The 25 Highest-Yielding Stocks

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 see its share price drop, 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.

Three months ago, I ran a screen for the highest-yielding stocks, and it got such a good reception that I'm doing it again this quarter. The only limitation I've set this time is that the dividend stocks must have a market cap greater than $500 million.

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

 

Company

Market Cap (millions)

Yield

1 Invesco Mortgage Capital (NYS: IVR) $1,824  24.9%
2 Chimera Investment (NYS: CIM) $2,733  19.8%
3 American Capital Agency (NAS: AGNC) $6,435  19.7%
4 ARMOUR Residential REIT (NYS: ARR) $604  18.6%
5 Two Harbors Investment (NYS: TWO) $1,333  17.2%
6 CYS Investments (NYS: CYS) $1,101  16.7%
7 Hatteras Financial (NYS: HTS) $2,053  15.0%
8 Ship Finance International (NYS: SFL) $912  15.0%
9 Annaly Capital Management (NYS: NLY) $15,783  14.8%
10 MFA Financial (NYS: MFA) $2,433  14.7%
11 Anworth Mortgage Asset (NYS: ANH) $861  14.6%
12 Niska Gas Storage Partners (NYS: NKA) $674  14.3%
13 Capstead Mortgage (NYS: CMO) $1,073  14.1%
14 National Beverage (NAS: FIZZ) $785  13.5%
15 Frontier Communications (NYS: FTR) $5,742  13.5%
16 Prospect Capital (NAS: PSEC) $1,027  13.2%
17 Cellcom Israel (NYS: CEL) $1,695  12.3%
18 OneBeacon Insurance Group (NYS: OB) $1,446  12.2%
19 Crexus Investment (NYS: CXS) $760  12.1%
20 BlackRock Kelso Capital (NAS: BKCC) $648  12.1%
21 CommonWealth REIT (NYS: CWH) $1,395  12.0%
22 Inergy (NYS: NRGY) $2,863  11.7%
23 Compass Diversified (NYS: CODI) $612  11.5%
24 Navios Maritime Partners L.P. (NYS: NMM) $834  11.4%
25 BGC Partners (NAS: BGCP) $807  10.9%

Source: S&P Capital IQ as of Dec. 5.

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

For more dividend stock ideas, click here to get The Motley Fool's free report: "11 Rock-Solid Dividend Stocks."

At the time this article was published Fool contributor Dan Dzombak owns shares of Frontier Communications and Annaly Capital Management, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Chimera Investment and Annaly Capital Management. Motley Fool newsletter services have recommended buying shares of Cellcom Israel. 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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Robert Regan

I like this list. Thanks.

December 16 2011 at 4:00 PM Report abuse rate up rate down Reply