I recently wrote an article listing the top paying dividend stocks from a range of industries. The purpose of the article was to provide readers with a list of stocks to investigate as potential additions to their portfolios. One of the comments suggested that I track their performance to see how dividend yield might correlate to future performance. While I can start tracking this most recent list, I can also review the performance of the previous set of top paying dividend stocks from my July 7, 2011, article. The main table is replicated below:
Top Paying Dividend Stocks July 2011
| Ticker | Name | Industry | Market Cap ($ Millions) | Dividend Yield |
| HHS | Harte-Hanks, Inc. | Advertising | 529 | 3.9% |
| LMT | Lockheed Martin Corporation | Aerospace & Defense | 28,301 | 3.7% |
| CZZ | Cosan Limited | Agriculture Crops | 2,160 | 2.1% |
| UPS | United Parcel Service, Inc. | Air Courriers | 72,763 | 2.8% |
| RYAAY | Ryanair Holdings plc | Airlines | 8,539 | 12.2% |
| TAP | Molson Coors Brewing Company | Alcoholic Beverages | 7,423 | 2.8% |
| VFC | V.F. Corporation | Apparel | 12,154 | 2.3% |
| ELUXY.PK | Elextrolux | Appliance & Tools | 7,657 | 3.5% |
| PHG | Koninklijke Philips Electronics, N.V. | Audio Video Equipment | 24,073 | 3.4% |
| Volvo | Auto & Truck Manufacturing | 35,736 | 2.0% | |
| GPC | Genuine Parts Company | Auto & Truck Parts | 8,744 | 3.2% |
| AZN | Astrazeneca PLC | Biotechnology & Drugs | 71,973 | 7.2% |
| SJR | Shaw Communications Inc. | Broadcasting & Cable TV | 9,410 | 4.0% |
| CODI | Compass Diversified Holdings | Business Services | 775 | 8.7% |
| THO | Thor Industries, Inc. | Campers & RV Vehicles | 1,613 | 1.4% |
| ASCA | Ameristar Casinos, Inc. | Casino & Gaming | 770 | 1.8% |
| TNH | Terra Nitrogen Company, L.P. | Chemical Manufacturing | 2,564 | 14.0% |
| SHLM | A. Schulman, Inc. | Chemicals: Plastics & Rubber | 787 | 2.4% |
| PVR | Penn Virginia Resource Partners LP | Coal Mining | 1,913 | 7.1% |
| NOK | Nokia Corporation | Communications Equipment | 23,668 | 6.5% |
| PT | Portugal Telecom SGPS, S.A . | Communications Services | 8,540 | 17.7% |
| HPQ | Hewlett-Packard Company | Computer Hardware | 75,644 | 1.3% |
| JKHY | Jack Henry & Associates, Inc. | Computer Networking Equipment | 2,633 | 1.4% |
| CAJ | Canon, Inc. | Computer Peripherals | 58,598 | 3.0% |
| ELNK | EarthLink, Inc. | Computer Services | 860 | 2.6% |
| STX | Seagate Technology. | Computer Storage Devices | 6,967 | 4.4% |
| TYC | Tyco International, Ltd. (Switzerland) | Conglomerate | 23,302 | 2.0% |
| VMC | Vulcan Materials Company | Construction - Raw Materials | 5,107 | 2.5% |
| MAS | Masco Corporation | Construction - Supplies & Fixtures | 4,394 | 2.4% |
| DE | Deere & Company | Construction & Agricultural Equipment | 35,608 | 1.9% |
| MDC | M.D.C. Holdings, Inc. | Construction Services | 1,196 | 4.0% |
| GE | General Electric Company | Consumer Financial Services | 201,928 | 3.2% |
| IP | International Paper Company | Containers & Packaging | 13,061 | 3.5% |
| AT | Atlantic Power Corporation | Electric Utilities | 1,060 | 7.1% |
| MOLX | Molex Incorporated | Electronic Instruments & Control | 4,576 | 3.1% |
| CSL | Carlisle Companies Incorporated | Fabricated: Plastics & Rubber | 3,035 | 1.4% |
| CALM | Cal-Maine Foods, Inc. | Fish & Livestock | 775 | 5.8% |
| BGS | B&G Foods Holdings Corp. | Food Manufacturing | 1,014 | 4.0% |
| NKE | Nike, Inc. | Footware | 43,497 | 1.4% |
