Featured Stock In January’s Safest Dividend Yields Model Portfolio

Twelve new stocks make our Safest Dividend Yield Model Portfolio this month, which was made available to members on January 24, 2019.

Recap from December’s Picks

Our Safest Dividend Yields Model Portfolio outperformed the S&P 500 last month. The Model Portfolio rose 8.5% on a price return basis and 9.0% on a total return basis. The S&P 500 rose 6.3% on a price return basis and 6.9% on a total return basis. The best performing large-cap stock was up 21% and the best performing small cap stock was up 23%. Overall, 9 out of the 20 Safest Dividend Yield stocks outperformed the S&P in December.

This Model Portfolio leverages our Robo-Analyst technology[1], which scales our forensic accounting expertise (featured in Barron’s) across thousands of stocks.[2]

This Model Portfolio only includes stocks that earn an Attractive or Very Attractive rating, have positive free cash flow and economic earnings, and offer a dividend yield greater than 3%. Companies with strong free cash flow provide higher quality and safer dividend yields because we know they have the cash to support the dividend. We think this portfolio provides a uniquely well-screened group of stocks that can help clients outperform.

Featured Stock for January: Lam Research Corporation (LRCX: $173/share)

Lam Research Corporation (LRCX) is the featured stock in January’s Safest Dividend Yield Model Portfolio.

LRCX was featured as a Long Idea in May 2018 and is down 15% while the S&P 500 is down 1% since publish date. However, the stock has bounced back by ~23% so far in 2019.

LRCX has grown revenue by 16% compounded annually over the past decade, and its after-tax operating profit (NOPAT) has grown 22% compounded annually over the same time. LRCX’s NOPAT margin has increased from 4% in 2013 to 27% over the last twelve months (TTM). The company has also improved its return on invested capital (ROIC) from 3% in 2013 to a top-quintile 53% TTM.

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Disclosure: David Trainer, Andrew Gallagher, Kyle Guske II, and Sam McBride receive no compensation to write about any specific stock, style, or theme.

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