Beware: Outrageously high numbers…

I had previously written about high dividend stocks. I would like to extend this post to include few more stocks that give outrageous yields. (As high as 45.80%). But wait….there is a catch…..!!!

  1. Royce Focus Trust, Inc. FUND operates as a diversified, closed-end investment company. The trust invests in the stocks and bonds in various sectors. They claim to pay dividend of $4.80/share and yield of outrageously high 45.80%. Is this kind of yield justified ? As per my research the last payment was made for $1.20/share, which multipled by 4 will give you 4.80$ which is right on track. Caution: Last four payments added up to only $1.57 which yields to only 14.5%. Do your own research to ensure that they will continue to pay $1.20/share every quarter and this is not a sham.

  2. Cal-Bay International, Inc. CBAY.OB invests in real-estate market. The company had interests in Utah, Nevada, Florida and California. They claim to pay dividend of $0.01/share and yield of outrageously high 41.70%. Caution: The company has made one dividend payment in the month of April 2006. The stock trades at 0.028$/share causing the yield to be so high.Since the company has only paid one dividend, you can’t rely on it in the future.

  3. Polyair Inter Pack, Inc. PPK engages in the manufacture and distribution of protective packaging products and swimming pool products. They claim to pay dividend of $0.81/share and yield of outrageously high 37.00%. Caution: They are only one-time dividend payer.

  4. Latin American Discovery Fund, Inc. LDF operates as a closed-end management investment company. The fund invests primarily in Latin American equity securities. They claim to pay dividend of $9.00/share and yield of outrageously high 33.80%. They pay dividend every six months. The mid-year dividend is small and the year-end is large. Caution: The year-end dividend relies on capital gains as opposed to dividend distributions from the stocks in the portfolio. Can you rely on such a stock for high dividend.

  5. Nicholas-Applegate Intl & Premium Strategy Fund NAI operates as a diversified, closed-end management investment company. The fund intends to invest in international markets. They claim to pay dividend of $9.28/share and yield of outrageously high 31.00%. Caution: The fund pays only at year end which includes capital gains which makes it unreliable.

  6. Templeton Emerging Markets Fund EMF operates as a closed-end investment company. It primarily invests in equity securities. They claim to pay dividend of $5.25/share and yield of outrageously high 30.50%. Caution: The fund pays only at year end which includes capital gains which makes it unreliable.

Conclusion: Some stocks look to be yielding outrageous numbers. They are attention grabbers. But are they genuine ? Maybe, maybe not. Not all high yielding stocks are bad. Again i urge my readers to read read and read…do you own research before jumping into any such high yield stock.

Recommendation:
As a rule of thumb, always always check the number of payments made out by these high yield stocks. Ensure the dividend payment is consistent. Also make sure that the payment doesnt rely on capital gains. And finally make sure that the yield is calculated correctly from whichever source you use to monitor such stocks.

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