| WY | Weyerhaeuser Company | Forestry & Wood Products | 11,930 | 2.7% |
| LEG | Leggett & Platt, Incorporated | Furniture & Fixtures | 3,538 | 4.4% |
| NEM | Newmont Mining Corporation (Holding Company) | Gold and Silver Mining | 26,819 | 1.5% |
| VIVO | Meridian Bioscience Inc. | Health Equipment | 1,011 | 3.1% |
| NHC | National HealthCare Corporation | Healthcare Facilities | 673 | 2.5% |
| IHG | Intercontinental Hotels Group | Hotels & Motels | 6,145 | 2.2% |
| AFL | Aflac Incorporated | Insurance (Accident & Health) | 21,725 | 2.6% |
| SLF | Sun Life Financial Incorporated | Insurance (LIFE) | 17,641 | 4.7% |
| AJG | Arthur J. Gallagher & Co. | Insurance (Miscellaneous) | 3,198 | 4.6% |
| OB | OneBeacon Insurance Group, Ltd. | Insurance (Property) | 1,242 | 6.4% |
| BBEP | BreitBurn Energy Partners, L.P. | Integrated Oil | 1,165 | 8.5% |
| PVD | Administradora de Fondos de Pensiones-Provida, S.A. | Investment Services | 1,598 | 7.2% |
| TX | Ternium S.A. | Iron & Steel | 6,112 | 4.9% |
| GSK | GlaxoSmithKline PLC | Major Drugs | 111,656 | 4.9% |
| SCCO | Southern Peru Copper Corporation | Metals | 27,804 | 6.9% |
| WSO | Watsco, Inc. | Miscellaneous Capital Goods | 2,235 | 3.4% |
| SJT | San Juan Basin Royalty Trust | Miscellaneous Financial Services | 1,136 | 6.1% |
| PAC | Grupo Aeroportuario Del Pacifico, S.A. de C.V. | Miscellaneous Transportation | 1,954 | 5.5% |
| NKA | Niska Gas Storage Partners LLC | Natural Gas | 575 | 8.2% |
| DPS | Dr Pepper Snapple Group, Inc | Non-alcoholic Beverages | 9,461 | 3.0% |
| CMP | Compass Minerals Intl Inc | Non-metallic mining | 2,853 | 2.1% |
| XRX | Xerox Corporation | Office Equipment | 14,811 | 1.6% |
| DLX | Deluxe Corporation | Office Supplies | 1,337 | 3.9% |
| ENP | Encore Energy Partners LP | Oil Production | 987 | 9.0% |
| TLP | Transmontaigne Partners L.P. | Oil Well Services & Equipment | 509 | 6.9% |
| SEOAY.PK | STORA ENSO CORP | Paper and Pulp | 8,239 | 2.7% |
| KMB | Kimberly-Clark Corporation | Personal & Household Products | 26,134 | 4.2% |
| STON | StoneMor Partners L.P. | Personal Services | 543 | 8.3% |
| RRD | R.R. Donnelley & Sons Company | Printing | 4,156 | 5.2% |
| SID | National Steel Corporation | Product Fabrication | 18,370 | 5.1% |
| TRI | Thomson Reuters Corp | Publishing | 31,240 | 3.3% |
| GSH | Guangshen Railway Company Limited | Railroads | 3,000 | 2.9% |
| ARR | Armour Residential | Real Estate Operations | 520 | 19.2% |
| TRK | Speedway Motorsports, Inc. | Recreational Activities | 599 | 2.8% |
| MAT | Mattel, Inc. | Recreational Products | 9,701 | 3.3% |
| TAL | TAL International Group, Inc. | Rental & Leasing | 1,164 | 5.7% |
| MCD | McDonald's Corporation | Restaurants | 88,858 | 2.9% |
| AEO | American Eagle Outfitters, Inc. | Retail (Apparel) | 2,516 | 3.4% |
| WMT | Wal-Mart Stores, Inc. | Retail (Department) | 185,400 | 2.7% |
| WAG | Walgreen Company | Retail (Drug Stores) | 39,118 | 1.6% |
| HD | Home Depot, Inc. (The) | Retail (Furnishings) | 58,260 | 2.7% |
| SVU | SuperValu Inc. | Retail (Grocery) | 1,994 | 3.7% |
| UNTD | United Online, Inc. | Retail (Specialty) | 554 | 6.4% |
| BBY | Best Buy Co., Inc. | Retail (Technology) | 12,532 | 1.9% |
| STRA | Strayer Education, Inc. | Schools | 1,606 | 3.1% |
| LDR | Landauer, Inc. | Scientific Instruments | 593 | 3.5% |
| DBD | Diebold, Incorporated | Security Services and Products | 2,068 | 3.5% |
| TSM | Taiwan Semiconductor Manufacturing Company Limited | Semiconductors | 65,915 | 6.2% |
