The direction of interest rates continues to be debated, but for investors seeking a high yield that debate is just sound and fury signifying nothing of any importance.
After all, we’re talking about the possibility of just a 0.25% increase in Fed Funds, so it’s not like there will suddenly be all sort of high-yielding fixed-income alternatives to stocks.
It will be a long time before we see traditional fixed-income investments like bank CDs and treasuries offer the type of yields investors need to meet their income goals.
When we look for income stocks to meet our needs, we need to take advantage of all the tools at our disposal to find stocks that have high yields and the potential to move higher in price.
One tool that we can use is the Piotroski F-score. The F-score was developed by Professor Joseph Piotroski to help identify stocks with the potential and probability of moving higher in prices using data points from financial statements.
The stock gets one point for each of the nine conditions that is met, and the higher the score the better the chance you have a winning stock. By limiting our high-yield portfolio to stocks with high F-scores we improve our chances of earning the income we need while growing our capital base.
Las Vegas Sands Corp. (NYSE:LVS)
Las Vegas Sands Corp. (NYSE:LVS) is not normally considered a growth stocks. However, the casino operators has seen its stock price decline as gambling revenues, particularly in Macau have fallen short of Wall Street’s expectations. LVS stock yields 5% at current prices.
It doesn’t help that the Vegas strip has been weak, with gaming revenues down almost 10% in the March report. The same problems have dragged down the price of Wynn Resorts, Limited (NASDAQ:WYNN), and that former high-flier is now yielding more than 5%.
Las Vegas Sands has an F-score of 8 while Wynn has a score of 7, so both easily qualify as high-yield stocks to buy.
Century Link Inc (NYSE:CTL)
Telecom has always been considered a good hunting ground for high yield stocks and that remains the case today. Century Link Inc (NYSE:CTL) is one of the leading telecom companies, and the current F-score of 7 is a good indication that business is good and the company is financially sound.
I use Century Link for broadband and I have to say they have the best customer service on any telecom provider I have ever used. The company is expanding internationally, and the future looks pretty solid for this company. At the current price the stock yields 6% so it can definitely fit well into a high-yield equity portfolio.
StoneMor Partners (NYSE:STONE)
StoneMor Partners (NYSE:STONE) is in one the most consistent industries in the history of markets. StoneMor owns and operates rated 303 cemeteries and 98 funeral homes in 28 states and Puerto Rico, and while “good” may not be the right word, business conditions are solid enough to earn and F-score of 7.
Insiders are apparently optimistic about the future as well, as they have been buying in the open market this year. StoneMor is structured as a master limited partnerships is and currently yields 8.2%. While none of us look forward to visiting the funeral home, the truth is that almost all of us will. This is truly a recession- proof industry, and StoneMor is an excellent addition to a high-yield portfolio.
Bottom line: Finding high-yield stocks to buy can be a difficult and frustrating task for investors. Using F-scores can help identify dividend stocks that also have the potential to move higher in price and protect and grow our capital in the future.
As of this writing, Tim Melvin did not hold a position in any of the aforementioned securities.