Paul Tracy Editor,High-Yield International and Co-Founder, StreetAuthority provided a long report on high dividend yield companies. His point is that you can find many strong high yielding, solid companies that are outside of the US.
This interested me for two reasons:
- I want to learn all I can about high dividend yield stocks to find the best of the best for both income and growth to offset the paltry returns from other interest bearing instruments.
- I am always interested in diversifying and if I can have companies that have markets in other geographic regions, that is of great interest.
Paul starts with the top US companies -- he filters the companies to make sure they are profitable and so this isn't just a tactic for propping up the stock price. He came up with 17:
|Arlington Asset Investments||(AI)||14.9%|
|Great Northern Iron Ore||(GNI)||12.2%|
Source calculated February 6 2012
In a future article, we will go on to look at the international stocks but this is a set of stocks that are a mix of names and not the usual suspects. It is noticeable that there are a lot of financial stocks which will add to volatility. Still, this is an interesting blind filter and worth comparing with our dividend ETF benchmark portfolio.
|Asset||Fund in this portfolio|
|REAL ESTATE||(ICF) iShares Cohen & Steers Realty Majors|
|FIXED INCOME||(TIP) iShares Barclays TIPS Bond|
|Emerging Market||(VWO) Vanguard Emerging Markets Stock ETF|
|US EQUITY||(DVY) iShares Dow Jones Select Dividend Index|
|US EQUITY||(VIG) Vanguard Dividend Appreciation ETF|
|INTERNATIONAL EQUITY||(IDV) iShares Dow Jones Intl Select Div Idx|
|High Yield Bond||(HYG) iShares iBoxx $ High Yield Corporate Bd|
|INTERNATIONAL BONDS||(EMB) iShares JPMorgan USD Emerg Markets Bond|
- Top 17 Yields For Profitable U.S. Companies -- Total of $10K invested equally in each stock
- Retirement Income ETFs Tactical Asset Allocation Moderate -- Above funds using TAA (40% fixed income, 30% for each of the top two asset classes)
- Retirement Income ETFs Strategic Asset Allocation Moderate -- Above funds using SAA (40% fixed income, 12% for each of the five asset classes -- funds selected based on price momentum)
Portfolio Performance Comparison
|Portfolio/Fund Name||YTD |
|1Yr AR||1Yr Sharpe||3Yr AR||3Yr Sharpe||5Yr AR||5Yr Sharpe|
|Retirement Income ETFs Tactical Asset Allocation Moderate||1%||1%||21%||10%||77%||8%||54%|
|Retirement Income ETFs Strategic Asset Allocation Moderate||5%||3%||24%||20%||118%||3%||8%|
|Top 17 Yields For Profitable US Companies||7%||0%||1%|
Unfortunately we can't learn a great deal from the table because the selection has had a short life thanks to some recent additions. However, we can see a strong year to date return but not very good over the one year history that we have assembled. Bear in mind that dividends have been re-invested so without that, the returns would have been worse.
Three Month Chart One Year Chart Three Year Chart Five Year Chart
When you look at the charts, you can see a great deal of volatility as many of the stock correlate through times when financial stocks have had a rocky time. I am interested to track this selection and see how it does. In particular, I am thinking about picking out some of the best and seeing if the financial imbalance were corrected, if we would get something better. I want more history on this set before I do that.
Disclaimer: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.