Income Spotlight: High-Yield Stocks

1/12/2015


We hear it all the time. Subscribers want high-yield stocks — and when they say high-yield, they mean really high, such as above 5%.

Unfortunately, such demands are impractical. Twenty years ago, the average S&P 500 Index stock yielded 2.7%, with 198 stocks yielding more than 3% and 62 more than 5%. Today, the average stock yields 1.9%, with 89 yielding above 3% and just 11 above 5%.

Credit many of today's high yields not to aggressive dividend policies, but to depressed prices. The 5% yielders average six-month declines of 27%, versus an average gain of 3% for all index stocks.

Nothing is impossible, but we don't expect the S&P 500's yield to return to levels from 20 years ago. With that in mind, below we list our favorite stocks with yields higher than the average for the S&P 500 and the average for their sector within the index.

Company (Price; Ticker)
Yield
(%)
Sector
J.P. Morgan ($59; JPM)
0.0
Financials
Macy's ($68; M)
1.9
Discretion.
Packaging Corp. ($77; PKG)
2.1
Materials
Travelers ($105; TRV)
2.1
Financials
U.S. Bancorp ($44; USB)
2.3
Financials
Wells Fargo ($52; WFC)
2.7
Financials

 


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