Investing

15 Stocks With Massive Dividend Yields of 10% or Higher

It is no secret that investors love collecting dividends from their investments. Almost half of all total returns through time can be attributed to dividends. Many investors also count on dividends to supplement their income through retirement or heading toward retirement. Dividends are also a great source of capital that can be reinvested for years and years.

If investors have an endless love for dividends, does that mean that the higher a dividend is the better it is? This gets complicated, particularly when dividends start to get too high. There is a class of dividends that is above and beyond the normal scope in the high-yield dividend sector. This is where dividend yields are 10% or higher.

Many investors might lick their chops at the thought of earning 10% in income per year. The harsh reality is that many investors simply cannot or should not take on the risk of 10% payouts. It is important to keep in mind that the yield on the 10-year Treasury was just 2.25%, and the 30-year Treasury yield was not even 3%, while the average Dow Jones Industrial Average stock’s dividend yield was about 2.5%.

24/7 Wall St. screened companies with 10% yields and gave a preference to those with a market cap of $1 billion or higher. This was to avoid those tiny, risky companies that may be unknown to most investors. We also checked with their corresponding press releases about dividends and dividend policies and pointed out if there were overhanging yield-risk issues.

These companies and outfits with such high yields sometimes are not traditional companies and their “yields” are not always traditional yields. They can be classified as master limited partnerships (MLPs), real estate investment trusts (REITs) or business development companies (BDCs), or they could be troubled businesses tied to coal, energy, telecom, media or other challenged sectors. Closed-end funds were also used in this screen for their implied diversity.

Some of these payouts are considered distributions rather than classic dividends, so they are considered “yield equivalents” instead of classified strictly as a dividend. Before thinking these dividends or distributions are all safe, we have tried to point out many risks here as well as the high yields. After all, we wouldn’t want you thinking that we just aimless focus on the bright side of investing.

First and foremost, investors need to remember that dividend cuts are rarely received positively by investors. Some of these entities have or may experience cuts. Many high yield companies have to lower their dividends over time, and some may even have to abandon their payouts entirely. Some of these entities also may have fluctuating dividends or distributions due to how their tax and business structure is. And some have been pointed out as having already cut their payouts.

As a reminder, there is no such thing as a “blue chip” stock that yields 10% or more. That would be in many cases more than each company’s entire earnings per share. We also focused on companies where their primary business is domestic to avoid any of the international and geopolitical risks that can drive investors nuts.

Almost all these stocks or units have at least one analyst with a projected upside to the formal price target, and many of them have consensus analyst price targets that are higher than the current share prices. While many investors seek high income from stocks and funds, 24/7 Wall St. wants to remind investors to do serious due diligence of their own to make sure that the dividend is sustainable.

Here are 15 entities that have payouts with yields or yield equivalents of 10% or more.

AGNC (REIT) at 10.1%

AGNC Investment Corp. (NASDAQ: AGNC) is fresh off a $500 million capital raise, which the mortgage REIT will use to buy new agency and non-agency securities (including credit risk transfer securities), mortgage-related assets and hedging instruments — and of course for general corporate purposes, which can include dividend payments.

The $2.16 annualized dividend and current $21.35 share price generates a yield of about 10.1%. While the 52-week trading range is $17.30 to $22.34, the consensus analyst price target is at $20.20. Most firms have a Neutral rating.

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