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 6 month returns. This month there were 52 results versus 55 results last month. The top stocks are then added to hypothetical portfolio, which is up 7.13% in its first 11 months.
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 10-11 stocks in the screen. This rule applies to Bristol-Myers Squibb (BMY), a current portfolio holding which now yields less than 4% but remains in the portfolio this month because its momentum would otherwise put it in the top 10.
For December 9th, the portfolio sold FirstEnergy (FE), PPL Corporation (PPL), and Xcel Energy (XEL). The proceeds were used to purchase Philip Morris (PM), SCANA Corp (SCG), and HCP Inc (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 December 9th. 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.
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 10-11 stocks in the screen. This rule applies to Bristol-Myers Squibb (BMY), a current portfolio holding which now yields less than 4% but remains in the portfolio this month because its momentum would otherwise put it in the top 10.
For December 9th, the portfolio sold FirstEnergy (FE), PPL Corporation (PPL), and Xcel Energy (XEL). The proceeds were used to purchase Philip Morris (PM), SCANA Corp (SCG), and HCP Inc (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 December 9th. 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.
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