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James Dennin, Kapitall: After looking at small and mid cap stocks this week – it's time to turn our attention to outperforming large caps.
As the year winds down we've been breaking the market into segments to look for some of the year's best performers. After looking at
mid cap stocks earlier this week, we come to large caps.
Read more from Kapitall: BP Might Be an Undervalued Oil and Gas Stock But is it Worth A Second Look Yet?
With large cap stocks in particular, dividend yields are an important indicator of how good the company has been at sharing its profits over the years. So we started off our screen by looking at stocks with
high dividend yields above 3%.
Then to narrow it down further, we only wanted to include stocks that have outperformed in 2013. So we looked at stocks that are trading above their
200-day simple moving averages (SMA).
The SMA simply adds together the closing price from the last 200 days and divides by 200. It's one way of getting a rough approximation of a stock's average price for a given time period. It can often be more reliable than the 52-week high, because the figure itself is much less volatile. And if a stock is rallying above its 200-day moving average, this could indicate strong upward momentum in the near future.
Oil and utility stocks often have high dividends – so it's no surprise to see a number of energy and telecom stocks come through our screen, many of them with a history of raising their payouts each year. One firm,
Ensco plc (ESV), has already increased their dividend
twice this year. Some analysts think the company has excellent growth prospects, as it controls the world's largest fleet of ultra-deep-water rigs, and the second largest fleet in general.
Meanwhile utility stock
National Grid plc (NGG) has the
highest dividend in its sector. The company used 2013 to focus on cutting costs, and has a regulated asset base that's expected to grow 6% for the year.
Our screen left us with five dividend-paying large cap stocks. Will they continue to outperform next year?