The 25 Top-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-yielding dividend stocks can be tantalizing. So 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. Because dividend yields and stock prices move in opposite directions, a high yield usually means investors have begun to worry about the business and driven down its stock price.

However, certain types of companies, such as real-estate investment trusts, 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 regular dividend stock. The only limitations I've set this time are that the dividend stocks must have a market cap greater than $500 million and must be corporations (i.e., no REITs , BDCs , LPs, MLPs , or LLCs).

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

 

Company Name

Market Cap (millions)

Dividend Yield

1

Windstream (NASDAQ: WIN  )

$4,780

12.50%

2

Grupo Financiero Santander Mexico (NYSE: BSMX  )

$14,951

12.10%

3

The Buckle (NYSE: BKE  )

$2,165

11.70%

4

SeaDrill Limited (NYSE: SDRL  )

$17,338

10.60%

5

North Atlantic Drilling Limited (NYSE: NADL  )

$2,098

10.50%

6

Just Energy Group (NYSE: JE  )

$1,100

9.89%

7

Banco Santander, S.A. (NYSE: SAN  )

$101,451

9.14%

8

Orange (NYSE: ORAN  )

$32,080

8.60%

9

Ship Finance International (NYSE: SFL  )

$1,755

8.50%

10

Frontier Communications (NASDAQ: FTR  )

$4,878

8.20%

11

Consolidated Communications (NASDAQ: CNSL  )

$764

8.13%

12

Student Transportation (NASDAQ: STB  )

$509

8.10%

13

Vector Group Ltd. (NYSE: VGR  )

$1,845

7.80%

14

Vodafone (NASDAQ: VOD  )

$107,739

7.69%

15

Compass Diversified (NYSE: CODI  )

$905

7.68%

16

CVR Energy (NYSE: CVI  )

$3,417

7.62%

17

Telefonica Brasil, S.A. (NYSE: VIV  )

$19,840

7.54%

18

Diamond Offshore Drilling (NYSE: DO  )

$6,576

7.40%

19

Grupo Aeroportuario del Centro Norte (NASDAQ: OMAB  )

$1,230

7.33%

20

Petrobras (NYSE: PBR  )

$74,046

7.12%

21

Crescent Point Energy (NYSE: CPG  )

$13,904

7.10%

22

HollyFrontier (NYSE: HFC  )

$9,067

7.02%

23

CenturyLink (NYSE: CTL  )

$18,067

6.91%

24

Telefónica, S.A. (NYSE: TEF  )

$67,767

6.75%

25

Booz Allen Hamilton (NYSE: BAH  )

$3,039

6.66%

Source: S&P Capital IQ as of March 3, 2014.

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

I have covered Windstream multiple times in the past. Nothing has changed about the company's debt situation or dividend payout ratio.

Windstream has a mountain of debt, which continues to grow as a percentage of the company's equity.

WIN Debt to Equity Ratio (Quarterly) Chart

WIN Debt to Equity Ratio (Quarterly) data by YCharts.

Further, Windstream continues to pay out as dividends an unsustainably high percentage of the cash it brings in.

WIN Cash Dividend Payout Ratio (TTM) Chart

WIN Cash Dividend Payout Ratio (TTM) data by YCharts.

The company's cash payout ratio has hovered around 100% for three years now.

We've seen situations like this before, most notably with Frontier Communications until recently:

FTR Cash Dividend Payout Ratio (TTM) Chart

FTR Cash Dividend Payout Ratio (TTM) data by YCharts.

Frontier's stock price was cut in half after the dividend cut, erasing the gains made from collecting the large dividends. I will reiterate what I wrote before: "Investing in Windstream looks like picking up quarters in front of a steamroller; sooner or later you're going to get crushed."

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.

Like High-Yielders? Here Are Nine Solid Ones!
One of the secrets that few finance professionals will reveal is that dividend stocks as a group handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

 


Read/Post Comments (4) | Recommend This Article (6)

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 04, 2014, at 1:46 PM, anindakumars wrote:

    I was expecting to see LINE, does it fail your limitation test?

  • Report this Comment On March 04, 2014, at 3:36 PM, TMFDanDzombak wrote:

    Yes, LINE is a limited liability corp (LLC)

  • Report this Comment On March 06, 2014, at 12:44 PM, jarek00001 wrote:

    Many of the companies that appear in this Top 25 list no longer pay the high dividends cited in the accompanying article. Others are so overextended through outrageously high payout ratios that they are rendered at least suspect and at worst useless as a potential vehicle for income investors. Maybe investors should be looking in a different direction for yield.

  • Report this Comment On March 19, 2014, at 7:34 PM, selliott76 wrote:

    I'm wondering when you ran your screen. Looking at the TMF stock charts on these 25 it appears that the dividend yield you report is anywhere from half a point to almost 10 points off on 14 of the stocks listed. For instance, BKE is shown with an 11.7% dividend but the TMF stock chart shows it with a 1.9% dividend. DO is listed at 7.4% vs 1.1% on the stock charts. Am I missing something here? Of course, I am beginning to wonder about the TMF stock charts based on the BSMX chart. You list them at 12.10%, the TMF chart shows 10.3% but reports the dividend as $3.81 with a stock price of $10.99. In my math class 3.81 divided by 10.99 is 34.66%. I'm confused.

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