Dividends don't get as much attention during a bull market, yet with yields like these they should. Here are the four largest dividend yields for mid. cap. (or larger) companies, as well as a technical outlook. These dividends could be altered in the future, therefore it is still important to invest in stocks that look good technically and fundamentally, and not only focus on the dividend.
Grupo Financiero Santander Mexico (NYSE:BSMX) has a 28.4% dividend yield; significant by any measure. It is a large cap. stock with average volume approaching two million shares, providing lots of liquidity for investors to easily enter and exit the stock. The stock has a tendency to trade in large ranges. Throughout early 2013 it traded in a range between (approximately) $18 and $13, and in the latter part of the year between $15 and $13 (unadjusted prices). After a break lower in January the stock is currently trading near its highest levels of 2014. Buying on a pullback between $12.50 and $12 is a possibility, but from a long-term perspective (and with the dividend), the current is price is still attractive for investors. The price has pierced into former resistance and may have room to the upside before hitting more resistance at $16.50 to $17.50.
CVR Refining (NYSE:CVRR) boasts a 14.6% dividend yield. It is a $4 billion company with average daily volume of more 300,000 shares. After falling for most of 2013 the price has broken higher out of a strong basing pattern which formed over the last several months. The breakout indicates a long-term uptrend could be underway. Before the breakout, the $24 region (unadjusted) was a strong resistance area, and following the breakout it should act as support. Therefore, patient investors can wait for a pullback to the $25 to $24 in an attempt to snag a better price. The upside target is near 2013 resistance at $33 to $34.
Chimera Investment (NYSE:CIM) is a real-estate investment trust, or REIT, which pays a hefty 11.4% dividend yield. It has a market cap. of more than $3 billion, average volume of more than 4.5 million shares and is priced near $3, making it accessible to investors even with limited capital. In 2008 the REIT was hit hard during the financial crisis. Since 2009 the REIT has been more stable, trading as high as $4.36 and as low as $1.81. Most of 2013 and 2014 has been spent near $3, therefore, waiting for a better entry price could backfire in this one. Capital gains aren't the play here, the dividend is, and with the stock currently trading very close to 50 and 200-day moving averages this seems to be a well established fair value for the REIT.
Invesco Mortgage Capital (NYSE:IVR) is also a REIT, has a dividend yield of 11.3%, a $2 billion market cap. and trades more than a million shares a day. The REIT lost approximately one-third of its value in the summer of 2013, but has since stabilized and broken higher out of a several month basing pattern. The trend is currently up, with support likely to develop along the upward sloping trendline near $16.75. This provides a potential entry point for those who wish to wait for a better entry. Major resistance doesn't appear until around $20; a former support area from 2013 which may now act as resistance.
Another honorable mention is Northern Tier Energy (NYSE:NTI), with a dividend yield of 11.16%.
The Bottom Line
These stocks have high dividend yields, yet dividends can be changed, so even though the dividend is appealing, the company should also be sound technically and fundamentally. The dividend yield will change with price, therefore exercising some patience to get a better purchase price helps in boosting the dividend yield and capturing bigger potential capital gains when the stock is sold in the future. The risk in waiting is that if the price doesn't pull back you may miss out on the dividend payments you seek. Make sure the stocks align with your investment objectives and risk tolerances before investing, and consult an investment advisor if uncertain.