Large Cap High Yield Model
INVESTMENT OBJECTIVE
The goal of the iQ Large-Cap High Yield Model is to provide a high rate of dividend income with a secondary focus on capital appreciation by investing in stocks of large companies that pay high dividends.
PROCESS
The iQ Large Cap High Yield Model employs the following unemotional rules-based process:
Start with the largest 500 domestically-traded companies
Select the 75 companies with the highest current dividend yield.
Screen by plow-back ratio, share buyback and dividend yield and select the top 10
This model reconstitutes every February, May, August and November
The benefits of large-cap, high dividend stocks
Investing in large cap stocks with high dividends can provide several potential benefits, including:
1. Stability and Security: Large-cap stocks are typically issued by well-established companies with a proven track record of success. These companies often have a stable cash flow and earnings history, making them a relatively secure investment option.
2. Potential for Income: Large-cap stocks with high dividends can provide a reliable source of income for investors. This is especially important for investors who are seeking regular income streams.
3. Relative Yield: Large-cap stocks with high dividends may offer a higher yield than other fixed-income investments such as bonds, CDs or savings accounts. As a result, investors may find large-cap stocks with high dividends to be an attractive investment opportunity, particularly in a low-interest-rate environment.
4. Potential for Capital Appreciation: Large-cap stocks with high dividends can also offer the potential for capital appreciation. Companies with strong fundamentals and consistent earnings often have higher chances of experiencing long-term stock price growth.
5. Dividend Growth: Some large-cap companies have a history of consistently increasing their dividends over time. Investing in these companies can provide an opportunity to benefit from dividend growth, which can result in higher income and potentially higher total returns over time.
It's important to note that investing in large-cap stocks with high dividends can also come with risks, such as market volatility and potential investment losses.
Investors should be aware that large cap high yield stocks carry specific risks. While these stocks may offer attractive dividend yields and potential for growth, they are also subject to market fluctuations and economic conditions. Their performance may differ from other investments due to factors such as company-specific events, industry trends, and changes in interest rates. Moreover, high yields could be a result of elevated risk, including credit and default risks. It is crucial for investors to carefully assess their financial objectives, risk tolerance, and conduct thorough due diligence before considering large cap high yield stocks.