After many years of very low interest rates, stock investors have had plenty to cheer about — the market is up almost 200% since the lows in March of 2009. Every asset class at one time or another during those five years has managed sizable gains. That includes Treasury bonds as well. The biggest loser? Income investors, who count on income-yielding securities to help pay for the cost of living.
Periodically at 24/7 Wall Street we refresh our screens that look for income producing stocks and investment vehicles. This also includes master limited partnerships (MLPs), limited partnerships and limited liability companies (LLCs), which technically are not really “stocks” even if they are units of ownership. None of them are anywhere close to as safe as a certificate of deposit (CD) or a government bond, and they are not suggested to replace that kind of guaranteed investment. What we screen for is top-yielding stocks that have wide analysts’ coverage on Wall Street. Typically if the stock is high yielding and has a Buy rating, the analyst will closely track the company’s ability to maintain the dividend or distribution.
Now consider this: some stocks and entities have dividends or distributions that are north of 10%. We have used recent Buy ratings for stocks and entities yielding 10% or more from various brokerage firm research reports. Again, none are going to have any sort of government guarantee and none will be considered safe havens for suitability tests. No widows and orphans funds should ever chase these as there is no sort of principal assurance, and these can be very volatile.
With all caveats in mind, some of these could be a great addition to an overall income portfolio looking to add higher yielding components for more current income. Here are five top analyst picks that all yield in excess of 10% and all are rated as Buy at known brokerage firms.
Apollo Global Management LLC (NYSE: APO) is rated Outperform at UBS and rated Buy at Merrill Lynch. As one of the top alternative asset managers on Wall Street, the firm has had an enviable track record of success. Apollo declared a monster $1.08 per share dividend as capital was returned to shareholders following the sale of some high-profile assets.
Based on the higher quarterly distribution, Apollo’s holders are paid an outstanding quarterly 12.7% dividend, which could be higher depending distributions the rest of the year. The UBS price target is posted at $33, and the Merrill Lynch target is higher at $35. The Thomson/First Call consensus price target is at $32.89. Apollo closed Wednesday at $27.62 a share.