The 25 Highest-Yielding Dividend Stocks in March

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.

I ran a screen for the highest-yielding stocks, the only limitation I've set this time is that the dividend stocks must have a market cap greater than $500 million and must be a corporation, so no REITs or MLPs.

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

 

Company Name

Market Cap (millions)

Dividend Yield

1

Boise (NYSE: BZ  )

$860.3

13.80%

2

SeaDrill (NYSE: SDRL  )

$17,629.6

12.00%

3

Windstream (NASDAQ: WIN  )

$5,125.4

11.50%

4

Pitney Bowes

$2,750.4

11.10%

5

Great Lakes Dredge & Dock

$580.3

10.40%

6

R.R. Donnelley & Sons

$1,900.8

10.10%

7

Vector Group

$1,442.9

10.10%

8

Wynn Resorts

$11,700.5

9.87%

9

Ship Finance International

$1,410.9

9.53%

10

Frontier Communications (NASDAQ: FTR  )

$4,092.9

9.52%

11

Consolidated Communications

$664.2

9.39%

12

National Presto Industries

$521.8

8.65%

13

PDL BioPharma

$977.1

8.60%

14

SouFun Holdings

$1,992.7

8.51%

15

First Financial Bancorp

$896.4

7.90%

16

New York Community Bancorp

$5,909.6

7.41%

17

Werner Enterprises

$1,704.1

7.40%

18

Linn

$1,349.4

7.37%

19

Costamare

$1,214.0

7.05%

20

Capitol Federal Financial

$1,813.3

6.89%

21

HCA

$16,386.9

6.82%

22

VimpelCom

$19,611.6

6.77%

23

United Online

$549.6

6.77%

24

Exelon

$26,881.8

6.70%

25

Giant Interactive

$1,550.4

6.69%

Source: S&P Capital IQ.

These stocks are a good place to start your research, but they're not formal recommendations.

Let's take a look at the top 3:

Boise is first with a trailing yield of 13.8%. Boise does not pay a regular dividend; 2012 was the third year in a row that the company paid a special dividend. In fact, in 2012 the company paid two special dividends: one of $0.48 per share and one of $0.72 per share. On the company's most recent conference call, when asked about future dividends, Boise's CEO reiterated the company's track record of returning capital to shareholders but said he would not commit to anything until later in the year.  While Boise could indeed continue to pay out large dividends, if you are looking for regular dividends, pass on Boise.

SeaDrill is second with a trailing yield of 12%. This is also artificially high as the company accelerated its fiscal fourth-quarter dividend to December, which normally would have been paid in March, to allow investors to get the lower tax rate on dividends, which expired at the beginning of 2013.

The company owns offshore oil rigs that it rents out to energy companies. SeaDrill has made it a policy to steadily return cash to shareholders through dividends. The company does not pay a specific quarterly dividend -- its dividend policy is "guided by earnings expectations, market prospects, current capital expenditure programs as well as investment opportunities."

SeaDrill is in a great place competitively as it has some of the newest ultra-deepwater drillships among the drilling fleet. SeaDrill has also benefited from largely avoiding Brazil where its competitor Transocean (NYSE: RIG  ) is being sued for $20 billion over a relatively small oil spill. SeaDrill has just three rigs leased currently to Petrobras in Brazil and that may go down in the future as Petrobras just announced an oil rig lease freeze.

Overall, the company has a high debt load, but this is backed by great assets and long-term contracts. Dividend investors should take note.

Third is Windstream with a trailing yield of 11.5%. The company is a rural telecom that has been working to transition from a focus on residential clients to business clients. The company pays out a high 87% of its free cash flow as dividends. Investors have seen before with Frontier Communications and CenturyLink what happens to companies that cut their dividend. Fool analyst Dan Caplinger recently laid out 3 areas Windstream investors should watch, and I recommend anyone who is interested in Windstream should read it.

Foolish bottom line
Remember, these 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.

If you're on the lookout for high-yielding stocks, The Motley Fool has compiled a special free report outlining our nine top dependable dividend-paying stocks. It's called "Secure Your Future With 9 Rock-Solid Dividend Stocks." You can access your copy today at no cost! Just click here.


Read/Post Comments (3) | Recommend This Article (11)

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 March 08, 2013, at 1:43 PM, drseusphd wrote:

    Win with an 8 day backlog of Shortsellers that only have 5 days left to settle up, options come due next saturday the 16th

    I think we will see alot of upside to win next week that will propel it upward till the dividend

  • Report this Comment On March 11, 2013, at 5:45 PM, i2foolish wrote:

    I wanted to check out some of the top dividend payers and found five of the top 15 show significantly lower yields than what is listed,

    GLDD listed at 10.40%, but their page lists 0.00% - yes, zero per cent

    RRD listed at 10.10%, but their page lists 9.7%

    WINN listed at 9.87%, but their page lists 3.4%

    NPK listed at 8.65%, but their page lists 1.3%

    FFBC listed at 7.90%, but their page lists 3.8%.

    How do you account for the dramatic differences since this is the first business day after your article was written?

    I did not check out the remaining 10 companies.

  • Report this Comment On May 27, 2013, at 5:48 PM, AnsgarJohn wrote:

    @i2foolish NPK pays special dividends

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