11 Highest Yielding Stocks by Sector for 2024 | Summary and Q&A

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June 23, 2023
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Let's Talk Money! with Joseph Hogue, CFA
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11 Highest Yielding Stocks by Sector for 2024

TL;DR

This content highlights 11 stocks with the highest earnings yield in various sectors, providing insights for investors looking to diversify their portfolios and maximize returns.

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Questions & Answers

Q: Why is the earnings yield a better measure of return than the dividend yield?

The earnings yield accounts for the total profit return an investor earns as a stock owner, considering the earnings per share and the value of the company. It provides a more comprehensive measure of return compared to the dividend yield, which only considers the cash dividend paid out by the company.

Q: How is the earnings yield calculated, and why is Enterprise Value important in the calculation?

The earnings yield is calculated by dividing the earnings per share by the Enterprise Value per share. The Enterprise Value accounts for the market value of shares, cash, and debt of a company, providing a more accurate measure of earnings yield, especially for highly indebted companies.

Q: What are the key factors that contribute to the high earnings yield of Ashford Hospitality Trust (AHT)?

The high earnings yield of AHT is mainly attributed to the use of funds from operations (FFO) instead of net income to evaluate real estate stocks. AHT's strong portfolio of high-end hotels, geographic diversification, and focus on the luxury market contribute to its high earnings yield potential.

Q: What makes Valero Energy (VLO) a favorable investment in the energy sector?

Valero Energy has the highest earnings yield in the energy sector due to its position as the world's largest refiner and strong dividend track record. The company's commitment to returning cash to shareholders through dividends and share repurchases, along with its focus on refinery operations, contribute to its attractive earnings yield.

Summary & Key Takeaways

  • Verizon Communications (VZ) has the highest earnings yield in the Communication Services sector, with a solid dividend yield of 7.3%.

  • Qualcomm (QCOM) offers a relatively high earnings yield of 7.5% in the technology sector, despite its revenue dependence on Apple.

  • Ashford Hospitality Trust (AHT) stands out in the real estate sector with a strong earnings yield of nearly 25%, considering the use of funds from operations instead of net income for evaluation.

  • Citigroup (C) presents a value play opportunity in the financial sector, with a solid 16% earnings yield and a 4.6% dividend yield.

  • Emerson Electric (EMR) leads in the industrial sector with a 9.3% earnings yield, supported by strong sales growth and free cash flow surge.

  • Nucor Corporation (NUE) offers the highest yield in the material sector, with an impressive 18% earnings yield and a long history of dividend increases.

  • Bunge Limited (BG) shows a solid 10.1% earnings yield in the consumer staples sector, driven by its diverse agribusiness operations.

  • DR Horton (DHI), the largest homebuilder in the US, presents a 13% earnings yield in the consumer discretionary sector, supported by the significant housing shortage.

  • Pfizer (PFE) stands out in the healthcare sector with a 12% earnings yield, driven by strong sales growth outside of the COVID-19 vaccine.

  • Consolidated Edison (ED) offers a 4.7% earnings yield in the utility sector, providing stability and diversification to investors.

  • Valero Energy (VLO) presents the highest earnings yield in the energy sector, reaching 29% and supported by consistent cash returns to shareholders.

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