The markets are more volatile than they’ve been in years. In fact, John Bogle, founder of Vanguard Funds recently said on CNBC that he’d never seen this much market volatility in his 66 years in the field.
It’s a challenge to figure out what to buy. If you’re a yield-seeking speculator, here are five stocks with five years of growing dividends and yields north of 6%. Don’t expect much capital appreciation, but if yields continue to rise, you might enjoy market-beating dividend returns.
High dividend investing is risky. So don’t invest all your money in risky assets and remain as diversified as possible.
If you’re seeking an income portfolio and would like some help and management, check out the IncomeClub, all-bond robo-advisor. You pick your risk level and they create and manage your bond portfolio. Or for DIYers seeking investment management help, look into M1 Finance. Read on for my five ultra-high dividend stocks!
Ultra-High Dividend Stock: Two Harbors Investment Corp. (TWO)
Price: $15.58
Market Cap: 2.33B
Dividend Yield: 12.19%
To avoid federal taxation REITs typically pay out 90 percent of their taxable income to shareholders, so it’s no surprise to see a mortgage-backed securities REIT on the list of ultra-high dividend stocks. The 9.6 percent dividend growth rate puts Two Harbors (NYSE:TWO) at the top of the high dividend stock list.
This REIT concentrates on investing in, financing and managing residential mortgage-backed securities (RMBS) and other financial assets. The firm concentrates on collateralized fixed, adjustable and hybrid loans or derivatives. With the tightening of lending requirements since the 2008 mortgage meltdown, investors have more confidence in these products than prior to 2008.
With a low 8.59 trailing PE ratio and low volatility, this stock is attractive to high dividend seekers.
Ultra-High Dividend Stock – CrossAmerica Partners LP (CAPL)
Price: $20.44
Market Cap: 700.35 M
Dividend Yield: 12.02%
As experienced investors understand, higher dividends signal riskier assets. But if you’ll looking to get into the oil and gas industry and get paid handsomely, then CrossAmerica (NYSE:CAPL) might be for you.
The small company has a respectable dividend growth rate of 7.48 percent and concentrates in the motor fuel industry. CrossAmerica Partners is involved in wholesale distribution of motor fuels and owns and leases real estate used in the U.S. retail motor fuel business. The firm sells its fuel at approximately 1,200 locations and owns or leases approximately 900 sites in 31 states.
The trailing 12 months PE is high at 36.76 and the beta of 1.42 illustrates the volatility of this holding versus the market. For high dividend aggressive investors, CAPL is enticing.
Ultra-High Dividend Stock – B & G Foods (BGS)
Price: $24.64
Market Cap: 1.638 B
Dividend Yield: 7.54%
You may not recognize B&G Foods (NYSE:BGS), but you’re certain to have sampled the brands owned by this food industry, consumer staples company. With dividends growing at 10 percent BGS is worth a look.
The company owns over 50 brands including Green Giant, Cream of Wheat, Ortega, Mrs. Dash, Emeril’s and Weber. Founded in 1889 by the Bloch and Guggenheimer immigrant families their first product was pickles, which they sold on the streets of New York. Today, their products sales span the U.S. and Canada.
Buy B & G for the dividend, not the earnings growth, as the company’s growth has recently faltered. But, if you think they can rebound and keep the continue to grow their dividend, you might consider this struggling high dividend stock.
Ultra-High Dividend Stock – Williams Partners L.P. (WPZ)
Price: $33.60
Market Cap: 32.806 B
Dividend Yield: 6.97%
Williams Partners (NYSE:WPZ) is a limited partnership in the oil and gas pipelines industry, basic materials sector. With a 7.2 percent dividend growth rate, this company might be a high yield addition to your energy sector holdings.
Williams Partners is an energy infrastructure company and operates through its Northeast G&P, Atlantic-Gulf and West segments. The company works across the U.S. in natural gas, fracking, crude oil production and related activities. The firm owns 33,000 miles of pipelines for clean power generation.
The trailing PE ratio of 37.33 is on the high side yet is offset by one-year analyst price predictions of $45.47. If you’re up for a rocky ride, consider this volatile high dividend stock.
Ultra-High Dividend Stock – Covanta Holding Corporation (CVA)
Price: $14.25
Market Cap: 8.847 B
Dividend Yield: 6.71%
Sometimes the dirty industries offer beautiful rewards. Covanta (NYSE:CVA) belongs to the waste management industry in the industrial goods sector. With dividend growth of 8.7 percent, you might want to dig in.
A full-service waste management firm, Covanta provides waste and energy services to U.S. and Canadian cities. It owns the infrastructure, waste transport, disposal and other renewable energy production businesses. Additionally, the firm has interests in energy-from-waste projects in Ireland and the United Kingdom.
Covanta joins B&G with negative earnings last year. With a 32.53 PE, the firm is not cheap. Although, sometimes the fallen angels are the firms with the greatest upside potential.
Barbara A. Friedberg, MBA, MS is a veteran portfolio manager, expert investor, and former university finance instructor. She is editor/author of Personal Finance; An Encyclopedia of Modern Money Management and two additional money books. She is CEO of Robo-Advisor Pros.com, a robo-advisor review and information website. Additionally, Friedberg is publisher of the well-regarded investment website Barbara Friedberg Personal Finance.com. Follow her on twitter @barbfriedberg and @roboadvisorpros. As of this writing, she does not hold a position in any of the aforementioned securities.
