Highest Yield Stocks You Might Overlook

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• Hi, My name is Aaron and Im with Dividend Stocks
  Research, today were reviewing our recently
  published article

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Highest Yield Stocks You Might Overlook
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When you hear about the highest yield stocks, you
usually hear about utility stocks. Look Im not
saying theres anything wrong with utility stocks.
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The right utility stock is a great way to capture
a high dividend.The wrong utility stock A world
of hurt. And Im going to show you one where
theres already been plenty of pain. And its
going to get worse.
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But first, lets get a few numbers straight.What
exactly is a high dividend stock? Were usually
talking about the highest dividend stocks when it
comes to yield.
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The actual percentage you see with the yield.And
you cant figure whats high until you can
measure a yield thats normal.
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Through the first 10 weeks of 2015, yields looked
like this. The SP 500 yield was 1.84. The
SP 500 Utility yield was 3.47.
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The FTSE Nareit, which tracks Real Estate
investment Trusts, or REITS, was 3.35. And
bonds... the Barclays U.S. Aggregate bond Index
was 2.1.
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These numbers give you good benchmarks to figure
out what a high yield is.But keep this in
mind. The search for stocks with the highest
dividend can send you staggering down a one-way
street toward ruin.
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Im not kidding If you are focused on nothing
but yield, if your approach is to take a look at
a list of stocks and buy the ones with the
highest yield, youre setting yourself up for
trouble.
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Its like buying a house because you love the
landscaping, but the foundation is shifting, the
plumbing is leaky, and the wiring shorts out
every time you fire up the microwave.
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So, theres only one thing you need to do if you
want to make money with dividend stocks...
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Get High Yield Out Of Your Head
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Stop drooling over big numbers. The numbers
dont lie. And dividend investors usually get in
trouble when they ignore some very simple
arithmetic.
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Yield is nothing more than dividing the total
dividend payout by the stock price. Thats
it. And it means that when the price of the stock
bumps around, so does the yield.When dividends
stay the same and the stock price falls, the
yield goes up.
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This painfully simple arithmetic means that
people who fall in love with high yield somehow
ignore the plunge in a stocks price.
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Companies with a track record of paying growing
dividends year after year usually dont have wild
swings in the price of the stock. So wheres a
good place to find high yield dividend stocks
that are easy to overlook?
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High Dividend Utility Stocks That Can Make You
Money
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What makes utility stocks so appealing to
dividend investors? Why do they crank out a
historically high yield? Theyre more or less
legal monopolies. The business is stable and
fairly predictable.
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Now and then youll run into a nasty situation,
like Trans Alta TAC, a utility in Calgary,
Alberta Canada. It pays a 7.86 yield, twice
what youd expect from a utility stock.
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The hitch is the company cant afford to keep
paying the dividend. The dividend payout ratio
is 276.9. This means Trans Alta is plowing
almost three times as much into the dividend
payment as its earning... something that clearly
cant last long.
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Look at the downhill slide Trans Alta has been
on...
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Investors in this supposedly safe utility stock
have been hit hard... a reminder that there are
exceptions to the rule. Utility stocks arent a
sure thing.But fortunately, most utilities arent
so reckless.
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The big utility in New York, Consolidated Edison,
ED, pays a 4.23 yield. Californias PGE Corp,
PGE, pays a 3.34 yield. You can also buy a
utility stock ETF....
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Utilities Select Sector SPDR XLU pays a yield of
3.12. Vanguard Utilities Index ETF VPU pays a
yield of 3.34. iShares US Utilities ETF IDU
pays a yield of 2.93.
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And if youre not thrilled with the idea of these
fairly safe dividend stocks, you can look at some
opportunities in real estate...
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High Dividend REITS That Can Make You Money
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A good place to look for high dividend stocks
that shelter you from a lot of risk is in real
estate. Real Estate Investment Trusts, known as
REITS, are good for a high yield.
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Thats because tax laws for REITS essentially
force the REIT to pay back 90 of taxable income
to shareholders. But REITs come with risk. And
one of the big question marks about a REIT is how
it will perform when interest rates go up.
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Heres what we know from history. When interest
rates go up, REITs dont do well. As the Wall
Street Journal put it, Fed rate rise is a
worry.
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But thats not the only problem. Theres
something else to worry about when it comes to
REITs.They have been on a roll. Demand for REITs
has been high. Youll have a hard time finding a
REIT on sale.
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Dividend yields for REITs are all over the
place.One of the highest... Newcastle Investment
Corp., NCT, pays a yield of 24.74.
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Thats 8 times the norm. Remember, the FTSE
Nareit, the index that tracks Real Estate
investment Trusts, or REITS, is at 3.35.
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Find The High Dividend Stocks You Might Overlook
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Look at REITs and utilities for a high dividend
stock that makes sense for your portfolio. Youll
uncover some good possibilities. Just stay away
from the high dividend stocks with a yield of
more than 10.
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Lower yields can be fine, especially when they
grow, and give you the power of
compounding. Thats one of the dividend
investing secrets not may people know.
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High dividend stocks wont always be your REITs
and utilities. You can look at different
industries for a good, solid stock that focuses
on growing the dividend over time. Consumer
packaged goods is a good sector. So is insurance.
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The bottom line... The highest yield stocks
arent always generating electricity. Cast your
net far and wide to find the ones that will
generate income.
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