High Yield Momentum Stocks for January

by: Scott's Investments
Approximately once per month I will be running a high-yield momentum screen and post the results. Last month's results are here. I should point out two things based on some previous comments on this screen. First, it is more of a trading strategy and less of an income strategy, although the dividends do play an essential component in the overall returns. Thus, turnover could be high and the strategy is not for everyone. 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.
The first screen looks for high yielding high momentum stocks. I screened the S&P 500 for stocks yielding greater than 4% and then ranked them by 6 month returns. There were 51 results and per a previous article, 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 10 stocks (rounded). You will see many of the same names on this months list as December's list (KIM, AVB, and TE are the new additions):

Ticker Company Marketclub Trend Score (-100 to +100) Dividend Yield Performance (Half Year) Price
RRD R.R. Donnelley & Sons Company 85 4.55% 89.56% 22.88
PLD ProLogis 65 4.34% 82.21% 13.83
KIM Kimco Realty Corporation 100 4.58% 54.54% 13.97
AVB Avalonbay Communities Inc. 80 4.47% 48.06% 79.94
VTR Ventas Inc. 100 4.58% 47.97% 44.76
TEG Integrys Energy Group, Inc. -55 6.50% 41.21% 41.87
WIN Windstream Corporation -100 9.26% 40.99% 10.8
TE TECO Energy Inc. 75 4.85% 40.34% 16.49
HCP HCP, Inc. 55 6.06% 39.36% 30.38
DTE DTE Energy Co. 100 4.79% 39.01% 44.29
RAI Reynolds American Inc. 90 6.66% 38.66% 54.02
Click to enlarge

The second screen looks for stocks in the S&P 500 yielding greater than 4%, with a payout ratio less than 50%. An explanation of the reasons behind the strategy is here. I have included some additional momentum columns for information purposes. EXC and PEG were on last month's list, MRK has been removed from last month's list:

Ticker Company Marketclub Trend Score (-100 to +100) Dividend Yield Payout Ratio 200-Day Simple Moving Average Price
PEG Public Service Enterprise Group Inc. 55 4.05% 45.07% 5.69% 32.82
EXC Exelon Corp. -85 4.28% 49.65% 1.70% 49.08
Click to enlarge

Author's Disclosure: No Positions