Like fat dividends? Like undervalued stocks? The most recent pick of my Special Situations portfolio has both. It's NorthStar Realty Finance (NYSE:NRF), and it offers nimble investors a nice chance for profit over the next year, about 50% upside, I figure.

Why does this opportunity exist? Last month NorthStar split off its asset-management arm into a separate publicly traded company. That helped keep the price on NorthStar down, as investors moved into the asset management business. But NorthStar is still maintaining a huge dividend – much higher than sites like Yahoo! Finance suggest, which indicate that the REIT is paying a 5.9% yield. I bet your broker's website says the same thing. They're out of date already. So there's a huge data lag that you can take advantage of. NorthStar should pay a dividend much closer to 9%, if it pays out 90% of its cash available for distribution, as it did in the first quarter.

To repeat, you won't find this news on the public finance sites. You have to read the SEC filings and investigate deeper. And that gives you a huge advantage.

With that kind of payout, we should expect the stock to trade up to a 6.5% yield. That implies a stock price of $23, or about 40% higher than today's price. Add in a 9% yield, and you get a near-50% return in a year. That dividend should help bolster the stock during any market downturn, too, so you have some added safety.

Foolish bottom line
So my Special Situations portfolio is putting $1,000 into NorthStar Realty Finance again this week. As I've been announcing for weeks, if the stock lingers around today's prices, I expect to buy more in the following weeks and to keep buying. This is one of the most attractive positions in my portfolio. Follow me on Twitter: @TMFRoyal. And check out my dedicated discussion board.