Key Takeaways
A recent market screen identified just five companies in the S&P 500 that offer a dividend yield above 5 percent while also beating recent Wall Street earnings forecasts.
The analysis, reported by Barron's, sought to find high-yield stocks with solid fundamentals, avoiding potential "yield traps" whose payouts are high only because their stock price has fallen sharply.
The five qualifying companies are Verizon Communications (VZ) with a 6% yield, Best Buy (BBY) at 6.5%, VICI Properties (VICI) at 6.2%, Kimberly-Clark (KMB) at 5.2%, and Paychex (PAYX) at 5.1%. To qualify, companies also needed a dividend payout ratio below 90 percent.
In a market where the S&P 500's average yield is near a historic low of 1 percent, finding sustainable high yields is a challenge for income-focused investors.
While these companies meet the quantitative criteria, they are not without risks. Verizon has faced stiff competition for subscribers for years, and Kimberly-Clark's stock has been under pressure due to skepticism about a proposed acquisition.
The screen highlights a small cohort of companies that may offer a rare combination of high income and fundamental stability. Investors will watch upcoming earnings reports to see if these firms can maintain profit growth to support their payouts.
This article is for informational purposes only and does not constitute investment advice.
