Escaping volatility by sidelining cash pays nothing. Instead, investors can sit in a high-yielding stock with great expectations while the market makes up its mind.
A stock screen for 10%+ upside, 5%+ dividend yield, and positive free cash flow returned 13 stocks. Five stocks were selected for further comparison, representing Energy, Telecom, Real Estate, and Consumer Discretionary.
TC Pipelines, LP (NYSE: TCP) scored best in the rank analysis, factoring in yield, average upside, and a group of relative valuation, coverage, leverage, efficiency, and technical metrics. However, TCP has some headwinds, and Buckeye Partners, L.P. (NYSE: BPL) may be a safer bet.
Get Paid to Wait
Market volatility is scarily high. Interest rates on sidelined cash are scarily low. Investors looking to de-risk or take some profits off of the table have a better option than financing bank loans: high-yielding dividend stocks with upside.
Finbox.io’s stock screener is an easy way to identify these stocks. Filtering primarily for 5%+ dividend yield and 10%+ upside by both Wall Street analysts and Finbox.io’s quant valuation model produced 13 candidates.
Full Screening Criteria:
– Dividend Yield > 5%
– Upside (finbox.io Fair Value) > 10%
– Upside (Wall Street Analyst Target) > 10%
– Total Analyst Targets > 4
– Confidence (finbox.io Fair Value) is HIGH
– EV / LTM Free Cash Flow > 0
– Market Capitalization > $1 bilion
These high-yielders are obviously dominated by Energy and Real Estate stocks, but four sectors in total are represented. The screener image below shows the top yielding stocks in the group. The top four were selected for further analysis, as well as the only Consumer Discretionary stock to make it past the filter.
The Big Five
First, a quick overview of the five stocks:
Buckeye Partners L.P. (NYSE: BPL) – Owns and operates liquid petroleum products pipelines in the United States and internationally.
TC PipeLines, LP (NYSE: TCP) – Acquires, owns, and participates in the management of energy infrastructure businesses in North America.
Centurylink Inc (NYSE: CTL) – Provides various communications services to residential, business, wholesale, and governmental customers primarily in the United States.
Select Income REIT (Nasdaq: SIR) – A REIT that owns properties that are primarily leased to single tenants.
L Brands Inc (NYSE: LB) – Operates as a specialty retailer of women’s intimate and other apparel, beauty and personal care products, and accessories.