Finding top dividend stocks isn't easy, but it can be rewarding. That's why we asked four Motley Fool analysts to each give us one higher-yielding stock investors can be thankful for this November. Here's what they said.
When investing in any business development company, the management team is everything. Golub offers one of the best teams in the business. It has been a leading bookrunner in the middle market, which means it sees the most volume and has first pick on some of the best and most interesting investments in its industry, which is good for the company's shareholders.
This management team has also shown nothing but good stewardship for shareholders since it went public. Recently, it derisked some of its investment portfolio, knowing full well that doing so would reduce earnings for its management team for the benefit of its shareholders. And its public disclosures are top-notch, providing transparency in a segment of the market that many investors often consider to be full of "black boxes."
Finally, its fees are among the lowest in the industry, and crafted so that managers are rewarded for making their shareholders wealthier. That alignment of management and shareholders should not be ignored.
As Jordan mentioned, it all starts with management, and few can match the industry expertise of Barry Sternlicht. He is the founder of Starwood Hotels -- one of the largest hotel chains in the world -- and CEO of both Starwood Capital Group and Starwood Property Trust. Sternlicht is a disciplined investor with a strong track record, which he proved by backing off the overheated real estate market in 2006 and 2007.
I also want a business that differentiates itself, and Starwood Property does this in a few ways. First, the company separates itself from banks by making shorter-term (three to five years) loans that are often particularly complex and require significant expertise. As the largest player in the space, Stardwood's loans are also diverse both geographically and by property type. The acquisition of special servicer LNR in 2013 -- the company works with borrows to improve defaulting loans -- diversified Starwood's income stream. Lastly, through LNR's data the company has an inside look at U.S. debt markets not available to competition.
Ultimately, with proven management and a strong market position, Starwood Property Trust is one of the best high-yield stocks to buy this month.
Matt Frankel: One of my favorite high-dividend stocks that doesn't get too much coverage is PennyMac Mortgage Investment Trust (NYSE:PMT). PennyMac's 11.5% yield isn't too uncommon among mortgage REITs, but the company's business model sets it apart.
Generally, mortgage REITs make their money by using high leverage ratios to buy agency (top-quality) mortgage-backed securities. PennyMac, on the other hand, mostly buys distressed mortgages at a discount to their intrinsic value. This results in higher interest income, so the company doesn't have to use extreme leverage ratios to achieve high returns.
In fact, PennyMac's leverage ratio of just two-to-one pales in comparison to the five-to-one or higher leverage ratios of most other mortgage REITs.
That lower leverage ratio means PennyMac is much less sensitive to interest rate fluctuations than other mortgage REITs. As a result, while many other mortgage REITs have been forced to make drastic dividend cuts over the past couple of years, PennyMac has actually increased its payout by 11% since 2012, and on a gradual, consistent basis.
With shares trading at a slight discount to book value (historically, PennyMac has traded for 1.025-1.175 times its book value), now might be a great time to buy shares on sale.
The company's a bit off-radar for U.S. investors, since it's no longer active on our market (for now, anyway). Earlier this year, it sold off its 45% stake in Verizon (NYSE:VZ) for $130 billion.
That's typical for Vodafone, which has proven over the years to be a smart dealmaker. As a result, outside of the U.S. it has a big international footprint. This should grow as the company uses the Verizon cash for new assets.
In terms of operations, Vodafone is improving where it counts. Europe might still be economically challenged, but the company has boosted its take there, with revenue rising by almost 17% on a year-over-year basis to 6.8 billion pounds ($10.9 billion) in its most recently reported quarter. That compensated for a 10% dip from the significantly smaller (in terms of revenue) Africa, Middle East, and Asia-Pacific region.
Vodafone investors, it seems, miss being players on the American market. Since the completion of the Verizon sale, the company's share price has slipped by 17%. But that has driven up the dividend yield to a sweet 7.5%, handily beating Verizon's 4.4% and American peer AT&T's (NYSE:T) 5.3%.
the_motley_fool has no position in any stocks mentioned. Dave Koppenheffer has no position in any stocks mentioned. Eric Volkman has no position in any stocks mentioned. Jordan Wathen has no position in any stocks mentioned. Matthew Frankel owns shares of AT&T; and PennyMac Mortgage Investment Trust. The Motley Fool recommends Vodafone. 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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