Income investors have ample opportunity to purchase stocks with attractive annual dividend yields. The compiled 9-names have a minimum of a 9% annual dividend yield. The industries are a mix from a funeral home operator to a mortgage REIT.
American Capital Agency Corp. (AGNC)
AGNC is a well run agency MREIT. The annual dividend yield is approximately 18%. AGNC was initially backed by American Capital, Ltd. (ACAS). ACAS earns 125-basis points on AGNC's annual shareholder equity. AGNC has gained popularity due to its high dividend yield.
Investors should consider purchasing this stock after the ex-dividend date and after a likely secondary AGNC-common offering. AGNC's book value should increase from the last quarter. This should provide a potential impetus for the stock to trade higher. AGNC management has a vested interest to bring a secondary offering, which will provide a short-term weakness to the stock.
- Stock Price: $30.60
- Dividend: $1.4 per quarter. $5.60 annual.
- Market Cap: $4-billion
- Dividend Yield: 18.3%
Apollo Investment Corporation (AINV)
AINV is a BDC focused upon small and mid-cap debt ownership, preferred share ownership and to a lesser degree common stock ownership. The book value, per the May 31st conference call, is $10.03-per share.
As of March 31st, AINV's portfolio holdings were broken down into these percentages: 33% senior secured loans, 58% subordinated debt, 8% preferred stock and 1% common stock.
The company has paid 8-quarters of 28-cent dividends. This equates to an annual dividend of $1.12. The annual dividend yield is 10.2% based upon today's stock price.
- Stock Price: $10.86
- Dividend: 28-cents per quarter. $1.12 annual.
- Market Cap: $2.11-billion
- Dividend Yield: 10.3%
Collectors Universe Inc. (CLCT)
CLCT has zero debt on its balance sheet. The company owns third party grading services for collectibles. These include coins, stamps, sports memorabilia and currency.
An example of CLCT's grading services includes their coin grading entity, PCGS. For example, assume you own a valuable 1893-S $1 silver Morgan in excellent condition. You want to ensure its authentic. If you plan to sell it, the buyer will want to know what grade the coin is in. Coins, for example, are graded on the obverse and reverse sides. Each coin can be graded between 1-70. A coin in perfect condition on both sides is called Mint State (MS) 70/70. The buyer and seller community respect and often times, require the PCGS stamp of approval. The coin contained with a PCGS container guarantees the buyer that the coin has been analyzed by professional coin dealers. Each coin costs a predetermined amount of money for the coin's analysis.
The yield is currently 9.2%. This is an excellent based upon a company with zero debt.
- Stock Price: $14.06
- Dividend: 32.5-cents per quarter. $1.30-per year.
- Market Cap: $111-million
- Dividend Yield: 9.24%
Delaware Enhanced Global Divide (DEX)
DEX invests in a little bit of everything: debt, real estate, stocks. The CEF is leveraged at a 26% level. The fund sells covered calls for income. 24% of the dividend is return of capital. The return of capital is enough to sway me away from this name. The monthly dividends are steady. If one needs cash flow, DEX can be that solution. The expense ratio in CEF's is a number I watch. The 1.95% appears to be at an elevated level vs. competing CEFs.
- Stock Price: $13.67
- Dividend: 10.3-cents per month. $1.23-per year.
- Market Cap: $234-million
- Dividend Yield: 9.04%
Dreyfus High Yield Strategies (DHF)
DHF buys U.S. and foreign issued non investment grade securities. Often times these securities are mispriced and can offer high overall returns. There will be some assets that are written off as non performing. We are seeing the debt markets show a number of non investment grade debt return to performing loans.
DHF has a 28.23% effective leverage. DHF is selling for a 19% premium to NAV, which is reason for pause. The market valuations on DHF's securities can be suppressed due to their non investment grade nature.
The average security in portfolio duration is 5.3-years. As of March 31st, the fund had 185-positions in U.S. corporate bonds. The fund offers a 10.2% annual return with monthly dividends.
- Stock Price: $5.05
- Dividend: 4.3-cents per month. 51-cents per year.
- Market Cap:
- Dividend Yield: 10.2%
Gabelli Global Gold, Natural Resources & Income Trust (GGN)
GGN is a closed end fund focused upon holding gold stocks, energy stocks and resource stocks. GGN earns its income from selling covered calls against its stock holdings. In addition, GGN receives income and dividends on its holdings. The fund's net asset value on June 6th was $17.28. GGN is trading at a 3-4% premium to NAV. It's ideal to wait for the investor's entry price to be closer to the NAV. There isn't any reason to pay a premium for a closed end fund.
- Stock Price: $17.78
- Dividend: 14-cents per month. $1.68 annual.
- Market Cap: $1-billion
- Dividend Yield: 9.4%
Hatteras Financial (HTS)
HTS is an agency backed MREIT. HTS arrived on the market place in 2008. This was approximately the same timeframe as AGNC. AGNC and HTS do not possess the duration of a NLY's business model. Time will tell if Annaly Capital Management (NLY) has enough experience to prevent future problems in the agency backed mortgage sector. HTS has been operating in a great business environment for MREITs. They have delivered very good returns.
Per the chart, HTS has provided investors a 15.9 total annualized rate of return since their IPO in 2008. This dwarfs the SP500's -.7% rate of return over the same period. As long as agency MREITs are working, this is a name to add to your portfolio. Interest rates should remain low. The Treasury rates are at extremely low rates.
- Stock Price: $29.03
- Dividend: $1-dollar per quarter. $4.00 annual.
- Market Cap: $2.17-billion
- Dividend Yield: 13.8%
Solar Capital Ltd. (SLRC)
SLRC is a BDC operating in the debt sector. SLRC provides senior secured loans, mezzanine loans and accepts equity securities for vendor liquidity. The company had a terrific 2010 with a $2.14 annual dividend. The dividend is now at a $2.40 annual rate, which is a 9.7% yield. Investors need to watch SLRCs management's effectiveness on who they loan to and how effective they are at identifying problems early on. This one is an interesting name to watch. A 9.7% dividend yield is mouth watering!
- Stock Price: $24.82
- Dividend: 60-cents quarterly. $2.40 annually.
- Market Cap: $900-million
- Dividend Yield: 9.7%
Stonemor Partners LP (STON)
StoneMor Partners is a recession proof security. The partnership is the second largest cemetery operator and owner. The company operates 260-cemeteries spread across 26-states. In addition, the partnership operates 58-funeral homes. A funeral has many miscellaneous costs to personalize the memorial for family and friends. The company's home office is Levittown, Pennsylvania.
The firm focuses upon accretive acquisitions and effectively managing properties efficiently for customers and shareholders.
The stock pays a 9% dividend based upon a $2.34 annual dividend and a $23 stock price.
- Stock Price: $26.12
- Dividend: 58.5-cents per quarter. $2.32 annual.
- Market Cap: $505-million
- Dividend Yield: 9%
Disclosure: I am long AGNC, CLCT, HTS.