Mortgage REIT NovaStar Financial
I'm a NovaStar shareholder, having bought the stock on the promise of a 17% dividend yield with what looked like solid backing. Today, all sorts of metrics are down from last year, some at alarming rates, and my investment is feeling a little shaky. Adjusted for dividends, I'm up 4.3% in 14 months' time, which is a far cry from the 17% free ride I was hoping for.
It's so easy to get drawn in by the promise of juicy dividends. But if it was just a matter of finding the highest possible yields, we'd all just invest in Terra Nitrogen
For its part, NovaStar is one of the many companies that keeps popping up in connection with naked short-selling. If Overstock.com
What to do, what to do .... Hold and hope that the housing bubble doesn't pop while the naked shorting demons turn out to be real? Or cash out at a tiny profit and not look back? The Fool says I need to think about it for at least 10 days now, so I'll go soul-searching in the meantime. As for the rest of you, due diligence is in order. Mathew Emmert's Income Investor newsletter is a great place to learn more about safe dividends, and you can take it for a free 30-day spin today.
Fooling right along:
- Fellow Fool Stephen Simpson didn't like NovaStar last year.
- Dare we invest in a crooked market?
- Maybe if you bring some truthiness into the equation.
- Dividends make you money in any market.
Netflix is a Motley Fool Stock Advisor selection, and NetEase is a Rule Breaker pick. Overstock is a former Stock Advisor recommendation.
Fool contributor Anders Bylund is a shareholder in NovaStar, Netflix, and True Religion, but holds no other position in any of the companies discussed here. He also used to own some Overstock.com stock. No, he doesn't go by the Reg SHO list when screening for investments. You can check out Anders' holdings if you like. Foolish disclosure is never nude.