The 25 Highest-Yielding Stocks

Dividend investing is popular again. Investors have taken to heart Jeremy Siegel's studies, which show that higher-yielding stocks tend to offer greater returns over time than low- or no-yield stocks.

The highest dividend yields can be very tantalizing. As long as a stock yielding 15% doesn't lose value, you'll make 15% in one year! In more cases than not, however, an astronomical yield is a bad sign for a stock. Since dividend yields and stock prices move in opposite directions, a high yield usually means that investors have begun to worry about the business and driven down its stock price.

However, certain types of companies such as REITs have to pay out most of their income as dividends, so their yields will be higher than "normal." Dividends are not guaranteed; you need to make sure that a business is generating enough cash to pay its dividend, or your investment could be disastrous.

Three months ago, I ran a screen for the highest-yielding stocks, and it got such a good reception that I'm doing it again this quarter. The only limitation I've set, this time, is the dividend stocks must have a market cap greater than $500 million.

Here are the top 25 highest-yielding stocks the screen produced:

Rank

Company Name

Dividend Yield

Market Cap (millions)

1 American Capital Agency (Nasdaq: AGNC  )          19.6% $1,451.4
2 PDL BioPharma (Nasdaq: PDLI  )          19.2% $753.0
3 Invesco Mortgage Capital (NYSE: IVR  )          18.5% $841.2
4 Cypress Sharpridge Investments (NYSE: CYS  )          18.4% $593.6
5 Chimera Investment (NYSE: CIM  )          17.6% $3,568.0
6 Annaly Capital Management (NYSE: NLY  )          15.4% $10,985.3
7 Hatteras Financial (NYSE: HTS  )          15.0% $1,363.7
8 Anworth Mortgage Asset (NYSE: ANH  )          13.1% $831.3
9 Prospect Capital (Nasdaq: PSEC  )          12.2% $791.0
10 MFA Financial (NYSE: MFA  )          11.4% $2,244.4
11 Teekay Tankers (NYSE: TNK  )          11.4% $628.4
12 BlackRock Kelso Capital (Nasdaq: BKCC  )          10.9% $861.5
13 Solar Capital (Nasdaq: SLRC  )          10.8% $757.9
14 Frontline (NYSE: FRO  )          10.4% $2,246.2
15 World Wrestling Entertainment (NYSE: WWE  )          10.4% $1,014.6
16 Cellcom Israel (NYSE: CEL  )          10.3% $3,263.9
17 Capitol Federal Financial (Nasdaq: CFFN  )          9.83% $1,765.4
18 Encore Energy Partners LP (NYSE: ENP  )          9.77% $929.1
19 Knightsbridge Tankers Limited (Nasdaq: VLCCF  )          9.23% $533.3
20 Nordic American Tanker Shipping (NYSE: NAT  )          9.22% $1,250.3
21 Provident Energy Trust (NYSE: PVX  )          9.15% $2,052.9
22 Capstead Mortgage (NYSE: CMO  )          9.12% $800.2
23 Navios Maritime Partners L.P. (NYSE: NMM  )          8.90% $939.4
24 Cheniere Energy Partners LP. (NYSE: CQP  )          8.86% $3,028.9
25 Mesabi Trust (NYSE: MSB  )          8.79% $503.9

Source: Capital IQ, a division of Standard & Poor's.

These stocks are a good place to start your research, but they're not formal recommendations. Remember, their seemingly irresistible yields could be ticking time bombs, so do your own due diligence. Also, make sure you diversify your picks across various sectors. As investors relearn every decade or so, you never want to put all your eggs in one basket -- no matter how tempting the dividends are.

For a basket of some high-yield some dividend opportunities, click here to get The Motley Fool's five-page free report: 13 High-Yielding Stocks to Buy Today.

Dan Dzombak recommends you read The Best Investment Advice You Will Ever Get If You Have Under $100k. His musings and articles he finds interesting can be found on his Twitter: @DanDzombak. He does not own any of the stocks mentioned in this article.

Cellcom Israel is a Motley Fool Global Gains pick. The Fool owns shares of Annaly Capital Management. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (10) | Recommend This Article (98)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 03, 2010, at 7:03 PM, marcjones281 wrote:

    Why aren't companies less than 500m included? RSO!

