How to Screen For High Yield Shares

Saturday, Jan 19 2013 by
How to Screen For High Yield Shares

Some of those quality blue chips that occasionally offer themselves up at decent yields have been looking fully valued of late. With the FTSE closing at 6,154 last week, its highest level since May 2008, it sometimes feels like some of my best ideas are running away from me.

Take Reckitt Benckiser (LON: RB.) for example, a company which I admire as it has proved exceptional at generating shareholder value over many years, delivering excellent earnings and dividend growth from a combination of its strong portfolio of everyday consumer branded products and good management. I tend to keep quality shares like this on a watch list and try to patiently accumulate them whenever the yield looks attractive relative to the market. I see from my records that my last purchase of Reckitt Benckiser was in April 2011 when the share price took a small tumble following the resignation of its well respected CEO, Bart Becht, when it was available on a yield of 3.7%. But with the share price having increased by over 30% since then and the dividend growth slowing down, its yield of now barely over 3% holds less appeal. It’s a similar story for other quality consumer staples such as Unilever (LON: ULVR) and Diageo (LON: DGE). Quality or not, no share is worth paying any price for and the value investor in me (or miserliness if you like!) will begin to shy away when those yields drop below that of the market. It usually means there are better ideas out there.

As shares move in and out of fashion and fortunes change, it is always worth keeping an eye out for new ideas. Sometimes I will read the financial news and be inspired to look into a company, but more often than not my research will initiate from a simple share screen.

Share screeners

There are just too many listed companies out there to manually wade through for ideas. There’s about 600 in the FTSE All Share alone, but taking into account other listed companies and AIM shares, never mind the possibility of international shares, there are potentially thousands to choose from. Fortunately, with modern technology, share screening has become a lot easier in recent years as there are many online resources to help us look up lists of shares and have some way of whittling them down to a more manageable size to…

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TP ICAP plc, formerly Tullett Prebon plc, is a United Kingdom-based interdealer broker. The Company acts as an intermediary in the wholesale over-the-counter and exchange traded financial and commodity markets, facilitating the trading activities of its clients, in particular commercial and investment banks. It operates in the Europe and the Middle East; Americas, and Asia Pacific segments. It covers over five product groups: Fixed Income Securities and their derivatives; Interest Rate Derivatives; Treasury Products; Equities, and Energy. It operates a voice broking business, where brokers, supported by screens displaying historical data, analytics and real-time prices, discover price and liquidity. It also operates an information sales business, Tullett Prebon Information, which collects, cleanses, collates and distributes real-time information to data providers, and a Risk Management Services business, which provides clients with post-trade and multi-product matching services. more »

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Albemarle & Bond Holdings PLC is a United Kingdom-based company. The Company’s services include pawnbroking, gold buying, cheque cashing, travel money and western union. The Company sells luxury watches, gold jewellery, silver jewellery and diamond jewellery. more »

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AstraZeneca PLC (AstraZeneca) is a biopharmaceutical company. The Company focuses on discovery and development of products, which are then manufactured, marketed and sold. The Company focuses on three main therapy areas: Oncology, Cardiovascular & Metabolic Disease (CVMD) and Respiratory, while selectively pursuing therapies in Autoimmunity, Infection and Neuroscience. In CVMD, it is expanding its portfolio into the cardiovascular-renal area with late-stage assets, such as ZS-9 and roxadustat, as well as investing to explore the benefits of its SGLT2 and GLP-1 franchises in chronic kidney disease (CKD) and heart failure (HF). The Company has approximately 40 projects in Phase I, including 29 new molecular entities (NMEs), and 11 oncology combination projects. It has approximately 40 projects in Phase II, including 25 NMEs; four significant additional indications for projects that have reached phase II, and seven oncology combination projects. more »

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  Is TP ICAP fundamentally strong or weak? Find out More »

3 Comments on this Article show/hide all

Miserly Investor 20th Jan '13 1 of 3

Interesting piece in the Telegraph on AZN, the 3rd highest yielder in the above screen:

A favourite of Neil Woodford and a mainstay of many income portfolios, AZN suffers from a low rating (i.e. the high yield) due to perpetual fears over its "patent cliff" and future growth prospects. Let's see if the new CEO can inject some much needed growth back into the business. He stopped the share buy backs, no doubt to fund his growth strategy, but at least he appears keen on protecting the dividend.

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macd2510 20th Jan '13 2 of 3

The only problem with ABM from my perspective is that it's AIM listed and not eligible for inclusion in my ISA. This is a dealbreaker for me when looking at high yield shares as the taxman looms large like the grim reeper at my marginal rate.

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Miserly Investor 20th Jan '13 3 of 3

Hi macd2510,

Yes, that's an issue with ISAs at present although the Chancellor did announce in the recent autumn statement that this is to be reviewed. I also have a low cost SIPP though which gives the ability to invest in AIM shares within a tax free wrapper.


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About Miserly Investor

Miserly Investor

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