My Top 10 High Yield Dividend Stocks For June 2024

Market Performance - In May, the SPDR S&P 500 ETF Trust (SPY) gained 5.06%, recovering from a 4.03% loss in April, while Vanguard's High Dividend Yield Index Fund ETF (VYM) returned 3.03%, not fully offsetting its April loss of 3.74% [1] - The watchlist outperformed both ETFs with a gain of 5.92% in May and a year-to-date return of 11.33%, compared to 11.30% for SPY and 8.09% for VYM [1][14] Watchlist Overview - The watchlist aims to identify high-quality stocks with attractive valuations and a good starting dividend yield, targeting a long-term compound annual growth rate (CAGR) of 12% [2] - Currently, the watchlist has achieved a CAGR of 17.09% over 43 months, exceeding its target [2] Dividend Yield Portfolio - The focus of a high dividend yield portfolio is to generate a reliable passive income stream, with the top 10 stocks on the June 2024 watchlist offering a collective dividend yield of 3.88%, more than double that of the S&P 500 [3] - These stocks have historically increased their dividends at a rate of 9.43% per year over the last five years and are considered approximately 33% undervalued based on dividend yield theory [3] Investment Strategy - A buy-and-hold strategy is recommended for building a strong high-yield dividend portfolio, emphasizing the importance of selecting potentially undervalued stocks [4] - Diversifying the portfolio across 20 or more unique stocks can enhance the chances of acquiring shares at bargain prices, allowing investors to benefit from capital appreciation over time [4] Watchlist Criteria - The watchlist is created based on four main criteria: basic criteria (dividend yield above 2.75% and trading on NYSE/NASDAQ), safety (excluding companies with payout ratios above 100% and negative 5-year dividend growth), quality (using Morningstar moat and stewardship ratings), and stability (positive 5-year revenue and earnings growth) [5][6][7] June 2024 Watchlist Changes - The June 2024 watchlist includes new additions: Coca-Cola Europacific Partners (CCEP), Evergy (EVRG), Starbucks (SBUX), and Essential Utilities (WTRG), replacing Air Products and Chemicals (APD), NextEra Energy (NEE), Royal Bank of Canada (RY), and Texas Instruments (TXN) [10] Performance Metrics - The watchlist has consistently outperformed VYM and SPY over various time frames, including a year-to-date performance of 11.33% compared to 8.09% for VYM and 11.30% for SPY [14][17] - Since inception, the watchlist has achieved an annualized return of 17.09%, outperforming both VYM and SPY by 1.50% and 1.09%, respectively [14] Top Performing Stocks - The top-performing stocks since joining the watchlist include Broadcom (AVGO) with a total return of 215.51% over 37 months, followed by Progressive (PGR) at 149.57% and General Dynamics (GD) at 147.66% [18][21]