Investing in dividends stocks is popular among investors. The right dividend stocks can produce magnificent long-term growth in a portfolio.
One of the beauties of the stock market is that prices are unpredictable. Dividends, in contrast, are an excellent form of investment as they are not typically dependent on the financial health and growth of a company.
Know this; dividend yields and stock prices move in opposite directions, and a high yield usually indicates that investors are worried about the business and become bearish on its stock price. Therefore, an astronomical yield is not a good sign at all and dividends are not guaranteed. When investing in dividends, be certain the company has a solid history of growth in dividends as well as earnings per share.
Chimera Investment Corporation (NYSE/CIM)
Chimera Investment Corporation (NYSE/CIM) invests in residential mortgage-backed securities (RMBS), residential mortgage loans, real estate-related securities, and various other asset classes.
Chimera’s objective is to provide attractive risk-adjusted returns to their investors over the long-term, primarily through dividends and secondarily through capital appreciation. (Source: Chimera Investment Corporation, last accessed July 15, 2015.)
The company currently provides an annual dividend yield of 13.7%. Its stocks are trading at $14.16 per share, down nearly 11% this year.
Chimera’s earnings per share as well as payout ratio have grown steady over the last few years, reflecting the health of its financial structure and ability to increase its cash dividends payment.
The GEO Group, Inc. (NYSE/GEO)
The GEO Group, Inc. (NYSE/GEO) is another real estate investment trust with high yield. The Geo Group is the world’s leading provider of correctional, detention, and community reentry services. The firm has 7.2% yields and pays 0.62 cents per share. (Source: The GEO Group, last accessed July 15, 2015.)
Recently, analysts at Canaccord Genuity have set a target price of $43.00 on its stock and upgraded the stock to “buy.” Geo’s shares are currently trading at $36.87.
Although the company has a high yield, steady growth in its EPS may indicate that the company continues to reward its shareholders with remarkable cash dividends.
Bank of Montreal (NYSE/BMO)
Bank of Montreal (NYSE/BMO) is a highly diversified financial services provider based in North America. The bank provides a broad range of retail banking, wealth management, and investment banking products. BMO is the 8th largest bank in North America as measured by assets. (Source: BMO, last accessed July 15, 2015.)
Bank of Montreal is the longest-running dividend-paying company in Canada, currently with a yield of 4.5%. BMO has a dividend payout ratio of 51%, reflecting its ability to generate income for its shareholders.
Investing in high yield stocks may be the easiest way to buy income in this volatile market. If you make the right pick and are resilient to the inevitable short-term market fluctuation, you may eventually outperform the overall market on a total-return basis.
All told, I’d be paying close attention to these stocks in 2015.