High Yield Dividend Stocks With +11% Payouts (FORTY, KCAP, WAC, WHX, IVR, RSO, CPLP, KSP, AMRR, GMR)

   

High yield dividend stocks were hard to come by in the recession, as some big blue chips slashed their payouts. But now, dividend growth appears to be back.  According to Standard and Poor’s, only 48 companies in the S&P 500 decreased their dividend payments during the first quarter of 2010, a vast improvement over the record 367 companies that slashed dividends during the same period in 2009 — adding $6.4 billion in total dividends.

Stable blue chips are staples for dividend growth, and the top 10 high yield dividend stocks in the Dow are all fall-backs for many investors. These quarterly offerings can provide a regular “paycheck” for retirees — especially when the company is a high-yielding blue chip with a track record of boosting its dividend year after year.

But dividends don’t just have to be a quiet way to grow your nest egg. They can really supercharge your returns when you buy into a great stock that also happens to be cash-rich. On top of the appreciation you see in your shares, you’ll also get a great bonus checked mailed four times a year — or more, depending on the dividend schedule!

Here are 10 examples of high-yielding dividend stocks with breakout potential. All of these companies have a yield of 10% or more and are small cap stocks that seem to be going strong right now.

One word of caution, however: These dividend yields are annualized rates based on previous payouts. One big disbursement can skew the annualized yield for a stock. Also, as with any investment there are no guarantees on these yields — stocks may be raising dividend yields as a whole, but there’s no guarantee these dividends will stay put for long. Stocks cut or eliminate dividends all the time, even in good markets, so nothing is set in stone. Finally, some of these small-cap stocks are thinly traded and can gap up dramatically on low volume. If you’re looking to buy, make sure you use a limit order and trade during regular market hours to protect yourself from overpaying.

Enough with the dividend stock disclaimers — on to the list:

High yield dividend stock #10 – Formula Systems 1985 FORTY

  • Sector: Information Technology
  • Market Cap: $171million
  • Current Annualized Dividend Yield: 11.3%

Formula Systems 1985 (FORTY) is an information technology company based in Israel, but trading on American exchanges as an ADR. Formula provides software consulting services and software development in over 50 countries. As companies look to keep costs down by outsourcing IT services, FORTY is doing brisk business. Shares are up 17% year-to-date and Formula Systems is currently offering a high dividend yield of 11.7%

High yield dividend stock #9 – Kohlberg Capital KCAP

  • Sector: Financials
  • Market Cap: $124 million
  • Current Annualized Dividend Yield: 11.9%

Kohlberg Capital (KCAP) s a private equity and venture capital firm specializing in buyouts. This cash-rich company typically hasn’t paid a first-quarter dividend, but has paid out cold, hard cash to shareholders in Q2-Q4 of 2008 and Q2-Q4 of 2009. Kohlberg has reported steady earnings recently, but it must be acknowledged that class action law suits have been filed against the company regarding its reporting practices. KCAP stock were really beaten down in early 2010 due to these troubles, dropping under $4 in early February, but have rebounded since then to the high $5 range and could be a good investment for those with the stomach for it. Kohlberg Capital’s high dividend yield was previously noted by InvestorPlace.com in March.

High yield dividend stock #8 – Walter Investment Management WAC

  • Sector: Real estate investment trusts
  • Market Cap: $417 million
  • Current Annualized Dividend Yield: 12.39%

Walter Investment Management Corp. (WAC) is a real estate investment trust or REIT that operates as a mortgage portfolio owner and mortgage service. That means Walter is one risky play amid all the foreclosure uncertainty. But apparently the company has made some smart moves as to the loans it is buying, since the company currently enjoys a high dividend yield of 12.3%. According to tax rules, REITs must consistently deliver a portion of their profits to shareholders — so WAC stock has a better chance of maintaining a high dividend yield than some other stocks in this list.

High yield dividend stock #7 – Whiting USA Trust WHX

  • Sector: Real estate investment trusts
  • Market Cap: $280 million
  • Current Annualized Dividend Yield: 13.1%

Whiting USA Trust I (WHX) is a subsidiary of Whiting Petroleum Corp. (WLL). The  parents company is an oil and gas stock that operates in the Rocky Mountains, Midwest and Gulf Coast – and due to its extensive exploration efforts, is a tremendous landowner. That’s where the Whiting USA trust comes in. This subsidiary is basically just a way to hold all that land with minimal tax impact to Whiting Petroleum. It’s apparently cheaper to pay WHX shareholders a high dividend yield of 13.1% than to keep that land under the WLL umbrella … which is fine by those investors who own the Whiting USA trust!

