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 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)

Dividend Yield (%)

1 Cypress Sharpridge Investments (NYSE: CYS  ) $1,060 18.8%
2 American Capital Agency (Nasdaq: AGNC  ) $3,913 18.5%
3 Invesco Mortgage Capital (NYSE: IVR  ) $1,643 17.6%
4 National Beverage (Nasdaq: FIZZ  ) $654 16.6%
5 Two Harbors Investment (NYSE: TWO  ) $959 15%
6 Chimera Investment (NYSE: CIM  ) $4,016 14.4%
7 Anworth Mortgage Asset (NYSE: ANH  ) $917 13.8%
8 Hatteras Financial (NYSE: HTS  ) $2,183 13.8%
9 Annaly Capital Management (NYSE: NLY  ) $14,745 13.7%
10 OneBeacon Insurance (NYSE: OB  ) $1,416 12.5%
11 Capstead Mortgage (NYSE: CMO  ) $1,027 12.4%
12 MFA Financial (NYSE: MFA  ) $2,934 11.5%
13 Teekay Tankers (NYSE: TNK  ) $572 11.2%
14 Prospect Capital (Nasdaq: PSEC  ) $1,141 10.5%
15 MCG Capital (Nasdaq: MCGC  ) $530 10.4%
16 Knightsbridge Tankers $514 10%
17 BlackRock Kelso Capital (Nasdaq: BKCC  ) $724 9.9%
18 Solar Capital (Nasdaq: SLRC  ) $903 9.7%
19 Compass Diversified (NYSE: CODI  ) $729 9.4%
20 Partner Communications (Nasdaq: PTNR  ) $2,629 9.3%
21 PDL BioPharma (Nasdaq: PDLI  ) $928 9.1%
22 PennantPark Investment (Nasdaq: PNNT  ) $567 8.8%
23 Frontier Communications (NYSE: FTR  ) $8,808 8.5%
24 Ares Capital (Nasdaq: ARCC  ) $3,444 8.5%
25 Vector Group (NYSE: VGR  ) $1,444 8.4%

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's musings and articles he finds interesting can be found on his Twitter account: @DanDzombak.

The Motley Fool owns shares of Chimera Investment and Annaly Capital Management. Motley Fool newsletter services have recommended buying shares of Partner Communications. 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.


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  • Report this Comment On June 08, 2011, at 3:11 PM, HumbleBeforeGod wrote:

    Great list, and some tempting dividend yields, indeed. Granted, due diligence is the rational response as some of these yields will prove unsustainable given current market conditions and specific companies' financials.

    Including National Beverage in this list is provocative; that company pays dividends sporadically, at best. Not sure how one would map future expected returns per an income investment strategy given that fact. Maybe if the strategy is nicknamed "Pleasant Surprise If Things Work Out"?

    Curious how the author determined OneBeacon's trailing dividend yield. Total dividends last 4 qtrs = $ .84/$15.00 (Closing price, May 31) is 5.6% according to my math. Is my math that far off?

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