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. Returns for the last month were 1.75% including dividends versus 2.98% for SPY and -.18% for SDY. The top performing stock from last month's list was Qwest Communications (NYSE:Q) returning 6.93% while HCP Inc (NYSE:HCP) was the worst performing at -5.66% (including dividends). The strategy has done well this year despite under-performing SPY last month.
The screen looks for high yielding high momentum stocks. I screen the S&P 500 for stocks yielding greater than 4% and then rank them by 6 month returns. There were 55 results (versus 53 last month) and per a previous article (see below for explanation), 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.
The article in reference was a study done by Charles Schwab in which they studied the 1500 largest stocks by market capitalization from 1990-2009 and divided yielding stocks into 4 quadrants. They ranked the highest yielding stocks by 6 month price momentum, divided them into 5 segments, and found that highest yield stocks with the highest 6 month price momentum outperformed a) all other momentum segments (in other words, those high yield stocks with lower price momentum) and b) the annual return of the other yield quadrants.
|Ticker||Company||Industry||Trend||Dividend Yield||Performance (Half Year)||200-Day SMA||Price|
|PM||Philip Morris International, Inc.||Cigarettes||Here||4.29%||32.09%||18.69%||59.64|
|Q||Qwest Communications International Inc.||Telecom Services - Domestic||Here||4.71%||31.33%||25.82%||6.79|
|CTL||CenturyLink, Inc.||Telecom Services - Domestic||Here||6.89%||28.29%||19.57%||42.08|
|WIN||Windstream Corporation||Telecom Services - Domestic||Here||7.69%||25.36%||18.28%||13|
|FTR||Frontier Communications Corporation||Telecom Services - Domestic||Here||8.33%||20.97%||18.79%||9|
|MCHP||Microchip Technology Inc.||Semiconductor - Specialized||Here||4.10%||20.12%||16.54%||33.55|
|AEE||Ameren Corporation||Diversified Utilities||Here||5.26%||19.89%||13.25%||29.29|
|MO||Altria Group Inc.||Cigarettes||Here||6.12%||18.39%||16.39%||24.85|
|VZ||Verizon Communications Inc.||Telecom Services - Domestic||Here||5.99%||17.38%||12.14%||32.56|
|POM||Pepco Holdings, Inc.||Electric Utilities||Here||5.75%||16.86%||11.00%||18.78|
|CMS||CMS Energy Corp.||Diversified Utilities||Here||4.71%||16.83%|
Disclosure: No Positions