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 and the strategy returned -1.51% for the month, including dividends. SPY returned -2.96% and SDY, the S&P Dividend ETF returned -2.21%.
To reiterate, the screen is more of a trading strategy and less of an income strategy (unlike some of my dividend aristocrat screens), 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 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 54 results (versus 52 last month) 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, or 11 stocks (Altria, or MO, was the 11th ranked stock).
I listed the payout ratios for informational purposes, but I would always recommend researching payout ratios in-depth, since one year of poor earnings (and vice versa) can skew the ratio significantly.
|Ticker||Company||Dividend Yield||Payout Ratio||Performance (Half Year)|
|Q||Qwest Communications International Inc.||6.20%||112.35%||48.70%|
|TEG||Integrys Energy Group, Inc.||5.66%||133.13%||39.35%|
|DTE||DTE Energy Co.||4.47%||60.03%||25.96%|
|LEG||Leggett & Platt, Incorporated||4.36%||97.34%||25.07%|
|PCL||Plum Creek Timber Co. Inc.||4.29%||176.77%||21.12%|
|D||Dominion Resources, Inc.||4.37%||77.57%||19.85%|
|MO||Altria Group Inc.||6.49%||82.07%||19.56%|
|SE||Spectra Energy Corp.||4.44%||72.70%||19.34%|
Disclosure: No positions
Source: 11 High Yield Momentum Stocks