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The saddest aspect of life right now is that science gathers knowledge faster than society gathers wisdom -- Isaac Asimov
This is part IV of the Dividend scorcher series. Part III examined stocks with yields as high as 21%. This list should not be viewed as a buying list - instead it should be viewed as a good place to commence your research from. Please do your due diligence before rushing out and purchasing the stocks listed below. Another very important rule is to make sure you diversify your investment across various sectors. Never ever put all your eggs into one basket no matter how tempting the investment might appear to be; doing so is a sure way to guarantee severe pain. For more ideas on diversification; these two articles could prove to be useful 7 Dividend Super-Stocks With Stellar Payment Histories and 5 Dividend Sizzlers With Yields As High As 19.1% (Part II)
Details on each name are below, but here are additional thoughts on four.
Gladstone Commercial Corporation (GOOD) has a very high payout ratio (833%), but it is still generating enough cash to make these dividend payments, and it has been paying dividends since 2003; the high payout ratio warrants close monitoring. For the last three years total cash from operating activities was higher than the amount paid in dividends. In 2010 total cash flow from operating activities was $18.13 million and dividend payments totaled $16.98 million.

Omega Healthcare Investors, Inc (OHI) also has a lofty dividend payout ratio of 660%, but in the last two years the cash flow generated from operating activities has been more than enough to cover the dividend. In 2009, it generated $147.22 million and dividend payments amounted to roughly $109 million. In 2010, it generated $157.56 million and dividend payments totaled $138.88 million. If it maintains this pace, the cash generated from operating activities should be more than enough to cover the dividend's payments this year. One positive factor is that OHI invests chiefly in long-term healthcare facilities. It provides lease or mortgage financing to qualified operators of skilled nursing facilities, assisted-living facilities and rehabilitation and acute-care facilities. This offers it somewhat of an edge as the health sector is more resilient to a slowing economy than most other sectors.
Starwood Property Trust, Inc. (STWD) has negative cash flow, but the quarterly earning growth year-over-year (Y-O-Y) rate is at lofty 197%. It is also trading roughly $2 below book value.
Two Harbors Investment Corp. (TWO) has a positive cash flow from operating activities, and currently it is more than enough to cover the dividend payments. In 2010 Dividend payments totaled $27.12 million. Cash flow from operating activities also experienced a significant jump; in 2009, it was -$11.36 million, but in 2010 it surged to $33.11 million.
Stock
Dividend
Debt to Equity ratio
Market Cap
PE
Operating margins
Revenue
Cash flow
Dividend date
18.1%
N/A
1.25B
6
78.4%
56.45 M
62.97 M
Oct 19, 2011
13.8%
39%
2.43B
6.49
91.3%
329.4M
283.03M
Oct 30, 2011
9.9%
197%
171.62M
62
46.26%
41.9M
20.61M
Sept 29, 2011
9.90%
39%
1.6B
9.69
65.7%
120.7M
-210.82M
Oct 13, 2011
9.5%
136%
1.64B
8.3
55.44%
283.9M
168.78M
Aug 15, 2011
Two Harbors Investment Corp (TWO)
Additional Info
  • Paying dividends since: 2009
  • % shares held by institutions: 40.4%
  • % Held by Insiders : 6.73%
  • Short % of Float: 5.5%
  • ROE : 8.49%
  • Book Value : 9.73
  • Forward Dividend: 18.1%
  • Dividend payout ratio: 104%
  • Forward Annual Dividend Rate 1.60
MFA Financial, Inc. (MFA)

  • Paying dividends since: 1998
  • % shares held by institutions: 70.4%
  • % Held by Insiders : 0.41%
  • Short % of Float: 4.9%
  • ROE : 12.08%
  • Book Value : 7.75
  • Forward Dividend: 13.9%
  • Dividend Yield 5 year average 10.10%
  • Dividend payout ratio: 91%
  • Qtrly Earnings Growth (y-o-y): 64.2%
  • Dividend Growth Rate 5yr Avg: 42.5%
  • Forward Annual Dividend Rate 1.00
Gladstone Commercial Corp (GOOD)
Additional Info
  • Paying dividends since: 2003
  • % shares held by institutions: 35.4%
  • % Held by Insiders : 4.92%
  • Short % of Float: 4.18%
  • ROE : 4.52%
  • Book Value : 12.98
  • Forward Dividend: 9.6%
  • Dividend Yield 5yr average 9.3%
  • Dividend payout ratio: 833%
  • Qtrly Earnings Growth (y-o-y): 36.2%
  • Forward Annual Dividend Rate 1.50
Starwood Property Trust Inc. (STWD)
Additional Info
  • Paying dividends since: 2009
  • % shares held by institutions: 86.2%
  • % Held by Insiders : 1.5%
  • Short % of Float: 7.1%
  • ROE : N/A
  • Book Value : 19.31
  • Forward Dividend: 10.3%
  • Dividend payout ratio: 104%
  • Qtrly Earnings Growth (y-o-y): 198.9%
  • Beta 0.54
  • Forward Annual Dividend Rate 1.76
Omega Healthcare Investors, In (OHI)
Additional Info
  • Paying dividends since: 1992
  • % shares held by institutions: 81.1%
  • % Held by Insiders : 11.9
  • Short % of Float: 9.5%
  • ROE : 3.63
  • Book Value : 8.79
  • Forward Dividend: 10%
  • Dividend Yield 5yr average 7.1%
  • Dividend Growth Rate 5yr Avg 10.43%
  • Consecutive Div. Increase 7 years
  • Dividend payout ratio: 660%
  • Qtrly Earnings Growth (y-o-y): 14.7%
  • Beta 1.10
  • Forward Annual Dividend Rate 1.60



Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Dividend Scorchers With Yields As High As 18.1%: REITS, Part IV