Extreme dividend yields are often a sign of deeply rooted issues in the company and business model behind the dividend-paying stock. For some investors, that's a deal-breaker. For others, it's a call to action. Some of those troubled businesses could come back swinging, unlocking a spring-loaded turnaround play -- and you can still enjoy sky-high effective yields on the low buy-in prices you locked up. High dividend yields can be signs of deep-rooted trouble -- or of a turnaround story in the making. These generous dividends belong in the latter group...
How can you tell the strong turnaround ideas apart from truly doomed underperformers, where the high yields really are red flags? That's the question we posed to a panel of dividend investors here at The Motley Fool, asking them to share some insights that could save ordinary investors from yield-hunting heartbreak. Read on to see why they would recommend taking a second look at Seagate Technology (NASDAQ:STX), GameStop (NYSE:GME), and Medley Capital (NYSE:MCC). All of these companies have their issues, but they also seem poised to make a strong comeback.
Source: Motley Fool
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