At least by the sound of it, you'd think that high dividend yield would be an unequivocally good thing for your holdings. Sure, big fat dividend yields mean more immediate cash in your pocket. But remember, dividend yield is only a comparative measure.
Calculated by dividing annual dividend per share by price per share, dividend yield is a ratio that shows how much a company pays in dividends relative to share price. If a stock takes a nosedive, dividend yield will consequently see a spike. So high dividend yield can often be a red flag, indicating very high risk ahead.
Which is why it's a good idea to consider additional criteria if you're thinking about adding some high dividend yielding stocks to your portfolio.
So we narrowed down the field by screening for stocks with high liquidity ratios, metrics evaluating current assets against liabilities. These ratios give investors a sense of how secure a company's dividend is -- low liquidity ratio suggests that the company may have trouble paying their dividends. All of the stocks in our list have current and quick ratios above 1.0, i.e., current assets are greater than current liabilities.
Then, we took our pool of high yield dividend stocks with high liquidity ratios, and looked to see which of them were getting snapped up by company insiders.
When a firm's executives are willing to put their personal piggy bank at stake to buy the shares of their employers, it's a good sign that they think dividend return outweighs the additional risk. What do you think of these high yielding stocks seeing insider buying? (Click here to access free, interactive tools to analyze these ideas.)
|
Company |
Industry |
Dividend Yield |
Insider Transactions Over the Last 6 Months |
|---|---|---|---|
|
Niska Gas Storage Partners (NYSE: NKA) |
Gas Utilities |
6.85% |
On a net basis, insiders purchased 2,500 shares over the last six months (insider ownership increased by 99.9%) |
|
DDI (Nasdaq: DDIC) |
Printed Circuit Boards |
4.31% |
On a net basis, insiders purchased 1,024,440 shares over the last six months (insider ownership increased by 12.5%) |
|
Star Gas Partners (NYSE: SGU) |
Specialty Retail |
5.70% |
On a net basis, insiders purchased 568,634 shares over the last six months (insider ownership increased by 4.6%) |
|
Overseas Shipholding Group (NYSE: OSG) |
Shipping |
5.28% |
On a net basis, insiders purchased 154,876 shares over the last six months (insider ownership increased by 3.3%) |
|
Federal Signal (NYSE: FSS) |
Trucks & Other Vehicles |
4.33% |
On a net basis, insiders purchased 5,000 shares over the last six months (insider ownership increased by .9%) |
|
CH Energy Group (NYSE: CHG) |
Diversified Utilities |
4.42% |
On a net basis, insiders purchased 8,000 shares over the last six months (insider ownership increased by .5%) |
|
Ennis (NYSE: EBF) |
Office Supplies |
4.02% |
On a net basis, insiders purchased 1,000 shares over the last six months (insider ownership increased by .2%) |
|
Intersil Corporation (Nasdaq: ISIL) |
Semiconductor Industry |
4.03% |
On a net basis, insiders purchased 336 shares over the last six months (insider ownership increased by .1%) |
Insider trading data sourced from Yahoo! Finance. The list has been sorted by the change in institutional ownership over the last six months.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.
Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.
