Top Net Payout Yields For January 2016

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Includes: AAL, BBBY, CBS, GM, KSS, M, MSI, NTAP, QCOM, STX
by: Stone Fox Capital

Summary

The top 10 net payout yields had a larger loss than the benchmark index in December.

The top 10 net payout yield stocks average yields of 19.2% to start January.

Motorola Solutions continues to hold the highest yield at 37.6%.

Top 10 This article is a continuation of a monthly series, highlighting the top net payout yield (NPY) stocks, that was started back in June 2012 (see article) and explained in August 2012 (see article). The series highlights the best stocks for the upcoming month utilized in part to make investment decisions for the Covestor model that has beaten the S&P 500 for four out of the last five years. Please review the original articles for more information on the NPY concept.

December Returns

Below are two charts highlighting the monthly returns of the top ten stocks from December (see list here). For presentation reasons, the chart is broken into the Top 5 and Next 5 lists.

The Top 5 stocks had a miserable month in December to finish a generally bad year. Though the S&P 500 index had a large 1.8% loss during the month, two stocks in the group had larger losses that were in excess of 10.5%. Bed Bath & Beyond (NASDAQ:BBBY) and Macy's (NYSE:M) saw the large losses as the department stores had a disappointing holiday season due to warm weather. As well, Motorola Solutions (NYSE:MSI) produced a large 4.6% loss, but both Qualcomm (NASDAQ:QCOM) and Seagate Tech (NASDAQ:STX) had positive returns that solidly beat the benchmark loss. In total, the Top 5 stocks generated a loss of 4.4% that was far worse than the 1.8% of the S&P 500.

MSI Chart

MSI data by YCharts

The Next 5 stocks had a dreary month to match the Top 5 group. In this case, three stocks had large losses in excess of 6%, including a massive 13.5% loss by NetApp (NASDAQ:NTAP). Both General Motors (NYSE:GM) and CBS (NYSE:CBS) had losses of roughly 6% while American Airlines Group (NASDAQ:AAL) and Kohl's (NYSE:KSS) outperformed the benchmark with gains. In total, the Next 5 stocks produced a sizable 4.5% loss due mainly to the large loss from NetApp.

GM Chart

GM data by YCharts

In all, the top 10 stocks produced a worse loss than the 1.75% loss of the benchmark S&P 500 index. With six stocks generating sizable losses, the NPY concept ended the year on a low note likely compounded by tax-loss selling.

January List

The top 10 list again encountered only minor changes for January as the largest yielding stocks saw losses that only pushed the yields higher. The only real move in the list was American Airlines dropping to the 10th position as the stock generated a small 2% gain during the month while the bottom stocks had losses.

The top yields keep squeezing higher as lower stock prices pushed the top three yielding stocks above 22%. Even the 5th largest yield for Qualcomm sat an incredibly high 17.6%.

The average yields were significantly higher to start January, with the NPY increasing to 19.2% from 18.3% in the prior month. The buyback yield increased further to an extremely elevated 16.1%. The dividend yield had a small increase to 3.1% from the prior month at 2.9%.

Conclusion

The NPY stocks ended 2015 on a low note probably due in part to a bout of tax-loss selling for stocks that generally struggled last year. Ultimately though, stocks repurchasing large amounts of their own stock will benefit from the even lower stock prices. In fact, the ever increasing yields continue to suggest these stocks are even more attractive on the dips with several bouncing to start the new year despite the weakest start to a new year in history.

Disclosure: I am/we are long AAL, GM, KSS, M, MSI, NTAP, QCOM.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.