High-yield stocks are considered to be risky. But don’t judge a book by its cover. There are companies with solid financial structure that can continue to reward investors despite their yields.
Mind you, an astronomical yield is not always a good sign and dividends are not guaranteed. When investing in high-yield dividend stocks, you should always make sure the company has a solid history of growth and healthy financial structure.
There are tons of stocks and funds that have a very high yield. But not all of them can reward investors with consistent dividend payments. Here, I’ve identified five top high-yield stocks that you may want to include it in your portfolio.
Prospect Capital Corporation (NASDAQ:PSEC)
Prospect Capital Corporation (NASDAQ:PSEC) is a business development corporation specializing in lending to mid-sized businesses. The company has a market cap of $2.53 billion and enterprise value of $7.07 million. Currently, the company has a 14% dividend yield—or $0.083 per share—on a monthly basis. Over the past 11 years, the company constantly paid dividends to its shareholders.
Chimera Investment Corporation (NYSE:CIM)
Chimera Investment Corporation (NYSE:CIM) is a residential mortgage company that provides residential mortgage loans and various real-estate securities. With an annual dividend rate of 13.90% or 0.48 cents per share, the company has paid dividends for more than 12 years. The company routinely pays dividends at the end of January, April, July, and October.
Chimera’s earnings per share as well as pay-out ratio have grown steadily over the last few years, reflecting the health of its financial structure and ability to increase its cash dividend payments.
MFA Financial, Inc. (NYSE:MFA)
MFA Financial, Inc. (NYSE:MFA) is a Real Estate Investment Trust (REIT) with the majority of its portfolio invested in Mortgage Backed Securities (MBS). The company’s strategy has been to generate net income and increase shareholder values both in dividends and capital gain.
Because the majority of the company’s assets are in real estate, the company is treated as REIT for U.S. federal income tax purposes. In this instance, instead of paying taxes to the government, the program allows the company to pay the net taxable income to shareholders in the form of dividends—monthly for this particular company.
Currently, the company pays a 10.80% dividend yield—or 0.80 cents per share—annually. Over the past 16 years, the company constantly paid its dividends.
Ares Capital Corporation (NASDAQ:ARCC)
Ares Capital Corporation (NASDAQ:ARCC) is another business development company who provides financials to middle companies. The company was founded in 1997 by a team of investments professionals. The company managed to become public in 2004 and currently has market cap of $5.04 billion.
Currently, the company provides a 9.8% yield or 0.38 cents per share. The company reported $249.5 million in revenue which was above Wall Street expectations.
The company’s portfolio is very well diversified. It ranges from real estate to aerospace and fitness industries. In addition, the company focuses on buy-outs, acquisitions, recapitalizations, restructurings, and rescue financing which could reward them with high returns.
Verizon Communications Inc. (NYSE:VZ)
The telecommunications company has a dividend yield of 4.80% or $2.2 per share annually. The company has a 93% payout ratio with about $3.3 billion of cash in hand.
The company has a remarkable dividends history. Verizon Communications Inc. (NYSE:VZ) has grown its dividends since 1994. Despite intense competition in the communications industry, Verizon has been able to mange to maintain its market share and moreover the health of its financials.
The company is expected to grow its dividends in the future. In 2014, the company increased its dividends by 3.8%.