5 High-Yield Dividend Investments for Hungry Income Investors

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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.

Closed-End Fund: Credit Suisse Asset Management Income Fund

Closed-end funds are publicly traded investment companies like stocks and raise capital through an initial public offering. They then use the proceeds to invest in securities. The type of securities they buy depends on the objective of the fund. Although closed-end funds are similar to traditional mutual funds, they don’t have a constant flow of investor capital coming in and out. Rather, they have a set number of shares, and that allows the price of those shares to move according to the market.

The Credit Suisse Asset Management Income Fund Inc. (AMEX:CIK) is a closed-ended fund that invests in the U.S. fixed-income market. Management invests in companies from a broad range of industries, and it does so with the specific goal of finding big dividends. The fund has a dividend yield 8.91%, so its mix of diversified dividend-paying holdings is certainly living up to its objective.

Energy Trusts: Provident Energy

Canadian royalty trusts, or CanRoys, are an asset class in transition. At one time, these entities enjoyed favorable tax treatment by the Canadian government that enabled them to pay out a large percentage of their cash to unitholders. That treatment was done away with earlier this year. That change prompted many high-yielding former trusts to convert into regular corporations. Fortunately for investors, these companies still pay big dividends, and in many cases even bigger yields than ever before.

One such former CanRoy is Provident Energy Ltd (USA) (NYSE:PVX). The company is in the natural gas liquids (NGLs) infrastructure and marketing business in both Canada and the United States. Provident’s operations include the extraction, processing, storage and transportation of NGLs. It also offers these services to third-party customers. Business in the natural gas space has boomed over the past year, and that’s helped PVX shares surge over 21% in the past 52 weeks. That performance, along with a 5.96% yield, should appeal to any income-sensitive palate.

Shipping/Tankers: Knightsbridge Tankers Limited

Shipping and tanker companies traditionally have been very generous with their dividends. These are the companies that transport oil and other commodities around the world in those super-massive cargo ships. Metrics in the sector have come under pressure as of late, as sinking charter rates, a glut of tankers and weak global economic growth have battered the sector. However, goods still need to get where they are going, and that means a steady inflow of revenue to the best shipping companies out there.

One such company is Knightsbridge Tankers Limited (NASDAQ:VLCCF). The firm’s diversified shipping operations include the seaborne transportation of crude oil and dry bulk cargoes worldwide. Knightsbridge’s customers include large oil companies, tanker companies, dry bulk companies, petroleum products traders and even government agencies. Shares hit rough waters midway through the year, but in recent trading they’ve fought their way upstream. The real attraction here for income investors is the stock’s 12.42% dividend yield.

This article originally appeared on Traders Reserve.


Article printed from InvestorPlace Media, https://investorplace.com/2011/11/high-yield-investments-mlp-reit-canadian-royalty-trusts-uan-nly-cik-pvx-vlccf/.

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