At the request of one of our readers at Plan B Economics, I put together the following rather complex stock screen to identify the cheapest stocks in the highest yielding sectors.
Part one: identify the highest yielding industries
The following chart illustrates the top 10 yielding industries, with dividend yields ranging from 4.38%-7.29%. Click to enlarge:
Part two: identify cheap stocks within each industry
Using the above industry data as the base, I then dug into each industry to pinpoint the 2 cheapest $2b+ market cap stocks. (In one case there was only one stock with a market cap over $2b.) The results are shown in the following table:
| Industry / Company | Ticker | Dividend Yield | P/E |
| REIT - Diversified | |||
| Chimera Investment Corp | CIM | 19.92% | 4.50 |
| MFA Financial Inc | MFA | 14.68% | 7.09 |
| Telecom Services | |||
| BCE Inc | BCE | 5.19% | 14.84 |
| AT&T | T | 5.85% | 14.93 |
| Telecom Services - Foreign | |||
| Telefonia S.A. | TEF | 10.98% | 2.22 |
| BT Group PLC | BT | 3.84% | 9.25 |
| Long Distance Carriers | |||
| Telefonos de Mexico SAB de CV | TMX | 5.49% | 13.25 |
| REIT - Residential | |||
| American Capital Agency Corp | AGNC | 19.92% | 4.18 |
| Hatteras Financial Corp | HTS | 15.33% | 6.48 |
| REIT - Healthcare Facilities | |||
| HCP Inc | HCP | 4.94% | 25.40 |
| Ventas Inc | VTR | 4.24% | 48.02 |
| Oil & Gas Pipelines | |||
| Sunoco Logistics Partners LP | SXL | 4.78% | 14.35 |
| TC Pipelines LP | TCLP | 6.71% | 14.66 |
| Cigarettes | |||
| Lorillard Inc | LO | 4.75% | 14.74 |
| Philip Morris International Inc | PM | 4.30% | 15.15 |
| Gas Utilities | |||
| Sempra Energy | SRE | 3.56% | 9.69 |
| National Grid PLC | NGG | 5.79% | 9.98 |
| Surety & Title Insurance | |||
| Fidelity National Financial Inc | FNF | 3.10% | 11.20 |
| Assured Guaranty Ltd | AGO | 1.57% | 71.44 |
Personally, I would strip out any of the above companies with a p/e above 10. This reduces my universe to the securities in the Gas Utilities, Residential REITs, Foreign Telecom Services and Diversified REITs industry categorizations.
Of course, as with any stock screen, this only provides a starting point for research and analysis. Please provide any comments you may have on the companies in this screen.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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