4/26 Open: $7.32
Market Cap: $1.4 billion
A yield of almost 11% seems too good to be true, right? Well consider that this yield for Apollo Investment (NASDAQ:AINV) is calculated after a reduction in its dividend. Apollo previously paid 28 cents per quarter dating back to 2009. The reason for the cut was a quarterly loss in Q2 because of poor performance of underlying investments. The dividend payout ratio was just too much to bankroll, so avoiding a cut was a mathematical impossibility with a $300 million loss on the quarter. However, looking forward, earnings are stabilizing and the company is projected to finish the year in the black.
Hopefully you understand the risks here — invest in Apollo, and you are banking on losses stopping and dividends at worst staying steady. But if Apollo stumbles further, your yield — as well as your underlying investment — will both steadily decline.
The company is a subsidiary of Apollo Global Management (NYSE:APO), run by former Drexel Burnham Lambert banker Leon Black, and has a storied history behind it. The only question is whether the company can make that 11% yield stick.