While most investors are familiar with the decent dividends available from many blue-chip stocks, some dividend yields available today should not be overlooked. Any dividend is only as good as the company's ability to pay it. More so, a great dividend accompanied by a declining stock price is no reason to chase the dividend.

TUTORIAL: Automated Trading Systems

The Best of Both

Master limited partnership Breitburn Energy (Nasdaq:BBEP) currently trades at $19 and boasts a yield of nearly 9%. This yield is more than twice that of major oil company ConocoPhillips (NYSE:COP) and nearly triple the yield of Chevron (NYSE:CVX). Breitburn operates differently from exploration and production companies like COP and CVX. As an energy partnership, BBEP invests in mature, already-producing property. The company supports its yield by hedging its oil and properties, thereby providing more consistent cash flows. So when energy prices are rising, BBEP might not benefit from the upside due to this hedging, but the pain from falling energy prices is not as severe.

Yet shares in BBEP also look attractive. As the company continues to pay a yield, more income-seeking investors should take notice of the shares. In addition, BBEP has quality reserves in relation to the stock price. During the financial crisis, BBEP cleaned up its balance sheet and quickly resumed making dividend payments.

Yes, These are Real Yields

Annaly Capital Management (NYSE:NLY) is a real estate investment trust (REIT) that invests in mortgage-backed securites (MBS). The shares currently yield 13.5%. Unless credit markets make a dramatic turn for the worse, Annaly's investments should continue to perform adequately and provide a solid yield to investors. While shares trade for a P/E ratio of 7.4, capital appreciation is slow since the majority of earnings are paid out to investors.

Invesco Mortgage Capital (NYSE:IVR) is another company that invests in MBS. Shares yield over 18%. Several years from now the yield may not be as high, but as long as the opportunity to invest in MBS remains attractive, investors should benefit from a solid payout.

Patience Pays

The value of dividends is not realized over short-term periods. Only when choosing attractive investments that pay dividends, and holding those investments until the price suggests a time to sell, will the dividend pay off. And only when the underlying stock is a good value should any investment be made - never on dividend yield alone. (Find out how the PPI can be used to gauge the overall health of the economy. Check out Predict Inflation With The Producer Price Index.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Savings

    Do Natural Gas Prices Always Follow Oil Trends?

    Prices for oil and natural gas are highly correlated. But investors should be aware of different factors affecting the prices of these commodities.
  2. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  3. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  4. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  7. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  8. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  9. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  10. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  3. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  4. Benchmark Crude Oil

    Benchmark crude oil is crude oil that serves as a pricing reference, ...
  5. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  6. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
RELATED FAQS
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
  6. What happens to the shares of stock purchased in a tender offer?

    The shares of stock purchased in a tender offer become the property of the purchaser. From that point forward, the purchaser, ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!