Double Your Returns With These 5 Shareholder Yield Stocks

BALTIMORE (Stockpickr) -- Want to double your portfolio's returns? It's simple: Just focus on the stocks that are handing the most cash to investors. Must Read: Warren Buffett's Top 10 Dividend Stocks No, I'm not necessarily talking about dividends here (although dividend payouts are definitely an important part of it). I'm talking about shareholder yield. In a nutshell, shareholder yield is made up of anything that directly returns cash or equity to your portfolio. Yes, that includes obvious moves such as dividends, but it also includes share buybacks and paying down debt. Any of those three corporate actions can unlock significant value for shareholders, and the data backs it up. According to research by James O'Shaughnessy, over a 40-year period, large-cap stocks with the highest shareholder yield delivered average gains of 18.05%. That's almost double the average annual returns that investing in the big S&P 500 index would have earned you. With low interest rates and record levels of cash sitting on corporate balance sheets, management teams are looking for the most effective ways to return value to shareholders. It's not one size fits all, either. The best mix varies from company to company. But by looking at the trifecta of dividends, buybacks and debt extinguishment, you can be sure that you won't miss out on any of the proceeds. With that in mind, here's a look at five stocks that have provided superior shareholder yield in the last year. Must Read: 10 Stocks Billionaire John Paulson Loves Hess Like most other energy names, Hess has been in selloff mode for the last six months now. Since July, Hess has given back 30% of its market value, dragged lower by the free fall in oil prices. But that drop has set up HES as a solid contrarian trade. When oil catches a bid again, Hess is set up cheaper than it's been in years and paying a fat shareholders yield. Hess is the most attractive energy sector name from a shareholder yield standpoint; the $21.1 billion exploration and production stock paid out 14.92% over the last 12 months. Hess has been undergoing a transformation in the last couple of years, unloading its midstream assets to set itself up as a pure-play E&P stock. That means that Hess' namesake gas station network is no longer part of the business. That got sold to Marathon Petroleum in 2014. Hess' extreme exposure to oil (nearly 70% of production at last count) has made it an easy target as oil prices declined -- maybe too easy of a target. That doesn't mean that Hess is a buy-it-immediately type of opportunity, but it does mean that Hess becomes undervalued compared with the rest of the sector once oil prices begin to stabilize. Most of Hess' shareholder returns in the last year came from debt extinguishment and share buybacks, which combine to just shy of $3 billion total. Hess currently carries $4.2 billion in cash and investments on its balance sheet, leaving plenty of dry powder for HES to keep returning to shareholders while oil prices continue to work themselves out. It's a pretty safe bet that Hess longs will need to demonstrate some patience in 2015, but that patience could still pay off big time this year. Must Read: 11 Stocks Warren Buffett Loves General Electric Most income investors know the name General Electric well. After all, GE's hefty 3.86% dividend yield makes it one of the most attractive payouts in the Dow Jones Industrial Average right now. Thing is, GE's sizable dividend (which totaled $7.82 billion) wasn't even the biggest contributor to its shareholder yield in the trailing 12 months. Add the other components of shareholder yield, and the number ratchets up to a hefty 12.97%. General Electric is a perfect example of a prototypical blue-chip stock. The industrial giant has a hand in making just about every capital-intense product you can think of, from jet engines to wind turbines to medical equipment. More important, it's found great success in making the puzzle pieces fit together and sharing technologies and customers across business lines. While GE Capital provides some critical services as a captive finance arm for the manufacturing business, management's decision to reduce its exposure to its financial unit will probably prove to be a good one in time. GE's capital-intense offerings give it a built-in moat. After all, customers who sink huge budgets on a GE solution are likely to continue their build-outs with parts that play nicely with one another, and GE has a high-margin services business that it can often upsell equipment customers on. Most of GE's shareholder yield last year came from debt extinguishment -- GE shed $22.9 billion in borrowings over the trailing 12 months. While exiting businesses will mean a medium term hit to revenues, it's a good longer-term move (and it's already priced into shares today). Must Read: 10 Stocks Carl Icahn Loves NetApp Demand for data storage is ballooning, and that's a very good thing for data management firm NetApp . The firm is the leader in the network attached storage space, selling ad-hoc devices to