Dividend-paying stocks are an attractive buy for many retail investors. And no wonder -- intangible, reinvested profits simply don't satisfy like cold hard cash in your pocket. So it makes sense to want to snap up stocks with big fat dividend yields, right?
Well, that depends.
Remember, a dividend yield is a ratio that shows how much a company pays out in dividends relative to its share price; it's calculated by dividing annual dividends per share by price per share. If a stock price drops sharply, dividend yield will see a spike -- meaning that high dividend yield is often an indicator of very high risk.
That said, high dividend yield stocks potentially offer a lot of bang for your buck, so it's worth considering them for your portfolio if you're willing to take the risk.
But you may want to evaluate high-yield stocks based on additional criteria. To narrow our pool, we looked for high-yielding dividend stocks with market caps north of $300 million. We then focused our attention on stocks with good short-term liquidity, that is, a large current asset value relative to current liabilities, measured by the current ratio. All of the stocks in our list have current ratios above 1.5.
Additionally, all of these high dividend yield stocks have seen insider buying over the past few months. When management buys its own stock, that's a very good sign -- because they know a lot more about their company than the rest of us. Could these insiders be signaling that the dividend return is enough to compensate for the additional risk? (Click here to access free interactive tools to analyze these ideas.)
Insider trading data is sourced from Marketwatch, current ratio data is sourced from Finviz, and dividend yield data is sourced from Zacks. The list has been sorted by dividend yield.
|
Company
|
Dividend Yield
|
Insider Transaction
|
Current Ratio
|
| Compass Diversified Holdings (Nasdaq: CODI ) |
7.90%
|
Insiders like I Massoud, Alan Offenberg, and Gordon Burns collectively bought $1,937,480 worth of stock between Aug. 5 - Aug. 19 |
1.85
|
| Overseas Shipholding Group (NYSE: OSG ) |
5.19%
|
Solomon Merkin (Director) bought $41,232 worth of stock between Aug. 5 - Aug. 31 |
2.74
|
| NL Industries (NYSE: NL ) |
4.79%
|
Harold Simmons (Chairman and CEO) bought $48,713 worth of stock between July 16 - Oct. 6 |
1.84
|
| Universal (NYSE: UVV ) |
4.70%
|
Thomas Johnson (Director) and Ray Paul collectively bought $58,272 worth of stock on Aug. 9 |
2.5
|
| DPL (NYSE: DPL ) |
4.44%
|
Scott Kelly (SVP) bought $79,201 worth of stock on Sept. 14 |
1.68
|
| Intersil (Nasdaq: ISIL ) |
4.05%
|
Gary Gist (Director) bought $31,340 worth of stock between Aug. 12-18 |
1.96
|
| Foot Locker (NYSE: FL ) |
3.87%
|
Nicholas DiPaolo (Director) bought $12,753 worth of stock on Sept. 17 |
3.27
|
| Comtech Telecommunications* (Nasdaq: CMTL ) |
3.35%
|
Insiders like Fred Kronberg (Chairman, President and CEO), Michael Porcelain (CFO), Roger Paul (Director) and Jerome Kapelus collectively bought $230,398 worth of stock between Sept. 30 and Oct. 6 |
5.45
|
| Methode Electronics (NYSE: MEI ) |
3.05%
|
Paul Shelton (Director) bought $16,840 worth of stock on Sept. 9 |
3.15
|
*Comtech's dividend was just initiated; it will pay its first quarterly dividend next month. From its press release: "While future dividends will be subject to Board approval, the Board of Directors is initially targeting an annual dividend of $1.00 per share per year."
Interactive Chart: Press Play to see how the market caps for all the stocks mentioned above have changed over the past two years.
Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.
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