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5 Top-Ranked Stocks With Superior Earnings Yield

1 11 64
27.08.2021

For intelligent investors who intend to invest money either in bonds or stocks, information on certain key financial parameters is very important. One such key parameter is earnings yield. It is the reciprocal of the price-to-earnings ratio. This ratio is vital for tracking undervalued stocks. It also comes in handy for comparing stocks with the market or fixed income securities.

Earnings yield can be derived as (Annual Earnings per Share/Market Price) x 100. While comparing stocks from the same sector or industry, the one with higher earnings yield is likely to fetch better returns.

For comparing the performance of a market index with the 10-year Treasury yield, this ratio is very useful. When the yield of the market index is higher than the 10-year Treasury yield, stocks can be dubbed as undervalued in comparison to bonds. This indicates that investing in the stock market is a better choice for a value investor.

Investment in Treasury-bill is risk free. Yet, investing in stocks always comes with a caveat. Hence, it is a good idea to add a risk premium to Treasury yield while comparing it with the earnings yield of a stock or the broader market.

We have set Earnings Yield greater than 10% as our primary screening criterion but it alone cannot be used for picking stocks that have the potential of generating solid returns. So, we have added........

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