Once you have your basic dividend portfolio in place, with the historically solid players forming a stable foundation, you may want to branch out to some higher-yielding companies for a little extra return. This month there are only three that are yielding over 7% and that have total returns of over 20% in the past twelve months.
Many traders follow a strategy of dividend capture, also known as dividend stripping. It involves studying high-yielding dividend stocks to determine how quickly and predictably their share price recovers after the ex-dividend date. By buying high-yielding stocks right before their ex-dividend date, and then selling soon after as the price recovers, traders following this strategy can reap the benefits of terrific dividends with no loss of capital. This strategy works best in a flat or rising market.
I have not analyzed these stocks to determine if they are suitable for such a practice. I like them because they are high-yielders, and because they have returned well over the past year. If you wish to employ the dividend stripping strategy with them, you will have to do that part of the analysis for yourself. I am merely pointing out some opportunities for you.
In order of yield, highest to lowest:
Armour Residential REIT (NYSE: ARR) is currently trading at $7 per share and yields 15.4%. Its 52-week range is $6.40 to $7.98. It goes ex-dividend on November 13 and will pay a dividend of $0.09 on November 27. The trust has returned 24.5% over the past twelve months.
Fifth Street Finance (NYSE: FSC) is currently trading at $10 per share and yields 10.8%. Its 52-week range is $8.99 to $11.08. It goes ex-dividend on November 13 and will pay a dividend of $0.0958 on November 30. The company has returned 23.4% over the past twelve months.
Mid-Con Energy Partners LP (NASDAQ: MCEP) is currently trading at $21 per share and yields 9.0%. Its 52-week range is $17.25 to $25.18. It goes ex-dividend on November 5 and will pay a dividend of $0.485 on November 14. The MLP has returned 25.1% since its inception on December 15, 2011.
Note that Armour and Fifth Street were on my October list as well, as they are monthly payers. With these sorts of dividends and historical performance, I expect they will be on my list for months to come.
These are definitely not stocks that you want to put in your dividend portfolio and forget about; they are far from being the Dividend Champs that you want to hold forever. But they have performed well in the past twelve months, far better than the S&P 500, and their yield is far better as well. They are surely worth some consideration.