Seeking Alpha
Newsletter provider, fund holdings, insider ownership
Profile| Send Message|
( followers)  

In a previous study, we showed that the average return of high dividend yielding stocks was 13.04% between 1927 and 2009. Dividend stocks beat the overall market by an average of 1.36% per year in that period.

We like high dividend stocks and consider them as alternatives to 10-year Treasury bonds. High dividend stocks deliver higher current yields and usually increase dividend payments over the next 5-10 years. Like Jim Rogers and Ray Dalio, we are concerned about the Fed’s inflationary monetary policy and want to protect ourselves against inflation. One of the ways of doing this without assuming significant risks is investing in high dividend stocks.

Below, we provide a list of the top 30 S&P500 Financial Stocks by market cap and ranked them based on their annualized dividend yields (The sector classifications are sourced from Finviz and the market data are sourced from Fidelity).The stocks with higher and lower dividends, and their performances are shown below:

HIGHER DIVIDEND YIELDS

Dividend Yield

YTD Return

Public Storage

PSA

3.18%

19.56%

BlackRock Inc.

BLK

3.14%

-6.86%

The Travelers Companies Inc.

TRV

2.95%

0.91%

Vornado Realty Trust

VNO

2.94%

14.20%

Simon Property Group

SPG

2.68%

23.01%

AFLAC Inc.

AFL

2.61%

-17.63%

PNC Financial Services Group

PNC

2.56%

-8.90%

BB & T Corp.

BBT

2.48%

-0.23%

The Chubb Corporation

CB

2.47%

7.39%

JPMorgan Chase

JPM

2.46%

-2.89%

Equity Residential

EQR

2.16%

20.24%

ACE Ltd.

ACE

2.09%

8.99%

The Bank of New York Mellon

BK

2.06%

-15.42%

Prudential Financial Inc.

PRU

1.97%

-0.60%

CME Group Inc.

CME

1.97%

-10.92%

AVERAGE

2.06%

LOWERDIVIDEND YIELDS

Dividend Yield

YTD Return

U.S. Bancorp

USB

1.91%

-2.28%

MetLife Inc.

MET

1.86%

-10.42%

State Street Corp.

STT

1.72%

-9.14%

Wells Fargo & Co

WFC

1.70%

-8.18%

Charles Schwab Corp.

SCHW

1.61%

-12.29%

American Express Company

AXP

1.43%

19.17%

Aon Corporation

AON

1.21%

8.03%

The Goldman Sachs Group

GS

1.03%

-18.84%

Morgan Stanley

MS

0.89%

-17.34%

Franklin Resources Inc.

BEN

0.77%

16.85%

Loews Corporation

L

0.62%

3.20%

Capital One Financial Corp.

COF

0.42%

12.12%

Bank of America

BAC

0.41%

-26.50%

Citigroup

C

0.10%

-19.25%

American International Group

AIG

0.00%

-40.06%

AVERAGE

-7.00%

Since the beginning of this year, the top 30 S&P500 financial stocks lost - 2.47%, underperforming the SPY by almost 5 percentage points. Despite the underperformance of the sector in 2011, higher dividend yielding financial stocks performed relatively better. In this period, the average return of the 15 high dividend yielding S&P500 financial stocks was 2.06%. The second group of 15 stocks with lower dividend yields performed negatively in the same period, returning -7.00% on average.

We prefer high dividend stocks over low dividend stocks since the former provides better protection in down markets. Here are the top ten S&P500 financial stocks with the highest dividend yields:

1. Public Storage is a real estate investment trust specializing in self-storage properties. PSA has a 3.18% dividend yield and returned 19.56% since the beginning of this year. The stock has a market cap of $20.37B and P/E Ratio of 40.32. Ken Heebner's Capital Growth Management holds the largest PSA position among the 300+funds we track (See Ken Heebner's favorite stock picks).

2. BlackRock Inc. is a leading US investment management firm. BLK has a 3.14% dividend yield but lost -6.86% since the beginning of this year. The stock has a market cap of $33.66B and P/E Ratio of 14.26. John Paulson and Andreas Halvorsen hold large BLK positions in their portfolios.

3. The Travelers Companies Inc. is an American company providing insurance services. TRV has a 2.95% dividend yield and returned 0.91% since the beginning of this year. The stock has a market cap of $23.24B and P/E Ratio of 10.88. Mason Hawkins’ Southeastern Asset Management had more than $750M in TRV at the end of March 2011. David Einhorn also has more than $200 Million in TRV.

4. Vornado Realty Trust is a real estate investment trust specializing in commercial real estate. VNO has a 2.94% dividend yield and returned 14.20% since the beginning of this year. The stock has a market cap of $17.27B and P/E Ratio of 25.54. Martin Whitman’s Third Avenue and Murray Stahl’s Horizon Asset Management are prominent VNO investors.

5. Simon Property Group is a leading U.S. real-estate company operating regional malls, outlets and lifestyle centers. SPG has a 2.68% dividend yield and returned 23.01% since the beginning of this year. The stock has a market cap of $35.42B and P/E Ratio of 42.48. D.E. Shaw holds the largest SPG position among the 300-plus funds we are tracking.

6. AFLAC Inc. is a leading provider of supplemental insurance services in the United States. AFL has a 2.61% dividend yield but lost -17.63% since the beginning of this year. The stock has a market cap of $21.51B and P/E Ratio of 12.04. Bill Miller had nearly $200 Million in AFL at the end of March 2011.

7. PNC Financial Services Group is a U.S. financial services firm operating in various areas such as retail banking, corporate banking and asset management. PNC has a 2.56% dividend yield but lost -8.90% since the beginning of this year. The stock has a market cap of $28.73B and P/E Ratio of 8.82. Ken Fisher had more than $350 Million in PNC at the end of March 2011. (Check out Ken Fisher’s favorite stocks) Ken Griffin and Ric Dillon are also among PNC investors.

8. BB & T Corp. is a U.S. financial services firm mainly providing commercial and retail banking services. BBT has a 2.48% dividend yield but lost -0.23% since the beginning of this year. The stock has a market cap of $17.95B and P/E Ratio of 18.95. Jean Marie Eveillard’s First Eagle holds more than $150 Million of BBT.

9. The Chubb Corporation is an American insurance company. CB has a 2.47% dividend yield and gained 7.39% since the beginning of this year. The stock has a market cap of $18.49B and P/E Ratio of 9.11. Both Ken Griffin and Steven Cohen hold more than $100M of CB (See Steven Cohen’s top stock picks here).

10. JPMorgan Chase is a leading financial services firm operating worldwide. JPM has a 2.46% dividend yield but lost -2.89% since the beginning of this year. The stock has a market cap of $161.55B and P/E Ratio of 8.69. Steve Heinz’s Lansdowne Partners has the largest JPM position among the 300-plus funds we are tracking.

Disclosure: I am long C, MS.

Source: Investing in High Dividend Financial Stocks