increase enterprise customers' storage capabilities. Because the firm's equipment can be added to existing installations rather than as part as a major datacenter overhaul, it's been the go-to vendor for IT buyers in need of incremental storage growth. NTAP's ability to plug and play with other manufacturers' devices has provided it with a pretty clear-cut value proposition for customers. NetApp was one of the first names to market in the network-attached storage business, and it's continued innovating along the way. As a result, the firm owns a valuable portfolio of intellectual property, and it's consistently been one of the first firms to market with new tech. Despite the fact that NetApp books revenues on its hardware appliances, it's really a software firm -- after all, it's the software that differentiates enterprise storage firms from one another. It's important to note that software comes with far deeper moats than hardware alone (it's not as easily commoditized over time), and that adds a defensive bent to NetApp's business. From a financial standpoint, NTAP is in excellent shape. The firm's balance sheet is stuffed with $3.8 billion in net cash and investments, enough to pay for nearly a third of NetApp's current market capitalization. That's a huge risk reducer right now, and NTAP has been using that cash cushion to reward investors with a huge shareholder yield. In the last 12 months, NTAP has paid out 11.45% of it's market cap back to investors in the form of buybacks and dividends. Must Read: 5 Stocks Warren Buffett Is Selling Pfizer The health care sector has been a pretty safe bet in the last few months. While the market indices have given investors a roller coaster ride of rallies and corrections, health care stocks have seen a whole lot more of the former than the latter. That's certainly been the case with shares of big pharma firm Pfizer lately. In the last three months, Pfizer has shown stellar relative strength, rallying nearly 19% to reclaim multiyear highs. Pfizer is another mega-cap name whose shareholder yield far outpaces an otherwise hefty dividend. In the last 12 months, PFE has paid a 10.76% shareholder yield. Pfizer is one of the biggest pharmaceutical companies in the world, with household name drugs such as Lipitor, Viagra, Celebrex and Lyrica in its portfolio. Pfizer has historically had one of the most successful marketing departments in big pharma, and that has helped the firm minimize sales losses as blockbuster drugs fall off of patent protection. Patent losses have been a persistent black cloud over PFE's business (and one of the reasons for the big dividend yield), but the firm has been buying up some attractive candidates for its drug pipeline. Several of those have the potential to be blockbusters in the near future. PFE also sports a big fat cash cushion on its balance sheet right now, some $14.8 billion in cash and investments. That cash position helps to cover the dividend payout when times get tough -- and more important, it provides the wherewithal for Pfizer to keep spending money on its pipeline in 2015. Must Read: Warren Buffett's Top 10 Dividend Stocks Activision Blizzard Last up is video game maker Activision Blizzard , a name that's been pretty kind to investors in the past year. Since last January, ATVI has rallied 19.2%, stomping the S&P 500's return in the process -- and that's not counting the 10.76% shareholder yield that shares delivered in those last 12 months. In total, it's a $1.57 billion payout. Activision Blizzard owns some of the most profitable video game franchises in history. Its cash cows include Call of Duty, World of Warcraft and Diablo. ATVI is arguably the best-monetized gaming stock. Not only does it generate sales on its conventional titles, but it also generates recurring revenues from subscriptions to its online role-playing franchises and recurring one-time sales from follow-on releases. While the subscription business has been quietly fading over the last few years, it retains a core of very sticky customers. Because gamers have a massive sunk cost in building characters and attaining status, they’re a lot less likely to switch to a competing franchise and restart the process. Next-gen gaming consoles are a big tailwind for ATVI in 2015. With the release of the Xbox One and PlayStation 4, gaming industry investors should expect a balloon in game revenues similar to the one that occurred with the last generation of devices. Likewise, mobile gaming has the potential to become a more meaningful part of the revenue puzzle at Activision Blizzard, but for the moment it remains a side note. Expect to see an update on ATVI's execution (and its shareholder yield) early next month alongside fourth quarter earnings. -- Written by Jonas Elmerraji in Baltimore. Must Read: 10 Stocks George Soros Is Buying Follow Stockpickr on Twitter and become a fan on Facebook. At the time of publication, author had no positions in stocks mentioned. Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation. Follow Jonas on Twitter @JonasElmerraji

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