When evaluating potential investments, many investors focus on dividend yield as a key metric. However, shareholder yield offers a more comprehensive picture of how companies return value to shareholders. Let’s explore this concept and examine five stocks that currently score highly according to Validea’s models.
What is Shareholder Yield?
Shareholder yield encompasses three ways companies can return capital to shareholders:
- Dividends
- Share buybacks
- Debt reduction
By considering all three factors, shareholder yield provides a fuller view of a company’s commitment to creating value for its investors. While dividends offer direct cash returns, share buybacks can increase the value of remaining shares, and debt reduction improves a company’s financial health.
Why Shareholder Yield Matters
Shareholder yield can be a superior measure to dividend yield for several reasons:
- Comprehensive view: It captures multiple ways companies return value to shareholders.
- Flexibility: Companies can adjust their mix of dividends, buybacks, and debt reduction based on market conditions and opportunities.
- Tax efficiency: In some cases, buybacks may be more tax-efficient than dividends for shareholders.
- Long-term focus: A high shareholder yield often indicates a company’s commitment to sustainable value creation.
Now, let’s examine five stocks that currently score highly on Validea’s models, with a focus on their shareholder yield and other key metrics.
Top Scoring Stocks with High Shareholder Yield
Toll Brothers is a luxury home builder operating in 24 states and the District of Columbia. The company designs, builds, and markets a wide range of residential properties, including single-family detached homes, townhomes, and condominiums.
Why it scores highly:
- Strong fundamental and price momentum (100% score on Twin Momentum Investor model)
- Low volatility relative to market (100% score on Multi-Factor Investor model)
- Attractive valuation metrics (92% score on Value Composite Investor model)
- Net payout yield of 8.18%, ranking in the 10th percentile of Validea’s database
- Shareholder yield of 9.52%, indicating strong commitment to returning capital to shareholders
2. Haverty Furniture Companies, Inc. (HVT)
Haverty Furniture is a specialty retailer of residential furniture and accessories, operating primarily in the Southern and Midwestern United States.
Why it scores highly:
- Strong value characteristics (100% score on Value Composite Investor model)
- Attractive valuation relative to earnings potential (94% score on Acquirer’s Multiple Investor model)
- Low Price/Sales ratio of 0.48, indicating potential undervaluation
- Net payout yield of 9.44%, ranking in the 8th percentile of Validea’s database
- Free cash flow per share of 0.49, demonstrating financial stability
3. Marathon Petroleum Corp (MPC)
Marathon Petroleum is an integrated downstream energy company, operating in refining, marketing, and midstream segments. The company refines crude oil and other feedstocks, sells refined products, and transports and stores crude oil and refined products.
Why it scores highly:
- Exceptional fundamental and price momentum (94% score on Twin Momentum Investor model)
- Strong shareholder-friendly practices (95% score on Shareholder Yield Investor model)
- Attractive valuation metrics (92% score on Value Composite Investor model)
- Net payout yield of 15.11%, ranking in the 5th percentile of Validea’s database
- Shareholder yield of 14.17%, demonstrating significant capital return to shareholders
4. Jefferies Financial Group Inc (JEF)
Jefferies Financial Group is a diversified financial services company engaged in investment banking, capital markets, and asset management activities.
Why it scores highly:
- Strong fundamental and price momentum (94% score on Twin Momentum Investor model)
- Low volatility characteristics (100% score on Multi-Factor Investor model)
- Shareholder-friendly practices (90% score on Shareholder Yield Investor model)
- Net payout yield of 10.55%, ranking in the 7th percentile of Validea’s database
- Twelve-month minus one-month return of 37.29%, indicating strong recent performance
Murphy USA is a retailer of gasoline and convenience merchandise, operating over 1,700 stores primarily in the Southwest, Southeast, Midwest, and Northeast United States.
Why it scores highly:
- Exceptional fundamental and price momentum (100% score on Twin Momentum Investor model)
- Low volatility characteristics (100% score on Multi-Factor Investor model)
- Strong shareholder-friendly practices (90% score on Shareholder Yield Investor model)
- Net payout yield of 9.44%, ranking in the 8th percentile of Validea’s database
- Annual earnings growth rate of 31.53% over the past five years, demonstrating strong profitability
These five stocks showcase strong shareholder yield characteristics and score highly across various Validea models. Common themes among these companies include:
- Commitment to returning capital to shareholders through dividends, buybacks, or debt reduction
- Strong fundamental and price momentum
- Attractive valuation metrics
- Low volatility relative to the broader market
- Solid financial performance and profitability
Shareholder yield offers a more comprehensive view of how companies return value to their investors compared to dividend yield alone. By considering dividends, share buybacks, and debt reduction, investors can gain a clearer picture of a company’s commitment to creating shareholder value. The five stocks highlighted in this article – Toll Brothers, Haverty Furniture, Marathon Petroleum, Jefferies Financial Group, and Murphy USA – all demonstrate strong shareholder yield characteristics and score highly on various Validea models, making them potentially attractive options for value-oriented investors.
Further Research
