Below is a list of 8 stocks yielding more then 3% with a dividend payout ratio less than 70% as of the close on April 27th. In addition, I required the stocks have a recent history of rising dividends. I looked for
Dividend Percent Change, Year Over Year (%) > 10,
Dividend Growth Rate, 3 Years (%) > 15,
Dividend 5 Year Growth Rate (%) > 20.
I featured TKC and LPHI in previous months and they remain on this months list and have held up well of late. The only two stocks on the list that haven’t appeared in recent months are Cal-Maine Foods (CALM) and Empresa Nacional de Electricidad (EOC). Both are in downtrends and CALM recently started a downtrend after a downgrade, the ongoing threat of an egg price fixing lawsuit, and an earnings report that warned of volatile feed costs (see Finviz chart below).
In addition to dividend reductions/increases, share price fluctuations affect yield and can cause this list to fluctuate.
As I stated previously, for investors worried that equity market rallies may be getting long in the tooth, high yield stocks with strong cash flow and a history of dividend increases may offer a small buffer for skittish investors who still want to maintain equity exposure.
|Ticker||Name||Free Trend Analysis||MktCap||PayRatio||Yield|
|CALM||Cal-Maine Foods, Inc.||Here||799.92||33.32||5.71|
|EOC||Empresa Nacional de Electrici||Here||12639.11||35.13||4.36|
|HCBK||Hudson City Bancorp, Inc.||Here||6998.78||54.7||4.51|
|LLTC||Linear Technology Corporation||Here||6785.78||62.1||3.03|
|LPHI||Life Partners Holdings, Inc.||Here||356.47||13.54||4.17|
|OSG||Overseas Shipholding Group In||Here||1281.67||67.16||3.67|
|TKC||Turkcell Iletisim Hizmetleri||Here||13701.6||65.2||5.2|
|Ticker||Company||Industry||Trend Analysis||Forward P/E||P/S||Dividend Yield||LT Debt / Equity|
|BMS||Bemis Co. Inc.||Packaging & Containers||Here||13.27||0.97||2.94%||0.68|
|TEG||Integrys Energy Group, Inc.||Diversified Utilities||Here||14.9||0.51||5.43%||0.82|
|TGT||Target Corp.||Discount, Variety Stores||Here||13.53||0.7||1.17%||0.99|
Looking Back, Looking Forward – John Hussman
The 200-Week Moving Average in Market History – dshort.com
I’ve reproduced part of the article below:
|WDC||Western Digital Corp.||Here||44.71|
|MDF||Metropolitan Health Networks,||Here||3.12|
|CBEH||China Integrated Energy, Inc.||Here||11.53|
|PTI||Patni Computer Systems Limite||Here||25.76|
|USNA||USANA Health Sciences, Inc.||Here||34.72|
|DECK||Deckers Outdoor Corporation||Here||157.21|
|MANT||ManTech International Corpora||Here||50.36|
|AFAM||Almost Family, Inc.||Here||39.4|
|TRLG||True Religion Apparel, Inc.||Here||33.11|
|AEO||American Eagle Outfitters||Here||18.14|
|FCFS||First Cash Financial Services||Here||23.49|
|LHCG||LHC Group, Inc.||Here||36.51|
|JOSB||Jos. A. Bank Clothiers, Inc.||Here||64.13|
|USPH||U.S. Physical Therapy, Inc.||Here||18.03|
|CHSI||Catalyst Health Solutions, In||Here||45|
|CTCM||CTC Media, Inc.||Here||19.53|
|CPLA||Capella Education Company||Here||93.51|
|STRA||Strayer Education, Inc.||Here||253.03|
|BWLD||Buffalo Wild Wings||Here||51.33|
|QCOR||Questcor Pharmaceuticals, Inc||Here||8.21|
Since it is a weekend and I don’t have any original ideas for today, I thought it would be worthwhile re-posting one of my favorite strategies I have detailed to date. The 5 stock hedged portfolio which is based on AlphaClone’s service has produced some impressive returns the past decade. Below is the original post which I wrote on March 16th:
Is it possible to beat the S&P 500 with a portfolio as small as 5 stocks while also having lower overall volatility than the S&P 500? The answer has been yes since 2000 if you followed a strategy developed by AlphaClone.
AlphaClone seeks to “clone” or simulate investing in the ideas of the world’s best investors when they are made public. They do so by tracking public filings of hedge funds and institutional investors. While there are limitations to this system – a hedge funds quarterly filing may contain purchases that are weeks or months old – the historical performance of “cloning” speaks for itself.
I ran a couple of backtests, two using AlphaClone’s site and one with the help of Mebane Faber. The first two results are a clone of 10 institutional managers selected by Mebane Faber and available with a membership in AlphaClone: Appaloosa Management, Baupost Group, Berkshire Hathaway, Blue Ridge Capital, Eminence Capital, Greenlight Capital, Lone Pine Capital, Maverick Capital, Private Capital Management, and Tiger Global Management. The particular clone I ran purchases the top 5 most popular stocks among these 10 managers as determined by how many managers hold a stock in their top 20 holdings (AlphaClone allows you to run a variety of strategies based on any number of clones). The stocks are then typically rebalanced quarterly.
