High Yield Stocks With A Big Return on Equity

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Sep 17, 2011
Investments in high yielding stocks are very popular. The goal is to buy stocks with huge cash return and to minimize the risk of a decreasing share price or to bet on rising prices. The total return is the above all target. The higher the cash dividend, the lower the expected capital gain must be in order to achieve the target.


I screened the capital market by stocks with a dividend yield of more than 5 percent. I order to avoid the risk of low diversified and small business; I decided to screen only stocks with a market capitalization of more than $10 billion. Finally, the stocks should have a return on equity of more than 20 percent. That’s a pretty good figure to evaluate the efficiency of the shareholders equity. 16 stocks remained of which 4 have a dividend yield of more than 7 percent.


Here are the three best results by dividend yield:


1. Vivo Participacoes (VIV, Financial) is acting within the wireless communications industry. The company hasa market capitalization of $34.3 billion, generates revenues in an amount of $9.9 billion and a net income of $1.5 billion. It follows P/E ratio is 10.4 and forward price to earnings ratio 10.4, Price/Sales 3.5 and Price/Book ratio 2.4. Dividend Yield: 11.8 percent. The return on equity amounts to 21.6 percent.


2. Telefonica (TEF, Financial) is acting within the foreign telecom services industry. The company hasa market capitalization of $89.2 billion, generates revenues in an amount of $85.4 billion and a net income of $13.0 billion. It follows P/E ratio is 6.8 and forward price to earnings ratio 8.1, Price/Sales 1.0 and Price/Book ratio 3.1. Dividend Yield: 10.1 percent. The return on equity amounts to 48.1 percent.


3. YPF (YPF, Financial) is acting within the oil and gas refining and marketing industry. The company hasa market capitalization of $15.4 billion, generates revenues in an amount of $11.1 billion and a net income of $1.4 billion. It follows P/E ratio is 10.7 and forward price to earnings ratio 9.9, Price/Sales 1.4 and Price/Book ratio 3.1. Dividend Yield: 8.1 percent. The return on equity amounts to 29.3 percent.


Take a closer look at the full table of 16 large capitalized high yield stocks with biggest return on equity. The average price to earnings ratio (P/E ratio) amounts to 12.5 while the average forward P/E ratio is 11.2. The dividend yield has an average value of 6.7 percent. Price to book ratio is 4.8 and price to sales ratio 2.2. The operating margin amounts to 26.8 percent.


Related stock ticker symbols:

VIV, TEF, YPF, MBT, SCCO, SID, CPL, MO, AZN, NGG, RAI, TMX, GSK, LLY, SKM, STO,