5 High-Yield Dividend Stocks to Avoid
High yield dividend stocks can appear to be attractive investments, but many of them can be very risky. Some may seem to be a good investment at one point in time, but it is important to understand that factors for these seemingly high-yielding stocks, such as the size of the dividend, stock price, and dividend yield can change at any time.
The biggest risk factor with high yielding dividend stocks is a continually falling stock price. Often times, a super-high yield results mainly from a price drop, since a stock's price and yield move inversely to each other.
Also, if a stock price falls significantly in a relatively short amount of time, a company may decide to cut their dividends. Remember, falling stock prices are often a signal of declining earnings, and when earnings drop, dividends tend to follow. Below are five high-yield stocks that investors should probably avoid right now.
1. BGC Partners
BGC Partners, Inc. ( BGCP ) is a global brokerage firm located in New York, New York. It was founded in 1994 when Cantor Fitzgerald spun out its brokerage firm. The firm provides a wide range of products including fixed income securities, interest rate swaps, foreign exchange, equities, equity derivatives, credit derivatives, commercial real estate, property derivatives, commodities, futures, and structured products.
BGCP currently has a payout ratio of 109%, and a dividend yield of 14.47%. In the past year, the stock has declined 18.27% percent - to under $5 per share.
2. Tsakos Energy Navigation
Tsakos Energy Navigation Ltd. ( TNP ) is a Greek provider of international seaborne crude oil and petroleum that was founded in 1993. It focuses on marine transportation for national and independent oil companies, and is one of the largest transporters of energy in the world.
The company has an incalculable payout ratio (considering it's on track to lose a substantial sum of money this year), and a dividend yield of 12.63%. In the past year, TNP's stock has declined by 42% - also to under the pivotal $5 per share mark.
3. Portugal Telecom
Portugal Telecom( PT ) is a holding company specializing in telecommunications and is located in Lisboa, Portugal. The company, founded in 1994, provides TV, Internet, and I.T. services. The company is the Portuguese national leader in every sector that it operates.
PT's stock has a payout ratio of 87% (which is set to rise next year as its earnings continue to fall), and a dividend yield of 12.63%. The stock has declined 13.34% in the past year.
4. Teekay Tankers
Teekay Tankers Ltd ( TNK ) is an international marine transportation company located in Bermuda. The company, which was founded in 2007, focuses on oil tank ownership. TNK has a payout ratio of 106%, and a dividend yield of 14.97%. The stock has increase 0.57% in the last year. With a stock price of only $3.55, this stock is also very risky since it is well below $5.
5. France Telecom
France Telecom( FTE ) is a telecommunications company located in Paris. The company, which was founded in 1988, specializes in mobile and internet providing for multinational businesses. FTE is the largest telecommunications company in Europe and second largest worldwide.
Despite its seemingly strong business presence, the company has a too-high payout ratio of 96.6%, and a dividend yield of 14.10%. FTE shares have declined 19.09% in the past year.