Monday, November 24, 1997

The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (Nov. 24, 1997)

In recent weeks we've had a number of discussions, both here and in the Dow Dividend Approach area, about strategies to complement (or use in lieu of) the basic Dow models.

One approach is to start with a pre-defined field of stocks, perhaps all stocks with a market capitalization over a certain amount, then screen by dividend yield and choose from there, using pre-defined criteria. Another is to set a limit for the field of stocks, say the 100 largest, before performing the high-yield screens.

Today I'll post two lists of stocks. The first begins with all U.S. large-cap stocks in the Value Line database (defined as having a market cap of $5 billion or more). There are currently 334 such stocks. I'll sort them by dividend yield, eliminate non-industrial stocks (utilities, phone companies, railroads, REITs), and then include the top thirty here.

The second list will follow the same procedures except that instead of all stocks with market caps of $5 billion or more, I'll use a field of only the 100 largest U.S. stocks.

Once you have the high-yield list of stocks, you must decide how you want to choose from the list. One possibility is simply to perform a Beating the Dow-like screen, choosing the ten or twenty highest yielders and sorting by lowest price. Another method is to choose from the high-yield list in descending order, but limiting yourself to only one stock per industry group in order to focus on diversification. I suspect there are a number of other possible alternatives, but these seem to cover some of the more likely possibilities in addition to Beating the Dow and Ethan Haskel's Beating the S&P. Let's get to the lists.

From the All Large-Caps Group (334 stocks)

Yld   Stock                      Ticker  Industry
5.95  RJR Nabisco Holdings       RN      Tobacco
5.32  UST Inc.                   UST     Tobacco
4.89  Chrysler                   C       Auto
3.94  Ford Motor                 F       Auto
3.78  Philip Morris              MO      Tobacco
3.57  Dow Chemical               DOW     Chemical
3.47  Atlantic Richfield         ARC     OilInteg
3.46  Occidental Petroleum       OXY     OilInteg
3.40  Bankers Trust              NY      Bt Bank
3.32  Penney (J.C.)              JCP     Retail
3.28  Pharmacia & Upjohn         PNU     Drug
3.27  Gen'l Motors               GM      Auto
3.11  Texaco Inc.                TX      OilInteg
3.07  PNC Bank Corp.             PNC     Bank
3.05  Morgan (J.P.) & Co         JPM     Bank
3.03  Amoco Corp.                AN      OilInteg
3.03  Int'l Flavors & Frag.      IFF     ChemSpec
3.02  Genuine Parts              GPC     Auto-Rep
2.98  Fleet Fin'l Group          FLT     Bank
2.96  Weyerhaeuser Co.           WY      Paper
2.93  Eastman Kodak              EK      Instrmnt
2.93  Lincoln Nat'l Corp.        LNC     InsDivrs
2.84  Gen'l Mills                GIS     FoodProc
2.82  Chevron Corp.              CHV     OilInteg
2.82  Banc One Corp.             ONE     BankMid
2.82  Mobil Corp.                MOB     OilInteg
2.78  Waste Management           WMX     Environm
2.75  Marsh & McLennan           MMC     InsDivrs
2.75  Phillips Petroleum         P       OilInteg
2.74  SAFECO Corp.               SAFC    InsPrpty

From the 100 Largest Stocks

Yld   Stock                      Ticker  Industry
4.89  Chrysler                   C       Auto
3.94  Ford Motor                 F       Auto
3.78  Philip Morris              MO      Tobacco
3.57  Dow Chemical               DOW     Chemical
3.47  Atlantic Richfield         ARC     OilInteg
3.27  Gen'l Motors               GM      Auto
3.11  Texaco Inc.                TX      OilInteg
3.05  Morgan (J.P.) & Co         JPM     Bank
3.03  Amoco Corp.                AN      OilInteg
2.93  Eastman Kodak              EK      Instrmnt
2.82  Chevron Corp.              CHV     OilInteg
2.82  Banc One Corp.             ONE     BankMid
2.82  Mobil Corp.                MOB     OilInteg
2.64  Exxon Corp.                XON     OilInteg
2.59  First Union Corp.          FTU     Bank
2.54  Heinz (H.J.)               HNZ     FoodProc
2.50  NationsBank Corp.          NB      Bank
2.43  Amer. Home Products        AHP     Drug
2.43  First Chicago NBD          FCN     BankMid
2.40  Anheuser-Busch             BUD     Alco-Bev
2.25  Minnesota Mining           MMM     ChemDiv
2.23  Emerson Electric           EMR     ElecEq
2.23  Chase Manhattan Corp.      CMB     Bank
2.15  Caterpillar Inc.           CAT     Machine
2.10  Du Pont                    DD      Chemical
2.09  Bank of New York           BK      Bank
1.94  Kellogg                    K       FoodProc
1.94  Merck & Co.                MRK     Drug
1.93  Sears  Roebuck             S       Retail
1.92   Norwest Corp.             NOB     BankMid

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