The following commentary comes from an independent investor or market observer as part of TheStreet’s guest contributor program, which is separate from the company’s news coverage. The opinions expressed are those of the author and do not represent the views of TheStreet or its management.

NEW YORK (Scott's Investments) -- Once per month I update a high-yield dividend stock momentum portfolio on Scott's Investments. The portfolio is comprised of the high yielding stocks in the S&P 500 with high price momentum. I screen the S&P 500 for stocks yielding greater than 4% and then rank the results by six-month returns. This month there were 52 results, vs. 55 results last month. The top stocks are then added to hypothetical portfolio, which is up 7.13% in its first 11 months.


More From Stockpickr

  • 10 New Dividend Aristocrats for 2012
  • Top 10 High-Dividend ETFs
  • 10 Best Dow Dividend Stocks for 2012
  • ----------------------------------------------------------

    Per a previous article, the highest-momentum, high-yield stocks have historically out-performed lower yielding, lower momentum stocks. As I have previously mentioned, the screen is more of a trading strategy and less of an income strategy, although the dividends do play an essential component in the overall returns. Thus, turnover could be high and the strategy is not for everyone but I have added a modification to the strategy to minimize turnover.

    In an attempt to limit turnover in the portfolio, stocks with yields that have fallen below 4% due to share price appreciation will remain in the portfolio. Stocks will only be sold when yield falls below 4% due to dividend cuts or when the six-month performance would otherwise lag the top 10 to 11 stocks in the screen. This rule applies to Bristol-Myers Squibb (BMY), a current portfolio holding that now yields less than 4% but remains in the portfolio this month because its momentum would otherwise put it in the top 10.

    For Dec. 9, the portfolio sold FirstEnergy (FE), PPL (PPL) and Xcel Energy (XEL). The proceeds were used to purchase Philip Morris (PM), Scana (SCG) and HCP (HCP). Utilities continue to dominate the portfolio as in previous months. This should not come as a surprise since the utility sector has shown relative strength versus other sectors for several months.

    Below are the top 15 high-yield momentum stocks as of Dec. 9. Keep in mind that only 10 stocks are held in the portfolio and the current holdings can be viewed on the right-hand side of Scott's Investments.

    Data source: Finviz.

    Scott's Investments focuses on consolidating and tracking free online investment resources for the public with an emphasis on ETFs, portfolio/trading strategies and macroeconomics. Follow Scott's Investments on Stocktwits Twitter.