Massive Yields From Little-Known “Secret Payouts”

Most sites use a shorthand method to calculate a stock’s annual dividend yield. They do this through multiplying the most recent payout by the distribution frequency.This number, however, often misses irregular, or special, dividends. As a result, the published yield you see may show something under two percent. The stock’s real yield, however, could be much, much higher. I call them Wall Street’s “Secret Payouts”–big, huge yields hiding in plain sight. For those willing to do the extra legwork, they can represent lucrative sources of dividends.

Case in point: Main Street Capital Corporation (NYSE:MAIN). This firm lends money to mid-sized businesses and passes on the profits to owners. And because management has stuck to the most credit-worthy borrowers, this stock has emerged as a reliable income stream for investors. Here’s the thing. If you check Yahoo! Finance, you’ll see the dividend reported as $2.22 per share. Based on the current stock price, that comes out to an annual yield of 5.7%. This number, however, isn’t entirely correct. The computers at Yahoo! and other financial web sites fail to account for irregular dividends. Main Street mails a supplemental distribution every six months, in addition to its regular payout. The last special dividend was $0.28 per share.

Source: Income Investors

Related Articles:
- My Top 3 Investing Mistakes
- 6 Stocks Currently Trading Below their Fair Value
- The Wit and Wisdom of Warren Buffett
- The Perfect Dividend Stock
- Charlie Munger's 10 Rules for Investment Success