7 Companies That Pay Dividends but Are Burdened With High Debt

Companies with high debt loads usually shouldn’t be paying dividends. That money could be better used to pay off debt. By paying dividends, the company is essentially borrowing money to pay its shareholders and sometimes at high rates of 6% or more. Let Tasty Baking (TSTY) be a cautionary tale. The company continually borrowed to pay dividends, ignored its mounting debt problem, and now can’t make its principle payments and is most likely headed toward bankruptcy. If you can find the next TSTY and short it before the “debt hits the fan,” you can make a hefty profit. Check out my article on TSTY here. These six other companies also have large amounts of debt yet still pay dividends. Exterran Partners (EXLP): Natural gas compression services and equipment industry. Market Cap: 915M, Debt: 452M, Cash: 50k, Div Yield: 6.9% Last 3 months up 11%, up 22.5% in the last year... Read more