| MSFT | Microsoft Corporation | Software & Programming | 219,505 | 2.5% |
| IFSIA | Interface, Inc. | Textiles - non apparel | 1,301 | 0.4% |
| CTB | Cooper Tire & Rubber Company | Tires | 1,225 | 2.1% |
| MO | Altria Group | Tobacco | 55,684 | 5.7% |
| KNX | Knight Transportation, Inc. | Trucking | 1,429 | 1.4% |
| WM | Waste Management, Inc. | Waste Management Services | 17,839 | 3.6% |
| NMM | Navios Maritime Partners LP | Water Transportation | 854 | 9.3% |
| CWT | California Water Service Group Holding | Water Utilities | 780 | 3.3% |
One thing to notice is that some stocks will post high yields simply because their share price is declining and they have not yet cut their dividend, despite a challenging outlook. Hence, I would expect this list to also include several poor performers. Another observation is that the market, as measured by the SPDR S&P 500 Trust ETF (SPY), has declined 2.7% since then. For each stock, I went through and added up their dividends since July 2011 and their closing prices as of June 1, 2012, to provide a total return. Unfortunately, the results were quite disappointing. The group average was -8.0%, substantially worse than SPY. The following table shows the results:
| Ticker | Closing Price (July 5, 2011) $ | Dividends $ | Closing Price (June 1, 2012) $ | Total Return |
| TNH | 138.60 | 16.24 | 202.1 | 57.5% |
| AEO | 12.91 | 0.44 | 18.56 | 47.2% |
| STX | 16.20 | 0.86 | 21.74 | 39.5% |
| HD | 36.59 | 1.12 | 47.96 | 34.1% |
| WMT | 53.39 | 1.53 | 65.55 | 25.6% |
| MO | 26.60 | 1.23 | 31.69 | 23.8% |
| AJG | 28.65 | 1.00 | 34.21 | 22.9% |
| VFC | 111.10 | 2.07 | 134.35 | 22.8% |
| KMB | 66.52 | 2.14 | 78.28 | 20.9% |
| DBD | 31.67 | 1.13 | 35.5 | 15.7% |
| NKE | 91.74 | 1.39 | 104.6 | 15.5% |
| BGS | 21.16 | 0.71 | 23.38 | 13.8% |
| TRK | 14.40 | 0.50 | 15.84 | 13.5% |
| MAT | 27.91 | 1.08 | 30.56 | 13.4% |
| GPC | 55.58 | 1.40 | 61.08 | 12.4% |
| MSFT | 26.03 | 0.76 | 28.45 | 12.2% |
| WSO | 67.89 | 2.38 | 72.28 | 10.0% |
| CALM | 32.48 | 0.84 | 34.84 | 9.8% |
| ARR | 7.50 | 1.23 | 6.94 | 8.9% |
| PVD | 72.35 | 7.03 | 71.58 | 8.7% |
| MDC | 25.29 | 1.00 | 26.47 | 8.6% |
| GSK | 43.26 | 2.48 | 43.45 | 6.2% |
| TYC | 49.69 | 1.00 | 51.48 | 5.6% |
| LMT | 80.97 | 3.75 | 81.22 | 4.9% |
| MCD | 85.64 | 2.71 | 86.71 | 4.4% |
| OB | 13.15 | 0.63 | 12.94 | 3.2% |
| HHS | 8.30 | 0.33 | 8.21 | 2.9% |
| THO | 28.89 | 0.45 | 29.17 | 2.5% |
| ELNK | 7.82 | 0.15 | 7.86 | 2.4% |
| UPS | 73.78 | 2.18 | 73.25 | 2.2% |
| CSL | 49.58 | 0.72 | 49.81 | 1.9% |
| MAS | 12.27 | 0.30 | 12.04 | 0.6% |
| GE | 19.04 | 0.49 | 18.54 | -0.1% |
| IP | 29.87 | 1.05 | 28.13 | -2.3% |
| DPS | 42.74 | 0.98 | 40.63 | -2.6% |
| CWT | 18.67 | 0.62 | 17.36 | -3.7% |
| TLP | 35.22 | 2.50 | 31.13 | -4.5% |
| CZZ | 12.39 | 0.28 | 11.51 | -4.8% |
| NEM | 54.37 | 1.00 | 50.3 | -5.6% |
| BBEP | 19.73 | 1.76 | 16.46 | -7.6% |
| PVR | 26.95 | 2.02 | 22.8 | -7.9% |
| AT | 15.47 | 1.03 | 13.14 | -8.4% |
| PAC | 40.97 | 1.49 | 35.3 | -10.2% |
| WY | 22.15 | 0.60 | 19.11 | -11.0% |
| DLX | 26.00 | 1.00 | 22.1 | -11.2% |
| NHC | 48.64 | 0.90 | 42.11 | -11.6% |
| WM | 37.62 | 1.04 | 32.16 | -11.8% |
| MOLX | 26.00 | 0.60 | 22.31 | -11.9% |
| TAP | 45.06 | 1.28 | 38.33 | -12.1% |
| AFL | 46.45 | 1.29 | 38.65 | -14.0% |
| DE | 84.84 | 1.28 | 71.52 | -14.2% |
| LEG | 24.76 | 0.84 | 20.3 | -14.6% |
| SHLM | 25.51 | 0.69 | 21.04 | -14.8% |
| CODI | 16.59 | 1.44 | 12.62 | -15.3% |
| CMP | 86.80 | 1.89 | 71.51 | -15.4% |
