3 Rare High-Yield Securities That Yield Up To 9%

Sometimes the best dividend yields can be found by looking for stocks that few analysts follow. There are dozens of otherwise good quality companies out there which analysts simply don't talk about, either because the company is too small, too new or occupies a one-of-a-kind niche. Analysts don't cover these outlier stocks because their large institutional clients prefer investing in recognizable names that have high trading volume and address big markets (which attract lots of competitors). I decided to investigate the REIT (real-estate investment trust) sector for companies that occupy unique niches and don't command much attention from analysts. REITs are good for dividend investors in a number of ways, primarily because their unique structure requires them to pass along at least 90% of income directly to shareholders. In return, they are not subject to federal income taxes. Income typically comes from the rent, managing fees and leasing of the properties owned by the trust. Because of this unique structure, REITs generally offer higher yields than the overall market. I found three unusual REITs that aren't widely followed by Wall Street, but offer good dividend growth prospects and rich yields. 1. Government Properties Income Trust (NYSE: GOV) Yield: 7% This unique REIT primarily owns offices and warehouses that it leases out to the U.S. government and various state government agencies. As of March 2011, Government Properties owned 58 office properties and about 7.1 million square feet of space across 26 states and the District of Columbia. Government Properties completed its initial public offering (IPO) and paid a dividend of $0.90 per share that year. The REIT increased the dividend by 36% last year to $1.22 and is on track to pay a $1.68 dividend this year -- a 38% increase. Funds from operations (FFO), a key REIT performance metric, rose 7% in this year's first quarter, due to property acquisitions and increased leasing activity. Dividend payout from FFO is average at around 85%, and the REIT's debt is reasonable at just 21% of capitalization. The outlook for further FFO gains is good, since Government Properties has acquired 11 properties so far this year that should help boost future income and dividends.  Shares appear reasonably priced at just 14 times trailing 12-month FFO and 1.4 times book value.123... Read more