We spend a lot of time sorting through dividend stocks to build lists that meet our investment criteria. Many data sources will display stocks with unbelievable yields, and after double checking their facts, we find that the company has either cut its dividend, the stock was recently sold off or the yield calculation is wrong. Today, we've found the real high yield stocks that are actually paying the stated dividend.
To make the cut, each of these stocks had to have a stable annual dividend, a positive return over the last year and be trading at $5 per share or more. We left Cypress Sharpridge Investments (CYS), Anworth Mortgage Asset Corporation (ANH) and American Capital Agency (AGNC) off the list because they have cut the most recent dividend distributions. We found seven stocks in our screen that have dividend yields over 12%.
ARMOUR Residential REIT (ARR)
ARMOUR has a dividend yield of 19.9%, and pays dividends monthly. Although they cut their dividend in the fall of 2011, they have maintained their dividend for 5 consecutive months, and it appears to be stable at current levels. ARMOUR invests mostly in residential mortgage-backed securities issued by Fannie Mae, Freddie Mack or Ginnie Mae.
Two Harbors Investment Corp (TWO)
Two Harbors started paying dividends in 2010 and raised their dividend to $1.60 per share in 2011. So far, it looks like they will be keeping their dividend the same for 2012, which gives them a 16.1% dividend yield. Two Harbors invests in residential mortgage backed securities and other financial assets that make up 5-10% of their portfolio.
Whiting USA Trust (WHX)
Whiting USA Trust has raised its dividend each year since 2009 and currently has a yield of 15.6%. Whiting USA Trust is a trust that was formed by the Whiting Petroleum Corporation to hold an interest in underlying oil and natural gas properties located in the US. The NPI is the only asset of the trust and entitles the trust to receive 90% of the proceeds of production sales from underlying properties.
Arlington Asset Investment (AI)
Arlington Asset Investment Corp started paying dividends in 2010 and has been increasing their dividend just about every other quarter. They currently have a 14.2% dividend yield. AI is a investment firm that invests in mortgage-related assets. AI acquires mortgage backed securities that are issued by both government agencies and private companies.
Capstead Mortgage REIT (CMO)
Capstead's quarterly dividends are not predictable distributions. Over the last three years, they range from $.26 per share to $.58 per share. CMO increased their dividend in 2011 after cutting it in 2010, and currently has a dividend yield of 13.10%. Capstead invests in residential pass through securities that are mostly adjustable rate mortgages (ARMs). These ARMs are guaranteed by government agencies.
New York Mortgage Trust (NYMT)
New York Mortgage Trust has been paying dividends since 2008 and has a 3 year dividend growth rate of 43%. Their dividend yield is 14.1%. NYMT is a REIT whose name is self-explanatory. They are a self advised REIT that invests in mortgage backed securities, prime adjustable rate mortgage loans and commercial mortgage backed securities. In 2009 they changed their strategy to start moving away from ARMs to diversify their portfolio.
Full Circle Capital (FULL)
Full has a dividend yield of 12.3% and pays dividends monthly. They cut their monthly distribution in 2011, but have maintained their current dividend for 6 months. Full Circle Capital Corp is a non-diversified investment company that strives to create income and capital appreciation through debt and equity investments. Their investments are made to a diverse range of companies in lower to mid markets.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.