Income Spotlight: High-Yield Stocks
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.