What does not workSAVNG Research · September 10, 2026

A 20%+ owner-earnings yield is the market disagreeing with the coupon

The claim. Sorted by starting owner-earnings yield alone, 2011 to 2025, the top tenth returned +2.9 pts versus the S&P 500 over the next year, but with a hit rate of only 43% — a few winners carried it. The tenth just below it returned −0.9 pts. Above roughly a 20% yield the coupon usually shrank. Measured on 13,036 company-years.

The richest-looking rows in the equity-bond table are almost never bargains. A yield above roughly 20% means the market expects the cash flow to shrink: a commodity peak, a business in run-off, or debt that eats the coupon.

How we tested it
  • Universe: 2,125 U.S. companies with ten-plus years of prices; banks, insurers and REITs excluded by SIC (no owner-earnings coupon).
  • Point in time: at each annual report's filing date we computed the coupon (three-year average of operating cash flow − capex − stock compensation, per diluted share), the yield at the next close, and a five-year revenue growth rate capped between −5% and +15%, using only filings available that day. Later restatements were never used earlier than they were filed.
  • Return: a ten-year internal rate of return with five years at that growth, fading to 2.5% by year ten, sold at fifteen times year-ten owner earnings. Companies ranked into fifths within each filing year.
  • Outcome: total return over the next twelve and thirty-six months minus the S&P 500, using split- and dividend-adjusted prices.
  • Limits: the universe is survivorship-tilted and small-cap, so the levels run negative; the spread between rows is the finding. No costs deducted.
Reproduce: node savng-insider-history/owner-yield-study.js → reports/owner-yield-study.json (generated 2026-09-14); served at /owner-yield-study.
The picture
Yield D1 (lowest)+0.1 pts hit 39%Yield D2−0.7 pts hit 42%Yield D3−2.7 pts hit 44%Yield D4−2.0 pts hit 42%Yield D5−0.8 pts hit 43%Yield D6−1.4 pts hit 43%Yield D7−0.0 pts hit 46%Yield D8−0.7 pts hit 44%Yield D9−0.9 pts hit 41%Yield D10 (highest)+2.9 pts hit 43%

Average twelve-month return minus the S&P 500, in percentage points.

Does it apply to your sector?
SectorCompany-yearsTop fifth, 12 moBottom fifth, 12 moTop − bottomTop fifth, 3 yrs/yrRead
Industrials & manufacturing3,598+0.2 pts n 508−3.0 pts n 763+3.2 pts−18.7 ptsSorts weakly
Services1,353+0.6 pts n 310−6.2 pts n 197+6.8 pts−18.6 ptsSorts well
Retail & consumer1,256+7.4 pts n 272+11.9 pts n 213−4.6 pts−21.5 ptsDoes not sort
Tech hardware & semis1,207+0.7 pts n 127+10.4 pts n 320−9.8 pts−10.5 ptsDoes not sort
Software & IT services957+6.0 pts n 87−3.6 pts n 301+9.6 pts−3.7 ptsSorts well
Other799+1.4 pts n 235−0.1 pts n 95+1.5 pts−18.4 ptsSorts weakly
Finance & real estate670+1.1 pts n 234−7.1 pts n 68+8.2 pts−8.6 ptsSorts well
Biotech & pharma609−2.5 pts n 132−0.6 pts n 124−1.9 pts−23.1 ptsDoes not sort
Energy574−14.1 pts n 335−24.6 pts n 61+10.5 pts−39.4 ptsSorts well
Medical devices458+8.6 pts n 18−2.1 pts n 160+10.7 pts−1.5 ptsToo few to say
Food, drink & tobacco365−11.5 pts n 40−9.6 pts n 70−1.9 pts−17.1 ptsDoes not sort
Utilities290−0.6 pts n 73−6.1 pts n 85+5.5 pts+0.3 ptsSorts well
Transport & logistics287+10.6 pts n 75+0.4 pts n 57+10.3 pts+1.1 ptsSorts well
Construction228+31.4 pts n 47−5.8 pts n 33+37.1 pts+17.0 ptsSorts well
Telecom & media195−6.1 pts n 71+6.4 pts n 34−12.5 pts−29.0 ptsDoes not sort
Healthcare services154+32.2 pts n 30−6.2 pts n 25+38.4 pts−6.5 ptsSorts well

Sectors with fewer than 150 company-years are omitted. "Sorts well" means the top fifth beat the bottom fifth by four points or more over the next year.

Where it applies today

Companies in the deep band today (ten-year owner-earnings return 10 to 30 points over the 5.00% Treasury, yield at or under 25%, $2B+ market cap):

WU Western Union COTechnology · yield 24.3% · IRR 35.0%OWL BLUE OWL CAPITAL INC.Financial Services · yield 14.4% · IRR 33.7%CALM CAL-MAINE FOODS INCBasic Materials · yield 19.2% · IRR 33.5%SKYW SKYWEST INCIndustrials · yield 19.1% · IRR 33.4%TRN TRINITY INDUSTRIES INCConsumer Cyclical · yield 15.4% · IRR 33.2%FISV FISERV INCTechnology · yield 15.5% · IRR 32.9%
Full list, deep band →Every stock on this axisThe backtest in full
Where it does not apply
We label these rows rather than rank them. Check the five-year cash-flow table and the debt line before believing one.

SAVNG is an educational research publication, not a Registered Investment Adviser. Everything here is general-circulation information produced by an automated pipeline — the same for every reader — and is not personalized investment advice, an offer, or a recommendation to buy or sell any security. Any performance figure is hypothetical; past performance does not predict future results. Details.

Published by SAVNG Research. Every figure on this page is read from the study data at render time; if the study changes, the page changes with it.

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