These Small-Cap Stocks Have Double-Digit Yields

The relationship between risk and reward never changes. If you're seeking great riches -- in the form of juicy dividends -- then you're likely pursuing very speculative investments. On the flip side, seeking "safe" dividend payers likely means you're going to get a paltry payout.
But sometimes it's OK to shoulder a good deal of risk, especially if it's only a small part of your portfolio. As long as you stay current on what's going on at the company in which you have invested, you may be able to get out of the stock before the risk part of the equation comes back to bite.
Out of curiosity, I went in search of micro-cap and small-cap investments (with a market value below $500 million), and was surprised to find dozens of choices that yield 10% or more. Logic would tell you that if these high payouts were sustainable, then more investors would pile into them, pushing up their price and pushing down their yield. Yet some of these high-dividend investments can keep the payouts coming -- if the chips keep falling their way.
Take the Cornerstone Progressive Return Fund (AMEX: CFP) as an example. The fund invests in a range of unusual securities such as high-yield municipal debt and arbitrage option plays on proposed acquisitions. The fund intentionally seeks out investments that few others would dare touch because of a higher-than-normal possibility the investment will go bust. Yet the strategy has worked fairly well in recent years. From 2008 through 2010, the fund paid out more than $36 million in dividend income to investors. Right now, the fund expects to pay out about $0.10 a share per month, or around $1.20 per year. That's good for a 16.6% yield.
Life Partners Holdings (LPHI)) may be the poster child for risk and reward. The company, which re-sells life insurance policies (known as "life settlements") has failed to file its most recent 10-K and 10-Q.123... Read more