Income-oriented investors are a voracious lot, and what they’re constantly on the hunt for is a great big plate of high-yield dividend investments. But to get the supersized serving of nourishment necessary to sate these high-yield appetites, it’s not enough to just forage around the supermarket of ordinary stocks. To get yields fit for hungry income investors, you need to check out a variety of specialized dividend dishes.
I’m referring here to the more exotic dividend vehicles that often pay double-digit yields. Securities such as Master Limited Partnerships, or MLPs, Real Estate Investment Trusts, or REITs, closed-end funds, energy trusts and shipping/tanker companies are all designed with yield-seekers in mind.
Master Limited Partnership: CVR Partners
The most basic definition of an MLP is that it’s a publicly traded limited partnership. The beauty of an MLP is that, unlike a regular corporation, it is considered to be the aggregate of its partners rather than a separate entity, and that structure allows for what’s called pass-through income.
In my view, one of the best MLPs out there is CVR Partners, LP (NYSE:UAN). The company produces nitrogen fertilizers, including ammonia and urea ammonium nitrate. CVR Partners’ nitrogen fertilizer manufacturing facility is the only operation in North America that uses the extremely efficient petroleum coke gasification process to produce nitrogen fertilizer. This makes it the lowest-cost producer of nitrogen fertilizer in the U.S. — and arguably the world. CVR has a dividend yield of 10.42% as of Nov. 21, which is plenty of yield to enrich the soil on any income portfolio.
Real Estate Investment Trust: Annaly Capital Management
REITs trade just like regular stocks, but the advantage of REITs is they offer a way for investors to participate in the real estate market without actually buying property. The bigger advantage for yield hogs is that REITs offer big yields along with the potential for some robust upside. Different REITs specialize in different areas. Some buy commercial properties like shopping malls and office buildings and some are more geared toward residential markets.
One proven REIT winner is Annaly Capital Management, Inc. (NYSE:NLY). The company invests primarily in mortgage pass-through certificates, collateralized mortgage obligations, agency callable debentures and other mortgage-backed securities. Like most REITs, it distributes at least 90% of its taxable income to its shareholders. That income translates into a 15.03% dividend yield, making it a stellar choice for income investors.