Top 10 Net Payout Yields For July 2017

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Includes: AAL, AGN, AIG, AMD, CBS, CTL, CVS, DFS, GLW, HIG, NLY
by: Stone Fox Capital

Summary

The top net payout yields had a large gain for June that outperformed the benchmark S&P 500.

The top 10 net payout yield stocks averaged yields of 13.5% to start July.

AIG remained in the top spot on the list with a yield to start July of 22.1%.

This article is a continuation of a monthly series highlighting the top net payout yield (NYSE: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 is now beating the S&P 500 for five out of the last six years. Please review the original articles for more information on the NPY concept.

June Returns

Below are two charts highlighting the monthly returns of the top 10 stocks from June (see list here). For presentation reasons, the chart is broken into the Top 5 and Next 5 lists.

The Top 5 stocks had a very strong bounce back month in June after a disappointing May. The S&P 500 index produced a nice gain for the month, but all of the Top 5 stocks had a solid gain outside of the loss from AIG (NYSE:AIG). Allergan (NYSE:AGN) had a sizable 8.6% gain while American Airlines Group (NASDAQ:AAL), Corning (NYSE:GLW) and CBS (NYSE:CBS) had strong gains in the 4% range. In total, the Top 5 stocks gained a sizable 3.7% in comparison to the 0.5% gain of the benchmark S&P 500.

Chart AIG data by YCharts

The Next 5 stocks were even hotter with all of the stocks generating gains in excess of the benchmark. The group was led by the strong gains of the financial stocks of Discover Financial (NYSE:DFS), Ameriprise Financial (AMD) and Hartford Financial (NYSE:HIG) along with CVS Health (NYSE:CVS). Only Annaly Capital Management (NYSE:NLY) didn't see gains in excess of 4.5% with a 0.5% gain that virtually matched the benchmark. In total, the Next 5 stocks gained 4.6% for the period, far outperforming the 0.5% gain of the S&P 500.

Chart AMP data by YCharts

In all, the top 10 stocks had an incredibly strong month with only one stock down during June following the weakness in the last few months. In total, the NPY stocks produced an average gain of 4.2% that far outperformed the 0.5% gain of the benchmark index.

July List

The top 10 list saw minor changes for June. If anything, Hartford Financial dropped off the list primarily due to the large gain during June that reduced the yield for this month.

AIG remained in the top spot on the NPY list with a 22% yield. Similar to in June, the top nine yielding stocks all remained on the list, but this time the list had no shifts in the order.

CenturyLink (CTL) rejoined the list after dropping off several months ago. The telecom had a large 4% loss during June that contributed to a jump in the yield, but mainly Hartford Financial saw its yield slump below 9% dropping the stock off the list.

The average yield decreased slightly due to the large stocks gains during June. Four stocks still maintained yields near 15% or above, which remains exceptionally high yields for mega-cap stocks.

The average yield decreased slightly to 13.5% to start July, down from June levels at 13.8%. The buyback yield dipped to 10.2% due to the stock gains and the inclusion of the large dividend of CenturyLink. Similarly, the dividend yield was up sharply for the month to 3.3%.

Conclusions

The yields of the NPY concept are steadying at more normal levels. The average stock on the list has more sustainable share buybacks that are more attractive than large, one-time purchases.

While stocks are at record levels, the concept slowly rotates out of stocks at highs like Hartford Financial and McDonald's the last two months and into beaten down stocks. Ultimately, the stocks on the list now have more sustainable yields though still at attractive yields at levels mostly above 10%.

Disclosure: I am/we are long AIG, AAL, AMP, NLY, HIG, CTL.

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.

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