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Author: IlanBigfoot Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 25  
Subject: Fool screener Date: 1/15/2009 2:44 PM
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Hi, I'm new here but have been a Fool follower for a while. I found the board from CAPS. I hope this long post will be educational, entertaining, or both. Please comment!!

http://caps.fool.com/player/tmfhighyield.aspx

It seems like this is a great time to try the strategy. Savings accounts & CDs are paying out 3% at best and finding stocks yielding that much is a snap. The S&P500 index ETF Spyders (SPY) has a current yield of 3.02%. After the beat-down of 2008, I think holding for a few years could see pretty good capital gains, too.

I'm trying to find a good screener for this strategy, has anyone found or developed one? TMFHighYield says to look for "high dividend payers from the S&P 500 from diverse sectors, relatively low debt, and a history of increasing dividend payments."

To address these:

1. S&P500 -- according to Standard and Poors, only companies with market cap in excess of US$ 5 billion can be in the S&P500. I put that in as a minimum.

2. Diversification -- The nice thing about using the CAPS screener, one can separate out the nine sectors, so diversification is easy. Just sort for each sector.

3. Low debt -- I set the LT Debt-to-Equity Ratio <= 1. I don't know why, just did. Anyone have a better number? Still returns plenty of choices.

4. Increasing payments -- hmmmm. No way to find that out, except go to Yahoo's historical information and check for final picks. Any better suggestions?

5. Misc. -- I also added some of my own. Minimum yield 3%, minimum ROE 10%, maximum P/E 15, and currently rated 4 or 5 stars.

Here's the results broken down by sector:

Basic Materials: 28 records -- highest 5 star yielders DOW, E, PCU, FCX, SSL, BP
Conglomerates: 3 records -- MMM, CBE, UTX
Consumer Goods: 11 records -- highest yielders RAI, MO, LO, ABV, PM -- cig stocks. Also PHG, PEP
Financial: 7 records -- highest yielders ING, RY, BNS, TD, MFC -- a mass of foreign banks.
Health Care: 7 records -- PFE, BMY, MRK, SNY, JNJ, WYE, NVS
Industrial Goods: 7 records -- ETN, IR, EMR, ABB, ITW, HON, DOV
Services: 6 records -- WPPGY, GPC, SYY, MHP, MCD, NSC
Technology: 14 records -- highest 5 star yielders FTE, TSP, AUO, TKG, TLK -- all foreign, mostly telecoms. Also T, VZ, and INTC
Utilities: 4 records -- CPL, ED, PCG, SRE

Looking at the top yielders for each: DOW,MMM,ABV,ING,PFE,ETN,GPC,FTE,CPL
(I chose beer over tobacco and couldn't find info on WPPGY.)

Eyeballing historical dividends, DOW, MMM, ING, PFE, ETN & GPC all have at least good decade long track record. They are also all US companies, except ING [Netherlands]. The foreign companies differ: ABV [Brazil] has paid since '97, but they jump around a lot. FTE [France] has paid since '98, but they haven't grown at all. CPL [also Brazil] has only paid since 2005. Now, even though these last four are not US companies and (probably) not on the S&P500, they are very large companies and heck, this strategy came from the UK, so they are staying in.

Now the amazing thing: these companies have an average yield of 10.4%

Now that is getting big help from ING's 24% yield. I'm going to have to read up on that to see if it will get cut. But DOW, FTE, and CPL yield over 10%.

You can watch results at: (I'm guessing this link will work for you like it does for me....)

http://caps.fool.com/player/ilanbigfoot.aspx
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