Ultra Low Beta Stocks With Yields Over 4%

Includes: APU, DUK, HTS, NLY, SEP, SO, SXL
by: Parsimony Investment Research

In the current market environment, it is important for income investors to choose their dividend stocks wisely. As volatility increases, investors may want to add some low beta stocks to their holdings to help dampen portfolio volatility. In general, companies with low betas will tend to be less volatile than the general market.

We did a screen last week for companies with yields greater than 4% and betas less than 1.0.

With the screen below, we took it one step further and searched for ultra low beta stocks (<0.35) that meet all the same parameters.

  • Dividend Yield > 4%
  • Avg. 3m Volume > 1,000,000
  • Stock Price > $10.00
  • Market Cap > $1 billion
  • P/E Ratio < 20.0x
  • Beta < 0.35

The stocks below meet the parameters above. Use this data as a starting point for your own analysis.

You can see that all of the ultra low beta stocks above are either energy stocks or REITs.

It should be noted that REITs have a much different risk reward profile than energy stocks. Even though the REITs (NLY, HTS) have ultra low betas (and also meet the rest of our screen parameters), they certainly carry more risk than the other stocks on the list (hence the 14%+ yields).

That said, we actually like the risk/reward profile of NLY in particular, but we caution investors to do their homework before investing in mREITs. We have written several articles on the sector, including this one.

Disclosure: I am long NLY.