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 see its share price drop, 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 that the dividend stocks must have a market cap greater than $500 million.

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

 

Company

Market Cap (millions)

Yield

1 Invesco Mortgage Capital (NYSE: IVR  ) $1,824  24.9%
2 Chimera Investment (NYSE: CIM  ) $2,733  19.8%
3 American Capital Agency (Nasdaq: AGNC  ) $6,435  19.7%
4 ARMOUR Residential REIT (NYSE: ARR  ) $604  18.6%
5 Two Harbors Investment (NYSE: TWO  ) $1,333  17.2%
6 CYS Investments (NYSE: CYS  ) $1,101  16.7%
7 Hatteras Financial (NYSE: HTS  ) $2,053  15.0%
8 Ship Finance International (NYSE: SFL  ) $912  15.0%
9 Annaly Capital Management (NYSE: NLY  ) $15,783  14.8%
10 MFA Financial (NYSE: MFA  ) $2,433  14.7%
11 Anworth Mortgage Asset (NYSE: ANH  ) $861  14.6%
12 Niska Gas Storage Partners (NYSE: NKA  ) $674  14.3%
13 Capstead Mortgage (NYSE: CMO  ) $1,073  14.1%
14 National Beverage (Nasdaq: FIZZ  ) $785  13.5%
15 Frontier Communications (NYSE: FTR  ) $5,742  13.5%
16 Prospect Capital (Nasdaq: PSEC  ) $1,027  13.2%
17 Cellcom Israel (NYSE: CEL  ) $1,695  12.3%
18 OneBeacon Insurance Group (NYSE: OB  ) $1,446  12.2%
19 Crexus Investment (NYSE: CXS  ) $760  12.1%
20 BlackRock Kelso Capital (Nasdaq: BKCC  ) $648  12.1%
21 CommonWealth REIT (NYSE: CWH  ) $1,395  12.0%
22 Inergy (NYSE: NRGY  ) $2,863  11.7%
23 Compass Diversified (NYSE: CODI  ) $612  11.5%
24 Navios Maritime Partners L.P. (NYSE: NMM  ) $834  11.4%
25 BGC Partners (Nasdaq: BGCP  ) $807  10.9%

Source: S&P Capital IQ as of Dec. 5.

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 more dividend stock ideas, click here to get The Motley Fool's free report: "11 Rock-Solid Dividend Stocks."

Fool contributor Dan Dzombak owns shares of Frontier Communications and Annaly Capital Management, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Chimera Investment and Annaly Capital Management. Motley Fool newsletter services have recommended buying shares of Cellcom Israel. Try any of our Foolish newsletter services free for 30 days. 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 (5) | Recommend This Article (22)

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 December 06, 2011, at 4:03 PM, Hawmps wrote:

    I currently have ARR, CIM, MFA, IVR, and PSEC as a small part of my portfolio (my high-yield/high-risk holdings "sub-portfolio"). Collectively these are down about 6.2% from my cost not including dividends. Add the dividends and they are collectively down about 2.5%. Out of the five above, my favorites are PSEC and ARR for the dividend paid monthly and PSEC is not in the mortgage business. If I deceided to sell some I'd probably put the cash into more shares of PSEC.

  • Report this Comment On December 07, 2011, at 7:50 PM, 1caflash wrote:

    I hate the words "if" and "assume". Let's use them anyway. Mathematics tells me if AGNC keeps its $5.60 annual dividend for nine years, this DRIP investment in 2020 could be worth an additional $93,713.50 at a price-per-share of $30.00. I currently have 1,859.395 shares. The original cost is $49,473.05. The shares were obtained with at least seven trades. I am not including taxes, brokerage or transaction fees. I have made NO TRADES since October 7, 2011 and I have about 10.5% cash as "soldiers" to deploy when there are bargains and to use for emergencies, like that new water heater I'll probably have to buy because the kit I need for the Whirlpool seems to be obsolete and I'm tired of cold showers. You don't have to throw freezing H2O on thinking Long-Term.

  • Report this Comment On December 09, 2011, at 5:49 AM, invafl wrote:

    NLY and FTR are really hurting me. Don't know how long I can hold or sell? Need some help here!

  • Report this Comment On December 09, 2011, at 8:52 PM, ltklem wrote:

    Since online trades are under ten dollars, why do you hold stocks that are killing you?

    Collect the D and instead of getting beat up for the next three months, sell when it starts to hurt.

    Start treating your hurtfull 1/4ly D stocks the same as you would an S stock. (speicial dividend)

    Here are three S stocks: GAME LVSY DL. They are paying big dividends now, but only once.

    1/4ly D stocks are always for sale, they will be for sale three months from now, just before the ex-date buy back.

  • Report this Comment On December 09, 2011, at 8:57 PM, ltklem wrote:

    selling covered calls on stocks you plan on holding will increase your incoming cash. You only sell the stock at the strike price which you determine when you sell the call. So if you want to keep the stock sell calls with a high strike price and sell far into the future to maximize your $ in.

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