17 Stocks Yielding 12%-Plus

Wednesday, February 15, 2012

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17 Stocks Yielding 12%-Plus

-- By Paul Tracy

I've found more than a dozen profitable companies paying 12%-plus yields, but that's just a fraction of the number of high-yielders available. (Full Story Below)

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17 Stocks Yielding 12%-Plus

Let's be honest. When you hear about a stock that yields 12% or more, your first thought should be that the company is probably a basket case that can't even turn a profit. If it's offering a yield that sounds too good to be true, it probably is.

And you'd be right most of the time. Usually, yields are this high because a company's share price is falling -- signaling underlying problems in its business. A lower share price gives a higher dividend yield. That means profitable companies paying yields this high should be rare.
 
In fact, my staff and I recently ran the numbers. When we looked only at the companies that turned a profit over the past year, we found just 17 U.S. common stocks paying yields of more than 12%. Here, you can see them for yourself:

Ticker Company Yield
IVR Invesco Mortgage 21.6%
AGNC American Capital 19.0%
CYS CYS Investments 16.8%
RSO Resource Capital 16.7%
FTR Frontier Communications 16.6%
CIM Chimera Investment 16.4%
TWO Two Harbors 16.2%
AI Arlington Asset Investment 14.9%
MFA MFA Financial 14.6%
ANH Anworth Mortgage 14.3%
NLY Annaly Capital 14.2%
HTS Hatteras Financial 13.9%
OTT Otelco 13.5%
CMO Capstead Mortgage 13.2%
CXS Crexus Investment 12.5%
DX Dynex Capital 12.2%
GNI Great Northern Iron Ore 12.2%
As of February 6, 2012. Source: Bloomberg

But did you know there are actually hundreds of 12%-plus yields out there from profitable companies? The difference is that many investors just don't know where to find them.

That's because the majority of the world's highest yields aren't being paid by U.S. companies. My recent search found 210 additional stocks out there yielding 12% or more... all coming from international-based companies.

That means many income investors are essentially missing out on 92% of the highest yields before they even get started.

I've researched this topic for years. And the fact is, foreign companies are simply paying higher yields across the board.

Take a look at the table to the right.

You can see the difference between what we get from U.S. companies and what's available from international companies. Keep in mind that I only looked at the common stocks of companies that were profitable over the past year.

 

As Judy Sarayan, a fund manager at mega-investment firm Eaton Vance explained, "There's a much stronger dividend culture abroad... individual investors play a larger role in those markets, and they have always demanded more dividends."

On a macro scale, the difference is striking. While the average yield for all stocks in the S&P 500 is just 2.0%,
Germany's average yield is 3.6%... Brazil's average yield is 3.6%... the United Kingdom yields the same... Australia yields 4.7%... New Zealand pays 4.8%.

But where you really start to see a dramatic difference is when you look at some individual examples of higher yields abroad.

Take banks, for instance. Here at home, Bank of America (NYSE: BAC) used to pay investors $2.56 per share before the financial crisis. That represented a yield of more than 6.0%.

Of course, we all know what happened next. Today, BAC pays a laughable $0.01 (yes, one penny) each quarter.

But it's a completely different story outside the United States.

Santiago, Chile-based Corpbanca SA (NYSE: BCA) is a perfect example.

Chile's largest bank, Corpbanca offers commercial and retail banking through more than 100 offices. The bank also offers mutual fund management, insurance, and securities brokerages through a network of subsidiaries. Not only have the shares soared over the past five years, but dividends now total $1.66 per share each year. That gives the stock a yield of over 7.0% at recent prices, and you can buy it on the New York Stock Exchange.

It's the same thing for utilities. They are one of the best places to search for yields in the U.S. Duke Energy (NYSE: DUK) pays a yield of about 4.5%. But even that is topped by international utility stocks like Germany's E.ON AG (OTC: EONGY).

E.ON AG is the world's largest energy provider. It serves over 26 million customers and employs more than 75,000 people. Its shares pay investors $2.16 a year, for a yield of 10%... that's about twice as much income as the average utility here in the U.S.

Still, most U.S. investors are simply unaware that they're missing out on high yields like these.

I want to make something clear, though. I don't think you should drop everything and put every dollar you have into international high-yielders. Truth is, the size and scope of the U.S. market makes it a great place to search for income investments.

But limiting yourself to only U.S. stocks is like going to a restaurant and limiting your options to just one side of the menu. Sure you can find something you like... but wouldn't you rather see all the options?

And one more thing -- not every one of the 210 stocks is available stateside, but don't worry, you can buy many of these without even leaving the U.S. markets.

I have more details -- including several names and ticker symbols -- in a presentation I recently put together. You can visit this link to read it now.

All the best,



Paul Tracy
StreetAuthority Co-founder, Chief Investment Strategist -- High-Yield International

P.S. -- Remember, you can learn more about investing in high-yielding international stocks -- including several names and ticker symbols -- by reading this presentation.

Disclosure:  Neither Paul Tracy nor StreetAuthority own shares of the securities mentioned in this article. In accordance with company policies, StreetAuthority always provides readers with at least 48 hours advance notice before buying or selling any securities in any "real money" model portfolio. Members of our staff are restricted from buying or selling any securities for two weeks after being featured in our advisories or on our website, as monitored by our compliance officer.


Income Notes

For all of last year, S&P 500 companies paid out a total $241.0 billion in dividends. That total is rising quickly, but is still slightly below the record $247.9 billion paid in dividends in 2008.

-- Research Staff


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