Approximately once per month I run a high-yield momentum screen and post the results. Last month's list is here. Returns for the last month were flat, returning -.02% including dividends (-.44% before dividends) versus 1.54% for SPY and -.04% for SPY, the S&P Dividend ETF. The top performing stock from last month's list was Verizon (NYSE:VZ) returning 4.81% excluding its $.488 dividend. The strategy did relatively well in 2010 and is one I continue to track because of its promise. In recent months I have also done a variation of this strategy with the Dividend Champions list in which I only search stocks that have had a history of raising dividends for 25+ years.
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 53 results (versus 54 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||Dividend Yield||Performance (Quarter)||Half Year||Year||200-Day SMA|
|FTR||Frontier Communications Corporation||7.89%||12.81%||38.23%||38.23%||20.55%|
|Q||Qwest Communications International Inc.||4.34%||17.89%||37.43%||66.97%||25.35%|
|VZ||Verizon Communications Inc.||5.43%||10.18%||37.31%||19.77%||20.48%|
|KIM||Kimco Realty Corporation||4.04%||7.34%||28.92%||31.49%||15.32%|
|RAI||Reynolds American Inc.||5.90%||15.34%||23.81%||32.87%||17.50%|
|CMS||CMS Energy Corp.||4.48%||0.16%||20.75%||25.44%||12.08%|
|CINF||Cincinnati Financial Corp.||5.02%||9.29%||18.52%||25.62%||13.37%|
|SE||Spectra Energy Corp.||4.21%||6.64%||17.66%||22.74%||11.76%|