Find High Dividend Yields in Unusual Places

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Most investors think to look in the obvious places for dividends: large-cap stocks and REITs. However, there are some great dividend plays in stocks that often are left out of typical screens. Each dividend stock has something unusual about it, but what isn’t unusual about these stocks is their dividends are consistent and generous.

Martin Mainstream Partners L.P.

Martin Mainstream Partners L.P. (NASDAQ:MMLP) is a pipeline limited partnership of the type I’ve written about before. Energy is a great investment, but so is energy infrastructure. Energy is a necessity, but moving it is just as important, so wherever you find an energy investment, an infrastructure play will be close behind.

Martin Mainstream Partners gathers, stores and transports natural gas for independent oil and gas producers. MMLP landed a big contract to help clean up the Deepwater Horizon debacle. The company has constantly increasing dividends, and MMLP today pays a fantastic 9.3% yield. Martin Mainstream Partners looks to increase net income 30% in 2012 over 2011 and trades at 20 times 2012 earnings.

Great Northern Iron Ore Properties

I’ve looked far and wide to find a royalty trust I like enough to purchase. A royalty trust acts as the owner of mineral rights to wells, mines and similar properties, and exists only to pass income generated from the sale of the assets to shareholders. Just like an REIT, 90% of net income must pass to shareholders in the form of distributions or dividends.

Great Northern Iron Ore Properties (NYSE:GNI) owns almost 70,000 acres of mineral leases in Minnesota. Driven by steel demand, the trust has been pulling ore out of the ground like it was going out of style. GNI’s yield at the moment is fantastic — 14.7%. There are two caveats, however. First, the trust dissolves in 2015, so the party won’t last forever. At that time, GNI shareholders will get a distribution equal to the liquidated value of the trust. Second, Great Northern’s dividend can fluctuate because it is dependent on steel demand and commodity prices.

Nevertheless, the value of the trust is not under question. It’s just a question of how much of a dividend gets paid each year. There is no sign of decreasing payouts at this time.

Knightsbridge Tankers Limited

Looking for a real odd duck? Check out Knightsbridge Tankers Limited (NASDAQ:VLCCF). The company engages in the seaborne transportation of crude oil and dry bulk cargoes worldwide. Knightsbridge Tankers’ customers include oil companies, tanker companies, dry bulk companies, petroleum products traders, government agencies and other entities.

This is a very profitable operation with net margins of 33%. That’s enough to make anyone salivate. VLCCF stock floats shareholders a 12.8% yield. There’s some question as to whether the dividend is sustainable, but the underlying business remains solid. Trading at only 13 times next year’s estimates also gives a reasonable margin of error should business slow.

As always, you’ll want to dig deeply into each company’s SEC filings to learn all you can about the businesses. That way you can determine for yourself how sustainable any given dividend is.

As of this writing, Lawrence Meyers did not hold a position in any of the aforementioned stocks.


Article printed from InvestorPlace Media, https://investorplace.com/2011/12/high-dividend-yield-stocks-unusual-places-mmlp-gni-vlccf/.

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