The 25 Highest-Yielding Stocks

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Dividend investing is popular again. Investors have taken to heart Jeremy Siegel's studies, which show that higher-yielding stocks tend to offer greater returns over time than low- or no-yield stocks.

The highest dividend yields can be very tantalizing. As long as a stock yielding 15% doesn't lose value, you'll make 15% in one year! In more cases than not, however, an astronomical yield is a bad sign for a stock. Since dividend yields and stock prices move in opposite directions, a high yield usually means that investors have begun to worry about the business and driven down its stock price.

However, certain types of companies such as REITs have to pay out most of their income as dividends, so their yields will be higher than "normal." Dividends are not guaranteed; you need to make sure that a business is generating enough cash to pay its dividend, or your investment could be disastrous.

Three months ago, I ran a screen for the highest-yielding stocks, and it got such a good reception that I'm doing it again this quarter. The only limitation I've set this time is that the dividend stocks must have a market cap greater than $500 million.

Here are the top 25 highest-yielding stocks the screen produced:

 

Company

Market Cap (Millions)

Dividend Yield

1Invesco Mortgage Capital (NYS: IVR) $2,035 22%
2American Capital Agency (NAS: AGNC) $5,089 19.5%
3ARMOUR Residential REIT (NYS: ARR) $574 19.3%
4Cypress Sharpridge Investments (NYS: CYS) $1,103 17.9%
5Chimera Investment (NYS: CIM) $3,112 16.8%
6Two Harbors Investment (NYS: TWO) $1,345 16.7%
7SandRidge Mississippian Trust I (NYS: SDT) $729 16.5%
8Hatteras Financial (NYS: HTS) $2,076 14.5%
9Capstead Mortgage (NYS: CMO) $1,123 14.5%
10Annaly Capital Management (NYS: NLY) $17,569 14.4%
11Prospect Capital (NAS: PSEC) $960 14%
12National Beverage (NAS: FIZZ) $763 14%
13Anworth Mortgage Asset (NYS: ANH) $950 13.8%
14MFA Financial (NYS: MFA) $2,668 13.3%
15Cellcom Israel (NYS: CEL) $2,240 11.8%
16BlackRock Kelso Capital (NAS: BKCC) $642 11.7%
17Niska Gas Storage Partners LLC (NYS: NKA) $866 11.1%
18Crexus Investment (NYS: CXS) $716 10.6%
19Compass Diversified (NYS: CODI) $641 10.5%
20Solar Capital (NAS: SLRC) $844 10.4%
21BGC Partners (NAS: BGCP) $819 10.2%
22Getty Realty (NYS: GTY) $635 10.2%
23Frontier Communications (NYS: FTR) $7,454 10%
24PDL BioPharma (NAS: PDLI) $854 9.98%
25CommonWealth REIT (NYS: CWH) $1,720 9.78%

Source: Capital IQ, a division of Standard & Poor's.

These stocks are a good place to start your research, but they're not formal recommendations. Remember, their seemingly irresistible yields could be ticking time bombs, so do your own due diligence. Also, make sure you diversify your picks across various sectors. As investors relearn every decade or so, you never want to put all your eggs in one basket -- no matter how tempting the dividends are.

For a basket of some high-yield some dividend opportunities, click here to get The Motley Fool's five-page free report: "13 High-Yielding Stocks to Buy Today."

At the time this article was published Dan Dzombak'smusings and articles he finds interesting can be found on his Twitter account:@DanDzombak. He owns shares of Annaly Capital Management and Frontier Communications, but he holds no other position in any company mentioned.The Motley Fool owns shares of Chimera Investment and Annaly Capital Management.Motley Fool newsletter serviceshave recommended buying shares of Cellcom Israel. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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