This article is a continuation of a monthly series highlighting the top net payout yield (NPY) stocks that was started back in June, 2012 (see article) and explained in August, 2012 (see article). The series highlights the best stocks for the upcoming month. Please review the original articles for more information on the NPY concept.
Below are two charts highlighting the monthly returns of the top ten stocks from February (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 very rough February despite the strong gains of CenturyLink (NYSE:CTL). The 8% gain by CenturyLink was quickly offset by the losses of Marathon Petroleum (NYSE:MPC), AT&T (NYSE:T), and Seagate Technology (NASDAQ:STX). Annaly Capital Management (NYSE:NLY) was the only stock that nearly matched the 4.6% gain for the benchmark S&P 500.
NLY Total Return Price data by YCharts
The Next 5 stocks performed extraordinarily during February with Halliburton (NYSE:HAL) up over 16% and DirectTV (DTV) up nearly 12%. Dollar Tree (NASDAQ:DLTR) and Pfizer (NYSE:PFE) outperformed the market with gains in excess of 6.5% each. Only Motorola Solutions (NYSE:MSI) underperformed the 4.6% gain of the S&P 500 index, though it still had a solid 3.8% gain for the month.
DTV Total Return Price data by YCharts
In all, the top ten stocks outperformed the market with an average gain of 5.2% even with the top few stocks performing horribly. Clearly the large gain by Halliburton more than offset the losses by AT&T and Marathon Petroleum. Typically this more conservative group of stocks struggles during the boom months, but in recent months, the model has included more volatile stocks such as CenturyLink and Dollar Tree that both gained over 8% in February.
The list encountered several changes since the February report with CenturyLink claiming the top spot with a 15% yield and AT&T sliding into second place. Annaly Capital dropped to fifth after a dividend cut and strong stock gains. Both Seadrill (NYSE:SDRL) and Northrop Grumman (NYSE:NOC) were added to the list with yields slightly over 10%. Dollar Tree and DirectTV dropped off the list in March due to the large stock gains.
The average yields plunged considering the large gains in certain stocks and limited additional buybacks. Even with the market gains, the dividend yield grew to 3.7% while the NPY declined to 12.0%.
The strong market helped pushed the yields down. With the majority of the stocks on the list supporting large buyback yields of over 8%, any future losses are a welcome addition to allow for large share purchases.
With the 10-year yield on the Treasury sitting around 2.8%, these stocks supporting yields of 12% remain very attractive.
Disclosure: I am long CTL, DTV, HAL, MSI, NLY, NOC, T. 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.
Disclaimer: 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.