High yield dividend stock #6 – Invesco Mortgage Capital IVR

  • Sector: Real estate investment trusts
  • Market Cap: $377 million
  • Current Annualized Dividend Yield: 14.0%

Formerly Invesco Agency Securities, Invesco Mortgage Capital (IVR) is yet another real estate investment trust (REIT). The company finances and manages residential and commercial mortgage-backed securities and mortgage loans like high dividend stock #8, Walter Investment Management (WAC). As with Walter, this REIT is a risky play amid the uncertain housing market but appears to be doing all the right things right now. It’s worth noting that that despite a high dividend yield of 14% — that’s an annual rate, remember — IVR investors are under water themselves in 2010 as the stock has trended down -10% year-to-date. Most of that decline came at the end of April after news of a public stock offering for IVR. But IVR posted decent first quarter earnings and the dividend certainly softens the blow.

Click the navigation below to keep reading the remaining high yield dividend stocks — including one with a +20% dividend yield!

High yield dividend stock #5 – Resource Capital Corp. RSO

  • Sector: Financials
  • Market Cap: $262 million
  • Current Annualized Dividend Yield: 14.9%

Resource Capital Corp. (RSO) is a young company, incorporated at the end of 2005, but has seen a lifetime of market turmoil over the past few years. As is a specialty finance company that focuses primarily on commercial real estate and commercial finance. Though RSO shares topped out at nearly $19 in 2007, the commercial real estate collapse and commercial lending troubles beat Resource Capital shares down to single digits where they still trade. However, the company has kept a high dividend yield of almost 15% and has been moving sideways for several months. For those who think commercial real estate is turning around, RSO stock would be a gutsy buy.

High yield dividend stock #4 – Capital Product Partners CPLP

  • Sector: Marine shipping
  • Market Cap: $224 million
  • Current Annualized Dividend Yield: 18.5%

Capital Product Partners L.P. (CPLP) is an international tanker company, though you probably assumed by the name that it was another company dealing in mortgage papers. Though the industry is very different, the fortunes of the two sectors have been pretty similar though – as the housing market collapse gutted financial companies, the collapse in crude oil has really hurt tanker shipping stocks. CPLP stock was trading for over $30 a share in 2007 and is a mere $9 or so as of this writing. But business appears to be picking up now that crude oil prices are creeping back towards $100 a barrel. This high yield dividend stock could pay out on both fronts – big dividends and good share appreciation — if things continue to swing its way.

High yield dividend stock #3 – K-Sea Transportation Partners KSP

  • Sector: Marine shipping
  • Market Cap: $184 million
  • Current Annualized Dividend Yield: 18.7%

Like Capital Product Partners (CPLP) high dividend stock K-Sea Transportation Partners (KSP) is a tanker operator with big potential. As of 2009, K-Sea operated a fleet of 69 tank barges and 66 tugboats that helped transport approximately 150 million barrels of refined petroleum products for KSP customers. And those customers are a who’s who of the oil industry, including BP (BP), Conoco Phillips (COP) and Exxon Mobil (XOM). With a nearly 19% dividend yield and crude oil prices creeping higher amid strong energy demand, KSP is looking up.

Editor’s Note: While KSP’s annualized yield is indeed high, the company has not payed a quarterly dividend since late 2009. As of yet there are no plans to reinstate the dividend.

High yield dividend stock #2 – Armour Residential AMRR

  • Sector: Real estate investment trusts
  • Market Cap: $263 million
  • Current Annualized Dividend Yield: 19.0%

Armour Residential (AMRR) is company that invests in residential mortgage backed securities. As another real estate investment trust, this company has weathered its share of troubles but still managed to pay a high dividend yield. Currently, AMRR stock has a  portfolio of hybrid adjustable-rate, adjustable-rate and fixed-rate residential mortgage-backed securities — in short, some of the riskiest stuff out there. The REIT is up 17% since it started trading in February.

High yield dividend stock #1 – General Maritime Corp. GMR

  • Sector: Marine shipping
  • Market Cap: $460 million
  • Current Annualized Dividend Yield: 20.6%

At the top of the list of high dividend stocks is General Maritime Corp. (GMR). This company operates 11 Suezmax vessels, 12 Aframax vessels, two Panamax vessels and four Handymax vessels with a total capacity of 3.9 million deadweight tons. All are double-hulled – an important feature amid the current crude oil spill in the Gulf that has captivated America. Like the other marine tanker stocks in this list of high yield stocks, General Maritime is benefitting from higher energy demand and increasing crude oil prices. Investors are getting a hefty 20.6% dividend yield thanks to GMR’s current profit performance.

As of this writing, Jeff Reeves did not own positions in any of the stocks mentioned here.


Article printed from InvestorPlace Media, http://investorplace.com/2010/05/high-dividend-yield-stocks-forty-kcap-wac-whx-ivr-rso-cplp-ksp-amrr-gmr/.

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