, with a payout ratio less then 50%. An explanation of the reasons behind the strategy is here. I have included some additional momentum columns for information purposes:

Ticker Company Free Trend Analysis Dividend Yield Payout Ratio Performance (Half Year) 200-Day SMA Price
EXC Exelon Corp. Here 4.50% 49.65% -5.14% -3.70% 46.7
SUN Sunoco Inc. Here 4.25% 19.40% -5.11% -1.13% 28.21
NU Northeast Utilities Here 4.11% 45.62% 11.43% 4.55% 23.1
FPL FPL Group Inc. Here 3.80% 45.57% -11.43% -5.89% 49.76
CAG ConAgra Foods, Inc. Here 3.74% 48.33% 23.84% 15.95% 21.4
EIX Edison International Here 3.74% 45.80% 13.32% 9.15% 33.19
CMS CMS Energy Corp. Here 3.70% 42.74% 15.64% 12.27% 13.53
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Disclosures: Author has no positions