Two High Yield Momentum Portfolios

by: Scott's Investments

Approximately once per month I run a high-yield momentum screen using the free service on Finviz and post the results. Last month's results are here.To reiterate, the screen is more of a trading strategy and less of an income strategy (unlike my dividend aristocrat screen from earlier this week), although the dividends do play an essential component in the overall returns. Thus, turnover could be high and the strategy is not for everyone.

Second, it is a screen and not a recommended or comprehensive portfolio. In other words, there could be sector imbalances so for investors looking to have exposure across different sectors and asset classes, this screen could potentially serve as a starting point for further research or one small piece to a much larger picture.
The first screen looks for high yielding high momentum stocks. I screened the S&P 500 for stocks yielding greater than 4% and then ranked them by 6 month returns. There were 55 results (versus 62 last month) and per a previous article, the highest momentum, high yield stocks have historically been the best performing so I have listed the top 20% (based on 6 month returns) of results, or 11 stocks.
This month's list features a higher concentration of REITs than previous months. This strategy will be added as one of several I track for free on the right hand column of my site:

Ticker Company Trend Analysis Dividend Yield Payout Ratio Half Year Price
Q Qwest Communications International Inc. Here 6.71% 83.38% 48.60% 4.77
TEG Integrys Energy Group, Inc. Here 5.81% 43.09% 46.82
DTE DTE Energy Co. Here 4.73% 65.60% 31.72% 44.81
WIN Windstream Corporation Here 9.23% 131.91% 31.43% 10.83
AVB Avalonbay Communities Inc. Here 4.20% 370.22% 30.62% 84.98
PLD ProLogis Here 4.35% 27.66% 13.8
PCL Plum Creek Timber Co. Inc. Here 4.57% 116.53% 27.60% 36.75
POM Pepco Holdings, Inc. Here 6.36% 101.28% 25.80% 16.97
TE TECO Energy Inc. Here 5.03% 79.87% 22.31% 15.9
VTR Ventas Inc. Here 4.71% 159.03% 22.23% 45.41
KIM Kimco Realty Corporation Here 4.34% 22.20% 14.75

The second screen looks for stocks in the S&P 500 yielding greater than 4%, with a payout ratio less than 50%. An explanation of the reasons behind the strategy is here. FPL, MRK, and PEG were all on last month's list:

Ticker Company Trend Analysis Dividend Yield Payout Ratio Half Year Price
FPL-OLD FPL Group Inc. Here 4.26% 48.25% -12.09% 46.97
MRK Merck & Co. Inc. Here 4.15% 27.89% 19.60% 36.67
PEG Public Service Enterprise Group Inc. Here 4.48% 42.27% 1.09% 30.55

Disclosure: No positions