Barron’s released their current “Barron’s 400″ index this week. They said,

“Get stock ideas from Barron’s index that measures a diversified group of U.S. companies based on strong fundamentals.”

OK, so we looked for some ideas for equity-income investors.

We sorted the list by trailing yield and eliminated all those with a yield lower than the composite 2.28% yield of the index — you’ll probably be able to get the index yield from a likely future ETF offering based on the Barron’s index.

That left 65 companies in 37 industries.

Then we sorted that shortened list to include only the highest yielding company in each of the industries.

Here is the list:

click image to enlarge

Barron’s 400 Index Description:

The Barron’s 400SM index, calculated by Dow Jones Indexes, measures the performance of a diversified group of U.S. companies selected in part based on fundamentals-related rules-based criteria. The index includes companies that have scored highest according to fundamentals-related rankings calculated by MarketGrader.com. Additional rules-based screening provides for sector and market cap diversification. The index is licensed by Dow Jones Indexes.

Barron’s 400 index rules

• 400-company index; equally weighted
• Underlying universe: Dow Jones Wilshire 5000
• Companies ranking highest based on fundamentals-related scores calculated by MarketGrader.com.
• All selections must have a minimum float-adjusted market cap of $250 million
• At least 25% of all selections must have a market cap above $3 billion
• The number of selections in the same industry sector cannot exceed 20% of index (80 companies)
• No REITs are eligible for index selection
• All index selections must have reported quarterly or annual results within the last six months
• All selections must have a minimum 3-month avg. daily trading dollar value of $2 million

[The index is equal weighted which seems to be an idea that is gaining popularity.  We recently wrote about the S&P 500 equal weight index which S&P describes as outperforming the standard market-cap weighted S&P 500. ]

Unfortunately, Barron’s did not reveal the fundamental criteria they and MarketGraders used to construct the index, leaving investors to work on faith in Barron’s and the performance charts.  That is less than fully desirable, but the list may still be a good place to do some idea mining.

Barron’s Index Relative Performance:

click to enlarge image

You can view the index attributes on the Barron’s site and download the full list from the attributes page.

Note: We are not recommending any particular stock in the full or high yield list, just providing research grist for the do-it-yourself investor, hoping it will save you some time and help you develop your own ideas.

Richard Shaw
QVM Group LLC

[Securities mentioned in this article: GNK, MO, QSII, INTC, LDR, SPH, SYY, AEO, DRI, BBT, HOG, CCL, NTRI, PG, MMP, BWP, HGT, ITW, LLY, NUE, GFIG, CVX, VR, KNL, CALM, ROK, CNP, GHL, CAT, EMR, STX, ARLP, DD, TNH, PEP, GPC]

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