A long only portfolio of 5 stocks invested in this clone had the following returns since 2000, soundly beating the S&P 500 every year:
|3 YEAR||5 YEAR||INCEPTION|
For those who more risk-adverse, AlphaClone allows you to backtest returns if you hedged a clone 25, 50, 75, or 100%. I hedged the identical portfolio above 100%, which means that a short position in the S&P 500 was always in place for an equal amount of the total long positions. Given that we have gone through 2 nasty bear markets since 2000, the hedged portfolio shows slightly better returns since inception but with much lower volatility than the long only strategy and has not had a down year in the past decade:
|Performance Statistics as of 2010-03-16|
|3 YEAR||5 YEAR||INCEPTION|
After running these tests I thought that there may be a better way to find a ‘middle’ ground between the two strategies. I wanted to capture as much upside as possible in bull markets while hedging myself as much as possible in bear markets. A 50% hedge strategy is one option, but it is hedged 50% at all times, bull or bear market. Thus, I asked the guys at AlphaClone to help with the following strategy: go long in the top 5 popular stocks in World Beta Clone when the S&P 500 is above its 10 month simple moving average. When the S&P 500 closes below its 10 month SMA, hedge the portfolio beginning the following month. The returns, since inception, speak for themselves and again this strategy has not had a down year since 2000 and has absolutely crushed the S&P 500:
Now matter which way you backtest this clone it has outperformed the S&P 500 by a wide margin. For the risk adverse, one of the second two strategies offer a safer way to hold stocks while hedging your position. Keep in mind that this is just one clone of potentially hundreds you can run using AlphaClone and used one strategy (top 5 popularity) among many. The ability to replicate top institutional investors has a track record of success but to be honest even I was a bit surprised by how wide of a margin even the ‘safe’ strategies outperformed the S&P 500.
Disclosures: I am an AlphaClone affiliate (only becoming one after first trying their service and being thoroughly impressed) and use their service frequently
I always look forward to Jeremy Grantham’s Quarterly Letter. His April 2010 letter is now available for free on GMO’s site (free registration required). Below are some excerpts I found noteworthy:
“The massive bailout program stopped the meltdown of the financial system and engineered at least a temporary economic recovery. We know the obvious cost of this bailout: unprecedented deterioration of the Federal balance sheet. But what of the less obvious costs incurred by taking away the rewards of caution by saving the reckless and incompetent? These weak enterprises, financial and other, were not gobbled up by the stronger, more prudent,and more competent natural survivors, and there is a longterm cost in that.”
“If, however, the economy only limps along, which seems more likely to me, then we run a very real danger of a third dangerous bubble in stocks and in risk-taking in general. For in that event, Bernanke will defi nitely keep rates low quarter after quarter and speculation will surely respond.
Again? Yes, I’m afraid so. In that environment, Bernanke will do nothing to let the air out gently. His lack of antibubble action is pretty much guaranteed. The end of such events is always hard to predict, but usually bubbles break for almost any reason when they are big enough. Of course, the larger the asset bubble, the bigger the shock to the economic and financial system.”
“…the line of least resistance is a market move in the next 18 months or so back to the old highs, say, 1500 to 1600 on the S&P, accompanied by an equivalent gain in most risk measures, followed once again by a very dangerous break. If that happens, rates will still be low
and thus diffi cult to use as a jump starter, the fi nancial system will still be fragile, and the piggybank will be more or less empty. It is remarkably silly for the Fed to allow, even encourage, this fl ight path. It is also remarkably silly for investors to be so carefree, given their recent experiences. Fortunately, there are several less likely outcomes that collectively, I hope, are equally probable. We are defi nitely playing with fi re and need some luck. The best kind of luck would be that Bernanke gets bitten by a Volcker bug.”
In this new (brief) video, Adam Hewison shows you how this market is setting itself up for a large move to the upside. He also points out that this is not going to happen tomorrow. The video is about two minutes long and I think it will give you a great insight into the past and future of this particular market.
As always, their videos are free to watch and there are no registration requirements.
I am a member of AAII (American Association of Individual Investors) and was recently reading one of their more popular screens, the Shadow Stock Screen. I decided to run my own test of the screen with a few small twists. This is a very simple screen that seeks out small/microcap value stocks. The screen criteria I used are below:
- No over-the-counter stocks
- No financial stocks
- Market cap > $20 Million and <$200 million
- Previous EBITDA quarter and trailing twelve months are positive
- Share price > $4
- Price/book < .80
- Price/sales < 1.2
- Top 10 stocks are selected based on highest 52 week returns
- Screen is run every 4 weeks
I would describe this as a high beta strategy – it performs very well in bullish markets and underperforms in bear markets. Since I personally am getting a bit squeamish on how much longer we can go without at least seeing a significant pullback in this market, this is not a strategy I am investing in. However, if an investor was looking to add some risk to his or her portfolio, this one could certainly add some “juice”. Below are charts of the 5, 3, and 1 year returns which include a .5% assumption for slippage. The current top 10 stocks as of today are also below:
Current top 10 stocks on the list, based on 52 week returns:
|Ticker||Name||Free Trend Analysis||MktCap||Industry|
|SALM||Salem Communications Corp||Here||128.82||Broadcasting & Cable TV|
|ESCA||Escalade, Inc.||Here||54.54||Recreational Products|
|SGMA||SigmaTron International||Here||23.32||Electronic Instr. & Controls|
|WCAA||WCA Waste Corporation||Here||101.83||Waste Management Services|
|RCKY||Rocky Brands, Inc.||Here||57.15||Footwear|
|BXG||Bluegreen Corporation||Here||163.4||Hotels & Motels|
|HAST||Hastings Entertainment, Inc.||Here||67.23||Retail (Specialty)|
|PNTR||Pointer Telocation Limited||Here||32.32||Security Systems & Services|
|DSWL||Deswell Industries, Inc.||Here||83.21||Chemicals – Plastics & Rubber|
|SYMS||Syms Corp.||Here||145.4||Retail (Apparel)|