Once per month I update a high yield dividend stock momentum portfolio on my site. The portfolio is comprised of the high yielding stocks in the S&P 500 with high price momentum. I screen the S&P 500 for stocks yielding greater than 4% and then rank the results by 6 month returns. This month there were 58 results this month, six more than last month. The top stocks are then added to a hypothetical portfolio and tracked publicly on my site.
Per a previous article, the highest momentum, high-yield stocks have historically out-performed lower yielding, lower momentum stocks. The screen is more of a trading strategy and less of a passive income strategy, although the dividends do play an essential component in the overall returns. Thus, turnover could be high and the strategy is not for everyone but I have added a modification to the strategy to minimize turnover.
In order to limit turnover stocks with yields that have fallen below 4% due to share price appreciation will remain in the portfolio. Stocks will only be sold when yield falls below 4% due to dividend cuts or when the six-month performance would otherwise lag the top 10-11 stocks in the screen. This rule applies to Philip Morris (NYSE:PM), a current portfolio holding yielding less than 4%. It remains in the portfolio this month because its momentum would otherwise put it in the top 10.
For March 12th, the portfolio has three positions turning over. Last month we had 6 six positions turn over and the previous month there was no turnover. The cause of turnover last month was a significant shift in momentum away from utilities in the broad market. In previous months utilities dominated the portfolio.
Below are the top 15 high yield momentum stocks as of March 11th. Keep in mind that only 10 stocks are held in the portfolio and the current holdings can be viewed on the right-hand side of my site and in the second table below.
Since inception the portfolio is up 10.49%. Returns exclude commissions, taxes, and are hypothetical:
Data source: Finviz.
|GCI||Gannett Co., Inc.|
|CINF||Cincinnati Financial Corp.|
|FII||Federated Investors, Inc.|
|HRB||H&R Block, Inc.|
|LMT||Lockheed Martin Corporation|
|HCBK||Hudson City Bancorp, Inc.|
|MRK||Merck & Co. Inc.|
|CMS||CMS Energy Corp.|
|MO||Altria Group Inc.|
New additions for this month are Gannett Co (NYSE:GCI), Federated Investors (NYSE:FII), and Hudson City Bancorp (NASDAQ:HCBK). The current positions including the new updates are listed below, including current yield:
|Ticker||Company||Dividend Yield||Performance (Half Year)|
|GCI||Gannett Co., Inc.||5.50%||50.78%|
|CINF||Cincinnati Financial Corp.||4.59%||34.37%|
|FII||Federated Investors, Inc.||4.60%||30.97%|
|HRB||H&R Block, Inc.||4.92%||28.46%|
|LMT||Lockheed Martin Corporation||4.49%||27.40%|
|HCBK||Hudson City Bancorp, Inc.||4.75%||24.86%|
|MRK||Merck & Co. Inc.||4.41%||22.55%|
Disclosure: At the time of writing no current positions in stocks mentioned.