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3 High-Earnings Yield Stocks

- By Alberto Abaterusso

If you screen for stocks that are more than doubling 20-year high-quality market corporate bonds in terms of return, you have more chances to succeed with your investments. These bonds represent corporate loans issued by triple-A, double-A and single-A-rated companies.

The monthly average spot rate of the 20-year bond is 4.38% according to the Federal Reserve Bank of St. Louis. Thus, the following stocks have a price-earnings ratio, which is the inverse of the earnings yield, of 11.42 or less as of May 10.


Additionally, the recommendation rating for these stocks ranges between overweight and buy, indicating they are forecasted to gain in the coming weeks with an average price target that brings at least 12% stock appreciation within 12 months. In contrast, the U.S. stock market is expected to fall 2.7% over the same period.

Honda Motor Co. Ltd. (HMC) traded around $26.09 per share on Friday for a market capitalization of $45.39 billion. The Japanese automaker has an earnings yield of 14.6% versus the industry median of 7.5% and a price-earnings ratio of 6.85 versus the industry median of 13.25.

The company also has a price-book ratio of 0.60 compared to the industry median of 1.26 and a price-sales ratio of 0.32 versus the industry median of 0.63.

The stock has an average target price of $34.05 per share, reflecting 29.7% upside from the closing price on Friday.

GuruFocus assigned a financial strength rating of 6 out of 10 and a profitability and growth rating of 7 out of 10.

The stock declined 1.4% over the past year. The closing price on Friday fell within the 52-week range of $25.30 to $33.50.

According to the Peter Lynch chart, the stock is cheap.

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Citizens Financial Group Inc. (CFG) was trading around $36.05 on Friday for a market capitalization of $16.52 billion. The Providence, Rhode Island-based bank has an earnings yield of 10.2% versus the industry median of 8.1% and a price-earnings ratio of 9.82 compared to the industry median of 12.36.

Citizens Financial also has a price-book ratio of 0.82 versus the industry median of 1.11 and a price-sales ratio of 2.73 compared to the industry median of 3.01.

The stock has an average target price of $41.98 per share, reflecting 16.4% upside from Friday's closing price.

GuruFocus assigned a financial strength rating of 3 out of 10 and a profitability and growth rating of 4 out of 10.

The stock has climbed 21.3% so far this year. The closing share price on Friday fell within the 52-week range of $27.62 to $43.12.

The Peter Lynch chart suggests the stock is cheap.

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Lincoln National Corp. (LNC) traded around $65.35 on Friday with a market capitalization of $13.22 billion. The Radnor, Pennsylvania-based life insurance company has an earnings yield of 10.65% versus the industry median of 7.55% and a price-earnings ratio of 9.39 compared to the industry median of 13.25.

Lincoln National also has a price-book ratio of 0.82 versus the industry median of 1.18 and a price-sales ratio of 0.84 versus the industry median of 0.82.

The stock has an average target price of $73.73 per share, reflecting 12.8% upside from the closing price on Friday.

GuruFocus assigned a rating of 4 out of 10 for both financial strength and profitability and growth.

Over the past year through May 10, the stock rose 27.4%. The 52-week range is $48.07 to $71.27.

Based on the Peter Lynch chart, the stock appears to be cheap.

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Disclosure: I have no positions in any securities mentioned.

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This article first appeared on GuruFocus.