Stock Quotes in this Article: VZ

 NEW YORK (Scott's Investments) -- Approximately once per month I run a high-yield momentum screen using the free service on Finviz and post the results. Returns for the last month's list were flat, at -0.02% including dividends (-0.44% before dividends) vs. 1.54% for the S&P 500 and -0.04% for the SPDR S&P Dividend ETF (SDY). The top-performing stock from last month's list was Verizon (VZ), returning 4.81% excluding its 48.8-cent dividend.

The strategy did relatively well in 2010 and is one I continue to track because of its promise. In recent months I have also done a variation of this strategy with the Dividend Champions list in which I search only stocks that have had a history of raising dividends for at least 25 years.


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    The screen looks for high-yielding, high-momentum stocks, which historically have been the best-performing. I screen the S&P 500 for stocks yielding greater than 4% and then rank them by six-month returns. There were 53 results this month (compared with 54 last month), and I've selected the top 11 based on six-month returns.

    As I have previously mentioned, the screen is more of a trading strategy and less of an income strategy (unlike some of my Dividend Aristocrat screens and Dividend Champion screens, which emphasize stocks that have a history of raising dividends), although the dividends do play an essential component in the overall returns. Thus, turnover could be high, and the strategy is not for everyone. However, some months have shown relatively low turnover from month to month, but this could change in the future.

    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.

    This strategy is one of several I track for free on the right hand column of Scott's Investments.


    At the time of publication, author had no positions in stocks mentioned.


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