Investors who want dividend stocks often turn to the big names like Altria, Chevron, and Coca-Cola. These are established companies with mature businesses, reliable financial management, and significant global market shares, so it makes perfect sense why investors would choose these.
However, there is value in being adventurous—it’s akin to finding the diamond in the rough. That’s why I like to look for relatively unknown dividend stocks every once in a while. This is coming from me, an investor who prioritizes asset protection. And once the rest of the market catches on, you’d be certain the yields will drop.
So, today, I’ll dive deeper into the market to look for the hidden gems of dividend investing and see if they’re worth the time and effort.
How I Came Up With The Following Stocks
As a general disclaimer, investing is inherently risky, particularly if you’re investing in smaller, less well-known companies. I’ll do my best to reduce the risks with this analysis, but they’ll always be present. Let this be your disclaimer.
Now, to start this analysis, I went to Barchart’s stock screener page and used the following filters:
- Number of Analysts: Between 4 (Low) and 12 (Medium). The idea here is to look for stocks that don’t have much coverage, though I wanted to avoid those with too little coverage. I feel that between four and twelve is the sweet spot here.
- Annual Dividend Yield: 5% and above. Higher yields are preferable here because if you’re going to take a risk, why not get paid more in the process? However, this risk is slightly mitigated by the following criteria.
- Dividend Payout Ratio: 60% or less. The dividend payout ratio measures how much the company spends its net income to give back to shareholders. 60% is the upper limit of what most consider a “healthy” payout ratio and is a good indicator of a company’s ability to keep sustainably paying dividends.
- Current Analyst Rating: 3.5 (Moderate Buy) to 5 (Strong Buy).
I ran the screen with these criteria and got thirty-two results. I then rearranged them from highest to lowest yield and took the top three.
I checked the dividend payment histories of the top companies just to be sure, and Noah Holdings Ltd’s is quite bare (5 payments in the last 12 years), so I will exclude it from the list.
Here are my top three high-yield dividend stocks to consider:
Torm Plc Class A (TRMD)
Torm Plc is a shipping company that primarily transports refined oil products such as gasoline, jet fuel, and naphtha, along with a small share of crude oil.
The company operates a fleet of over 90 tankers, offering worldwide services for oil majors, trading houses, and industrial customers. Torm's business focuses on the spot market and time charters, with its fleet including various sizes of product tankers, such as LR2, LR1, MR, and Handysize vessels.
Since last year, TRMD has been paying quarterly dividends. The latest dividend is $1.20, or $4.80 yearly. Based on current prices, this translates to an impressive 20% yield. This high yield is primarily due to the stock’s recent significant downward movement, so this may be a unique opportunity to grab a high-yield stock before it recovers.
Monroe Capital Corp (MRCC)
Monroe Capital Corp is a business development company focused on providing financing solutions to middle-market companies in the United States. It offers a range of financing options, including senior and junior secured loans, unsecured loans, and equity investments.
MRCC primarily serves businesses in healthcare, technology, media, and manufacturing. The company aims to support growth, acquisitions, and recapitalizations for its portfolio companies, often taking a flexible, customized approach to meet each business's unique needs.
Though MRCC’s dividends are lower than in 2020, it still offers a lot for income investors. The latest quarterly payout was 25 cents per share, making the dividend $1.00 annually and translates to an impressive 12% yield.
Lument Finance Trust Inc (LFT)
Lument Finance Trust Inc. is a real estate investment trust that primarily focuses on originating and managing commercial mortgage loans and other commercial real estate debt investments in the United States.
The company provides financing solutions for multi-family and other commercial property types. Its goal is to generate income from a portfolio of mortgage-backed securities, mezzanine loans, and preferred equity investments.
LFT has been paying dividends since 2015. Its latest quarterly payout is 7 cents per share or 28 cents annually, reflecting a 10.81% yield based on current prices.
Final Thoughts
Smaller, high-yield dividend stocks can be risky investments, but with the right tools and timing, you can take advantage of their yields while keeping your capital safe. Like always, practice proper monitoring and due diligence, and if it comes to it, always be prepared to sell off losing investments.
More Stock Market News from Barchart
- Are Wall Street Analysts Bullish on Coca-Cola Stock?
- CPI, Earnings and Other Can't Miss Items This Week
- GE HealthCare Stock Outlook: Is Wall Street Bullish or Bearish?
- 3 Tech Stocks at Risk from Potential Trump Tariffs