  • Report this Comment On November 04, 2010, at 10:00 AM, czelbst wrote:

    PDLI has no formal dividend policy and their latest 8-K states “We will continue to focus on our strategy, driven solely by increasing return for our shareholders, in the form of extending the life of the company by purchasing new royalty streams, buying back convertible debt or buying back stock”. Their royalties are tied to patents that expire in 2014 and their goal of extending the life of the company is something investors need to focus on. Based on their current strategy and efforts to purchase future royalty streams, I doubt that they will pay any dividends in 2011.

  • Report this Comment On November 04, 2010, at 6:02 PM, financeguy85 wrote:

    This list of companies really doesn't do much good. Virtually all of them are mortgage REITS or shipping and tanker LP's.

  • Report this Comment On November 05, 2010, at 1:04 PM, mrbill6 wrote:

    i think the list is worth looking at, as it has more than just REITs. Although, I don't think it should include stocks paying dividends once per year such as PDLI. And CFFN is down 28% over the past 6 months and may be a bargain as it has maintained it's quarterly dividend, even raising the last one.

  • Report this Comment On November 05, 2010, at 3:07 PM, TMFDanDzombak wrote:

    @marcjones281 Too many sketchy companies. If you like RSO you may also like TWO

  • Report this Comment On November 05, 2010, at 3:15 PM, TMFDanDzombak wrote:

    @czelbst In the presentation they posted on 11/2, in slide 43 it says dividends are still on the table for optimizing shareholder return.

    http://www.sec.gov/Archives/edgar/data/882104/00011442041005...

  • Report this Comment On November 05, 2010, at 3:18 PM, TMFDanDzombak wrote:

    @financeguy85 true their are differences between how retis versus a regular company's dividend affects your taxes but this varies greatly from person to person.

  • Report this Comment On November 05, 2010, at 3:19 PM, TMFDanDzombak wrote:

    @mrbill6 thanks and good point about cffn

  • Report this Comment On November 07, 2010, at 12:25 PM, TimoDOZ wrote:

    Many of these picks are MLP structured investments. Most Fools and Fool readers are sophisticated enough to understand this and some of the tax complications involved in investing in MLPs. But "FOOL" should make this situation clear in such TEASER plugs. Besides the complications of K-1 form investing that again most Fools will trivialize as their sophistication extends to Turbo tax and the rest of such ilk making these issues a "snap" to deal with, most others who have professional tax preparation done for them should realize this tax reporting could end up creating +26 page tax returns for you. In addition there are even worse complications as related to K-1 Box 20 UBTI that may endanger your IRA status and sucjh. Such investments may generate an excess amount of this income in IRA's and then the IRA must report that taxable income and it must be paid out toof the IRA whicjh then might also constitute premature 10% penalty withdrawals. And of course even more pages on your tax return. All this extra tax preparation could increase your cost for the service beyond what you might be earning in some of these investments. So to be cost effective you may need to be a pig and go all in with large globs of money. There are now so many CEFs and ETF that operate as "C" corporations that handle these investments in a more tax friendly manner and generate 1099 income. Fools may be just as well served finding a decent closed end fund that is an equity fund or an emerging market or even a global fund to invesrt in. Even the ETFs in these classes of assts are having strong returns and some pay out pretty decent dividends such as the Wisdom Tree emerging markets ETF. The Fool has been deaf Dumb and blind as Canadian utilities like Atlantic Power and Macquarie Power infrastructure and a few others have soared +30% and their distributions have with the currency leverage increased by 10%. The Fool is just not a comprehensive advisor service and is not allowed to play around in such speculative foreign countries as Canada. They with their Hard Currency, rising interest rates to dampen their rising Real Estate values and strong vibrant Nat Resources economy are "Socialists". No disagreement among Fools that that is worse than being a "liberal" and while you may make huge profits and distributions you may have to pay a bit of tax and that is very evil indeed.

  • Report this Comment On November 10, 2010, at 3:02 PM, bugsdaddy61 wrote:

    Be careful of what you are screening for. You need to do your due diligence and verify the yields. Many of these stocks no longer have the return listed above as they have reduced or eliminated their dividends. For example NAT used to have a wonderful 10%+ yield, but since they reduced the dividend they now yield "only" 3%. (Not bad when you consider the average yield on the S&P).

    But as always. Beware and DO YOUR OWN HOMEWORK!!!

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