What is a dividend yield and why does it matter?

Dividend yield is the annual dividend payment divided by the stock's current price, expressed as a percentage. A high yield means you're getting more dividend income relative to what you paid for the stock. For example, if a $20 stock pays $1 in annual dividends, its yield is 5%. Investors looking for regular income often prefer high-yielding stocks, but remember that unusually high yields can sometimes indicate underlying problems with the company.

What are REITs and why do they typically have high dividends?

REITs (Real Estate Investment Trusts) are companies that own, operate, or finance income-producing real estate. Companies like AGNC Investment and Annaly Capital Management in this group are REITs. They're required by law to distribute at least 90% of their taxable income to shareholders as dividends, which is why they typically offer higher yields than many other stocks. This makes them popular among investors seeking regular income.

What is the ex-dividend date and why is it important?

The ex-dividend date is the date when you must own a stock to receive its upcoming dividend payment. If you buy a stock on or after its ex-dividend date, you won't receive the next dividend payment; the seller will get it instead. This date is important for investors who want to make sure they'll receive the upcoming dividend, especially for high-yield stocks where the dividend is a significant part of the expected return.

Are high-yielding stocks considered risky investments?

High-yielding stocks can carry additional risks compared to lower-yield options. Companies offering unusually high dividends might be experiencing financial difficulties, which is why their share price has fallen (raising the yield percentage). Some may have sustainable high yields due to their business model (like REITs), but others might eventually cut their dividends if business conditions worsen. That's why this collection recommends balancing these investments with more stable stocks for a diversified portfolio.

What are CLOs mentioned in connection with Oxford Lane Capital?

CLOs (Collateralized Loan Obligations) are securities backed by a pool of debt, typically corporate loans with low credit ratings. Oxford Lane Capital (OXLC) specializes in investing in these instruments. CLOs offer higher yields because they involve higher-risk loans, but they're structured to provide some protection through diversification and payment prioritization. This structure allows companies like OXLC to generate income that supports their high dividend payments.

10 handpicked stocks

High Yielding Stocks

Looking for income from your investments? These carefully selected companies have historically paid substantial dividends compared to their share prices. Our analysts have handpicked these stocks for their dividend potential.

Han Tan | Market Analyst

Updated 2 days ago | Published at mai 7