Adam Jeffery | CNBC
A trader works on the floor of the New York Stock Exchange.
Investors often bail out of dividend stocks when interest
rates rise, so it's worth noting that a number of dividend-paying stocks
have weathered a selloff that hit some of the most popular plays.
The stock market has given investors a bit of a roller coaster ride so far in 2015, and after all the ups and downs, the major U.S. indices are just marginally positive. For those in some dividend names, the ride has been downhill. For instance, utilities are down 6 percent year-to-date
and are the worst-performing major S&P sector.
Now that the Fed has opened the door for possible interest-rate increases later this year, these types of stocks could be poised for a longer period of lagging performance. High dividend-paying stocks, such as the utilities and real estate investment trusts, are often more sensitive to interest rate moves because the relative attractiveness of those yields diminishes as interest rates head higher.
Read MoreForget the dividend—trader bets on Freeport
The stock market has given investors a bit of a roller coaster ride so far in 2015, and after all the ups and downs, the major U.S. indices are just marginally positive. For those in some dividend names, the ride has been downhill. For instance, utilities are down 6 percent year-to-date
and are the worst-performing major S&P sector.
Now that the Fed has opened the door for possible interest-rate increases later this year, these types of stocks could be poised for a longer period of lagging performance. High dividend-paying stocks, such as the utilities and real estate investment trusts, are often more sensitive to interest rate moves because the relative attractiveness of those yields diminishes as interest rates head higher.
Read MoreForget the dividend—trader bets on Freeport
CNBC screened the large-cap S&P 500 index
to see where the hottest parts of the dividend stock market have been.
First, only stocks that have the same dividend yield as the overall
S&P 500 or greater were included. In this case, the threshold was 2
percent, the current overall dividend yield of the index.
The 500 stocks became 223 after this screen. Second, we took the remaining names and only screened for ones with flat or positive year-to-date price performance. The list of 223 then became only 111.
The purpose of the screen was to look for better-than-average dividend payers within the S&P 500, while attempting to screen out those stocks that may have their dividends cut in the future due to slumping share prices or capital positions.
The 500 stocks became 223 after this screen. Second, we took the remaining names and only screened for ones with flat or positive year-to-date price performance. The list of 223 then became only 111.
The purpose of the screen was to look for better-than-average dividend payers within the S&P 500, while attempting to screen out those stocks that may have their dividends cut in the future due to slumping share prices or capital positions.
Higher dividend yields can result from static dividend
payments when a stock price is falling. The question in those situations
is whether the company feels compelled to continue dividend payments at
current levels, or cut them to help save needed cash. Looking for
stocks that have at least generated some near-term positive price
momentum could help mitigate some of that selection risk.
It was an energy stock that made the top of the list, even though the sector has been one of the worst performers over the last 12 months because of the collapse in oil prices. Shares of independent oil refiner Valero Energy not only carry a respectable 2.6 percent dividend yield but have also managed to gain 26 percent since the end of 2014. Oil refiners have been outperforming the broader energy sector in recent trading.
Read MoreIs Exxon dividend at risk?
It was an energy stock that made the top of the list, even though the sector has been one of the worst performers over the last 12 months because of the collapse in oil prices. Shares of independent oil refiner Valero Energy not only carry a respectable 2.6 percent dividend yield but have also managed to gain 26 percent since the end of 2014. Oil refiners have been outperforming the broader energy sector in recent trading.
Read MoreIs Exxon dividend at risk?
Darden Restaurants
also made the list. The stock offers a 3.2 percent dividend yield and
has managed to gain 19 percent year-to-date. The company, which owns
brands such as Olive Garden and Longhorn Steakhouse restaurants, sold
off its Red Lobster restaurant chain in May 2014. Since hitting a low of
$43.56 on July 17, 2014, the stock has managed to rally around 60
percent.
Mega cap pharmaceutical stocks also made the list. Shares of Pfizer currently yield 3.2 percent and have gained nearly 12 percent in that same time frame. Shares got a big boost in early February after it announced it would buy injectable drug maker Hospira for around $17 billion.
Those are just a few of the highlights. The top 20 stocks that emerged from the simple screen are listed below. As investors look toward dividend stock exposure, some are avoiding the route of picking the most beaten-down stocks with high yields, and instead are opting for a mix of those who still pay them to wait but have some positive price momentum behind them as well.
Mega cap pharmaceutical stocks also made the list. Shares of Pfizer currently yield 3.2 percent and have gained nearly 12 percent in that same time frame. Shares got a big boost in early February after it announced it would buy injectable drug maker Hospira for around $17 billion.
Those are just a few of the highlights. The top 20 stocks that emerged from the simple screen are listed below. As investors look toward dividend stock exposure, some are avoiding the route of picking the most beaten-down stocks with high yields, and instead are opting for a mix of those who still pay them to wait but have some positive price momentum behind them as well.
Ticker
|
Security Name
|
YTD %Chg
|
Div Yld
|
|---|---|---|---|
| VLO | Valero Energy Corporation | 26.30% | 2.56 |
| KSS | Kohl's Corporation | 23.40% | 2.39 |
| GME | GameStop Corp. Class A | 21.90% | 3.5 |
| DRI | Darden Restaurants, Inc. | 19.30% | 3.15 |
| BA | Boeing Company | 17.10% | 2.39 |
| ESS | Essex Property Trust, Inc. | 15.80% | 2.41 |
| ADT | ADT Corporation | 15.00% | 2.02 |
| GCI | Gannett Co., Inc. | 13.50% | 2.21 |
| EQR | Equity Residential | 13.10% | 2.52 |
| HAS | Hasbro, Inc. | 12.60% | 2.97 |
| SJM | J. M. Smucker Company | 12.60% | 2.25 |
| BMY | Bristol-Myers Squibb Company | 12.10% | 2.24 |
| COH | Coach, Inc. | 12.00% | 3.21 |
| HD | Home Depot, Inc. | 11.90% | 2.01 |
| PFE | Pfizer Inc. | 11.50% | 3.22 |
| PAYX | Paychex, Inc. | 11.50% | 2.95 |
| RAI | Reynolds American Inc. | 11.20% | 3.75 |
| MCHP | Microchip Technology Incorporated | 11.10% | 2.85 |
| CME | CME Group Inc. Class A | 11.00% | 2.03 |
| FTR | Frontier Communications Corporation Class B | 10.90% | 5.68 |
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