These Two Industry Stalwarts Avoid the 'High-Yield Cliff'

"Perfectionism rarely begets perfection, or satisfaction – only disappointment." [Chaikin PowerFeed]( These Two Industry Stalwarts Avoid the 'High-Yield Cliff' By Marc Gerstein, director of research, Chaikin Analytics "Perfectionism rarely begets perfection, or satisfaction – only disappointment." Those words of wisdom come from New York Times bestselling author and The Daily Stoic podcast host Ryan Holiday. They serve as a great lesson for investors, too... We all want to own shares of rapidly growing companies with other appealing traits. We seek great balance sheets, low valuations, high dividend yields, and more. However, we'll rarely – if ever – find a stock that offers everything. We're more often disappointed. That's especially true when you're looking at high-yielding income stocks. But you'll see today that we don't need perfection. By following a simple process, we can spot attractive opportunities to earn healthy income in the months and years ahead... 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(If you missed our two-part series, you can catch up [here]( and [here]( In short, the trick is to find the highest yield possible while avoiding stocks that are on the edge of a "high-yield cliff." The way it works is simple... Just picking from the top of a list of income stocks increases your risk of stepping on a financial land mine. So my first step is to exclude stocks with yields in the top 5%. Then, I use our "Power Gauge" system to add another layer of filtering... I exclude any stocks that our proprietary model ranks below "neutral." This process helps us find high-yielding stocks while avoiding ones on the brink of collapse. In fact, using this approach, I recently found two industry stalwarts with attractive yields... I'll start with ExxonMobil (XOM). You probably know it as a "Big Oil" powerhouse... It's one of the bluest of the blue-chip stocks. But you might not realize that it currently yields an attractive 5.8%. Many investors assume Big Oil is going extinct.... They've decided that renewable energy is chipping away at fossil fuels and will eventually supplant them. But change is more often evolutionary, not revolutionary... When TV became popular in the mid-20th century, for example, many people assumed it would kill movie theaters. It's now 2022... TV has evolved into better things. And yet, the world still has plenty of movie theaters. Renewable energy or not, ExxonMobil will continue to exist for a long time as well. Now, I'm not suggesting ExxonMobil will survive forever. We can't know for sure. But I do believe we'll keep using gasoline-powered cars long enough to keep ExxonMobil's income payments flowing to at least the current generation of dividend seekers. Plus, ExxonMobil is adapting for the future... The company is working hard on "carbon capture" – the process of preventing carbon dioxide from entering the atmosphere. It's also pushing its way into the new-energy era through development of low-emission biofuels. Importantly, we know that we've found a safe source of yield using our filter. Xerox (XRX) is the other high-yielding stock that caught my eye. It currently yields around 4.4%. And using my filtering process, I can see that it passes the "prudent yield hog" test. But like ExxonMobil, investors believe it's flawed today... The digitization of the world isn't good for Xerox's high-powered office copiers and printers. And pandemic-induced work from home is another cloud over the business. However, this is another long-term downslope... It's not a high-yield cliff. And Xerox isn't giving up on growth, either. It's building new businesses related to financial services and augmented-reality solutions for servicing digital equipment. Plus, it has an innovation hub that's involved in 3D printing, industrial automation, and more. Notice that neither of these companies is giving up on the future. And while their yields may be high, our "prudent yield hog" test gives us the peace of mind we need to add these stocks to an income-oriented portfolio. We don't need forever. We don't need perfection. We only need good enough. And as you've seen today, these two industry stalwarts offer attractive opportunities to earn healthy income moving forward. They're exactly what we need in a yield-starved world. Good investing, Marc Gerstein Market View Major Indexes % Hld: Bullish Neutral Bearish Dow 30 -0.18% 8 18 4 S&P 500 -0.22% 137 292 68 Nasdaq -0.62% 37 53 11 Small Caps -0.16% 366 1014 478 Bonds +0.20% — According to the Chaikin Power Bar, Large Cap stocks are more Bullish than Small Cap stocks. Major indexes are mixed. * * * * Top Movers Gainers [rating] CPS +3.85% [rating] MHK +2.41% [rating] ULTA +1.86% [rating] ROL +1.69% [rating] TECH +1.68% Losers [rating] DISCA -3.72% [rating] VIAC -3.02% [rating] CTRA -2.81% [rating] TWTR -2.79% [rating] FB -2.33% * * * * Earnings Report Reporting Today Rating Before Open After Close No earnings reporting today. Earnings Surprises No significant Earnings Surprises in the Russell 3000. * * * * Sector Tracker Sector movement over the last 5 days Real Estate +3.79% Utilities +2.67% Materials +2.60% Staples +2.47% Industrials +1.79% Health Care +1.12% Energy +1.09% Discretionary +0.62% Information Technology +0.60% Financial +0.57% Communication -0.52% * * * * Industry Focus Innovative Technology Services 8 59 26 Over the past 6 months, the Innovative Technology subsector (XITK) has underperformed the S&P 500 by -26.52%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #17 of 21 subsectors and has moved down 1 slot over the past week. Indicative Stocks [rating] Z Zillow Group, Inc. [rating] GDRX GoodRx Holdings, Inc [rating] FVRR Fiverr International * * * * Chaikin Analytics LLC is not registered as a securities broker-dealer or advisor either with the U.S. Securities and Exchange Commission or with any state securities regulatory authority. Chaikin Analytics does not recommend the purchase of any stock or advise on the suitability of any trade. The information presented is generic in nature and is not to be construed as an endorsement, recommendation, advice or any offer or solicitation to buy or sell securities or any kind, but solely as information requiring further research as to suitability, accuracy and appropriateness. Users bear sole responsibility for their own stock research and decisions. Read the full disclaimer at [(. 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