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 see its share price drop, 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)

Yield

1Invesco Mortgage Capital (NYS: IVR) $1,824 24.9%
2Chimera Investment (NYS: CIM) $2,733 19.8%
3American Capital Agency (NAS: AGNC) $6,435 19.7%
4ARMOUR Residential REIT (NYS: ARR) $604 18.6%
5Two Harbors Investment (NYS: TWO) $1,333 17.2%
6CYS Investments (NYS: CYS) $1,101 16.7%
7Hatteras Financial (NYS: HTS) $2,053 15.0%
8Ship Finance International (NYS: SFL) $912 15.0%
9Annaly Capital Management (NYS: NLY) $15,783 14.8%
10MFA Financial (NYS: MFA) $2,433 14.7%
11Anworth Mortgage Asset (NYS: ANH) $861 14.6%
12Niska Gas Storage Partners (NYS: NKA) $674 14.3%
13Capstead Mortgage (NYS: CMO) $1,073 14.1%
14National Beverage (NAS: FIZZ) $785 13.5%
15Frontier Communications (NYS: FTR) $5,742 13.5%
16Prospect Capital (NAS: PSEC) $1,027 13.2%
17Cellcom Israel (NYS: CEL) $1,695 12.3%
18OneBeacon Insurance Group (NYS: OB) $1,446 12.2%
19Crexus Investment (NYS: CXS) $760 12.1%
20BlackRock Kelso Capital (NAS: BKCC) $648 12.1%
21CommonWealth REIT (NYS: CWH) $1,395 12.0%
22Inergy (NYS: NRGY) $2,863 11.7%
23Compass Diversified (NYS: CODI) $612 11.5%
24Navios Maritime Partners L.P. (NYS: NMM) $834 11.4%
25BGC Partners (NAS: BGCP) $807 10.9%

Source: S&P Capital IQ as of Dec. 5.

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 more dividend stock ideas, click here to get The Motley Fool's free report: "11 Rock-Solid Dividend Stocks."

At the time this article was published Fool contributorDan Dzombakowns shares of Frontier Communications and Annaly Capital Management, but he holds no other position in any company mentioned.Click hereto see his holdings and a short bio. 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.

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