It is not as simple as running an online search for
the companies with the highest dividend yield producing a double digit return.
A company with a high dividend yield pays its investors a large dividend compared to the fair market value of the stock.
The income investing strategy is about more than using a stock screener to find
the companies with the highest dividend yield.
Companies with high dividend yields, that continue to pay those dividends, will see expected returns increase more and stock prices drop by a more significant margin.
One of the screens I look at is
companies with high dividend yields, which sometimes means some sort of overhang which is dropping the price below where it should be.
For example,
a company with a high dividend yield and low dividend payout ratio (or high dividend coverage ratio) indicates that the company's dividend yield is supported by its strong earnings.
Portfolios of
companies with high dividend yields and low payout ratios have the best returns.
Companies with high dividend yields can potentially offer very strong returns, but they can also lead to value traps and dividend implosions.