Imagine there’s a company offering a double-digit dividend yield and it has a rock-solid business to back its payout. What do you think would happen? Well, given the current low-yield environment, income investors would run toward a safe double-digit yielder. And as investors buy the company’s shares, they would bid up the stock price. Due to the inverse relationship between dividend yield and stock price, the buying activity would cause the company’s yield to drop. So before long, it would no longer be an ultra-high yielder. So if you see a company offering a yield north of 10%, chances are it’s not exactly perfect.
Case in point: THL Credit, Inc. (NASDAQ:TCRD) is a business development company (BDC) headquartered in Boston. With a quarterly dividend rate of $0.21 per share and a share price of $6.75, the company offers a staggering annual yield of 12.2%. And like I said, most ultra-high yielders are not perfect. While THL Credit seems to be offering very generous dividends, its current payout is actually the result of a dividend cut. Last year, TCRD stock had a quarterly dividend rate of $0.27. At the end of the day, conservative income investors would probably want to see consistent dividend coverage before making any investment decision. But if THL Credit, Inc. can keep outearning its payout, its massive 12.2% yield would be worth a look.
Source: Income Investors
Related Articles:
- 5 Tech Stocks With A History of Growing Their Dividends
- How To Manage Your Dividend Portfolio In A Downturn
- Where To Find Great Dividend Stocks
- How To Know When To Sell A Dividend Stock
- Your Greatest Wealth Building Asset
Improving Dividend Safety at This 12.2% Yielder?
Posted by D4L | Monday, October 21, 2019 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
As a relatively new blogger, the one thing that has stood out in my mind is the number of Canadian bloggers in the areas that I am most inte...
-
If your growth-investing days are over (or nearly so) and you're more interested in steady income, start your search with all-weather st...
-
In short, dividend-bearing stocks are one of the smartest approaches stock investors have available currently. The same is true in strong ec...
-
Finding cheap dividend stocks is critical for another reason. By the time the Federal Reserve meets for the second time in 2023, the central...
-
Investing in passive income can allow you to make money with minimal portfolio management. There are many types of investments to make passi...
-
Many companies make very predictable fixed dividend payments each quarter. When they do, their investors have a pretty good idea of how much...
-
As 2022 wraps up, many investors are likely looking for ways to position their portfolio for more macroeconomic uncertainty next year. After...
-
Dividends drive significant returns for Berkshire Hathaway's portfolio. One common theme of Warren Buffett's Berkshire Hathaway is d...
-
With inflation appearing to have peaked and fears of a recession dimming somewhat, investors have some positive catalysts to look forward to...
-
Dividends can be an underrated source of income for investors. With so much volatility in the stock market right now, it can be comforting t...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.