High-yielding stocks have been the worst bet this year. Here's one way to improve that.

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Critical information for the U.S. trading day

Early skirmishing in futures suggests the S&P 500 may recover a small portion of the 2.6% it shed in just the last two sessions. Big tech has done most of that damage, but a pop for Amazon.com on Friday following its results may halt the carnage, for now.

“Sure, a portfolio of higher dividend yielding stocks can provide some margin of safety compared to some valuation metrics, but it can also be littered with value traps too!,” they say in a note published this week. This will be a new phenomenon for younger investors, because since the great financial crisis the high dividend yield factor has generally provided a greater yield than benchmark bonds.

So, the question investors should ask is: How to find the high quality high dividend payers? The answer says Piper Sandler is to analyze stocks by what the broker calls an “ability to sustain.” This is calculated by taking cash flow and deducting preferred dividends and capex, then dividing the result by common dividends.

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