Prison Operators Geo And Corrections Pay Big Yields

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When it comes to dividend stocks, utilities, food and financials usually come to mind. But prison operatorsGeo Group ( GEO ) andCorrections Corporation of America ( CXW ) also pay large dividends.

Both companies recently converted to real estate investment trusts or REITs, where at least 90% of taxable income has to be distributed to shareholders as dividends. Companies operating under the REIT structure tend to pay out much higher yields.

Boca Ration, Fla.-based Geo Group runs correctional, detention and community re-entry centers in the United States, Australia, South Africa and the U.K.


Due to its REIT conversion, the company in January declared a quarterly dividend of 50 cents a share. That's more than double its prior payout of 20 cents a share. Geo had just started paying quarterly cash dividends in September.

Geo pays an implied $2 a share on an annual basis, which works out to a yield of about 5.6%.

The stock is extended after clearing a flat base in December.

Rival Corrections Corporation of America runs prisons in 20 states and in the District of Columbia.

Last month, it announced its first dividend under the REIT structure. The company declared a first quarter dividend of 53 cents a share to be paid April 15 to shareholders of record April 3. Its previous dividend was 20 cents a share.

At the new quarterly rate, the company pays $2.12 a share annually. Corrections Corp. has a yield of about 5.5%.

Corrections Corp. is in a flat base with a 39.41 buy point. On the plus side, the stock has traded sideways with support along its 10-week moving average.

But on the downside, the stock's pattern is a third-stage base.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: CXW , GEO

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