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Searching for Value and High Yield

Growth stocks may be outperforming, once again, in 2019. But in an environment of historically low interest rates, many investors are searching for high levels of income, which often can be found in value stocks. Over the years, the performance record has favored growth. Still, value is the place to achieve income. The current yield on the iShares Russell 1000 Value Index ETF is 2.3%, compared to the current yield on the iShares Russell 1000 Growth Index ETF of 1.1%. As well, sometimes the risk profile favors value. For the past five years, the standard deviation of monthly returns for value stocks has been 3.5%, compared to the standard deviation of monthly returns for growth stocks of 3.7%. When we look for attractive high-yield/value stocks at Argus, we look for low valuations on metrics such as price/earnings, price/sales, price/book, yield and price/cash flow. But we also look for companies with clean balance sheets, high levels of profitability and cash flow generation, and experienced management. We have designed a portfolio of companies followed by Argus that are BUY-or HOLD-rated on a long-term five-year basis and have an average yield of 4.0% or higher. ...  favors value. For the past five years, the standard deviation of monthly returns for value stocks has been 3.5%, compared to the standard deviation of monthly returns for growth stocks of 3.7%. When we look for attractive high-yield/value stocks at Argus, we look for low valuations on metrics such as price/earnings, price/sales, price/book, yield and price/cash flow. But we also look for companies with clean balance sheets, high levels of profitability and cash flow generation, and experienced management. We have designed a portfolio of companies followed by Argus that are BUY-or HOLD-rated on a long-term five-year basis and have an average yield of 4.0% or higher.   more

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