| SJR | 22.82 | 0.86 | 18.38 | -15.7% |
| VMC | 39.56 | 0.27 | 32.97 | -16.0% |
| AZN | 51.08 | 2.80 | 40.08 | -16.1% |
| WWE | 9.64 | 0.36 | 7.64 | -17.0% |
| LDR | 62.98 | 1.65 | 49.96 | -18.1% |
| NMM | 18.41 | 1.76 | 13.21 | -18.7% |
| VIVO | 24.66 | 0.76 | 18.91 | -20.2% |
| GSH | 21.13 | 0.79 | 16 | -20.5% |
| NKA | 17.02 | 1.40 | 11.7 | -23.0% |
| ASCA | 23.91 | 0.46 | 17.81 | -23.6% |
| CTB | 19.72 | 0.42 | 14.52 | -24.2% |
| WAG | 42.73 | 0.90 | 29.93 | -27.8% |
| PHG | 25.41 | 1.00 | 17.32 | -27.9% |
| UNTD | 6.25 | 0.40 | 4 | -29.6% |
| STRA | 131.17 | 4.00 | 86.9 | -30.7% |
| XRX | 10.57 | 0.13 | 7.12 | -31.4% |
| SLF | 30.51 | 1.43 | 19.39 | -31.8% |
| TX | 30.49 | 0.75 | 18.32 | -37.5% |
| IFSIA | 19.88 | 0.08 | 12.18 | -38.3% |
| SJT | 24.38 | 1.25 | 13.25 | -40.5% |
| HPQ | 36.47 | 0.36 | 21.25 | -40.7% |
| BBY | 32.24 | 0.48 | 18.3 | -41.7% |
| RRD | 20.03 | 1.04 | 10.33 | -43.2% |
| SEOAY | 10.57 | 0.39 | 5.2 | -47.1% |
| SID | 12.60 | 0.43 | 6.22 | -47.2% |
| SVU | 9.40 | 0.35 | 4.29 | -50.6% |
| PT | 9.75 | 0.85 | 3.9 | -51.3% |
| NOK | 6.32 | 0.26 | 2.64 | -54.1% |
In the previous article, I noted that stocks like Nokia (NOK) might have dividend sustainability issues. This turned out to be true, as Nokia posted the worst performance in the group, declining around 54%. Portugal Telecom (PT) was the second-worst performer, declining 51%. Several stocks on the list also appeared to discontinue their dividends. However, there were several strong performers as well, including clothing and apparel companies such as American Eagle Outfitters (AEO) and V.F. Corporation (VFC).
One filter to consider might be proximity to 52-week lows. Overall, 39 of 96 (41%) stocks outperformed SPY. If one considered just stocks more than 10% off their 52-week lows, then 33 of 76 (43%) outperformed SPY. This second result is marginally better. Other percentages give similar variations. Surprisingly, proximity to a 52-week low is not a clear filter. I still think one should be cautious in understanding the drivers of high yield.
The initial list was also constructed to eliminate stocks with a market capitalization above $500 million. Taking size into consideration does have an impact. As I filtered the stocks based on market capitalization, the results improved. Using $1 billion as the cutoff resulted in 34 of 73 (47%) stocks outperforming SPY. Raising this to $10 billion gave results of 16 of 30 (53%) outperforming SPY. At $25 billion, the result was 12 of 17 for 71%. The average return among these 17 stocks was 2.0%, which is small but still much better than the SPY at -2.7%.
So, as noted in the original article, these dividend yield lists might be a good place to start researching potential investments; however, it is not a list for blind investment. The size analysis also suggests that perhaps larger capitalization stocks are better bets. Perhaps the price of the stock has temporarily dipped, pushing up the yield. Over time, the price then reverts to a more normal level. So when looking at high yields, it appears to also be important to consider the size of the company as well.
Investors should do thorough research and analysis prior to making any investment decision, no matter how tempting the dividend yield might be.
Disclaimer: This article is for informational and educational purposes only and shall not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, recommendation or endorsement to buy or sell any security.
