The prevailing ultra low interest rate environment has left investors with little option to enhance their regular income. As a result of the Fed’s stimulus, fixed income security yields have dropped to their lowest. Therefore, stocks paying elevated dividends are the best alternatives these days.
You will find three such stocks from the U.S. financial sector that pay dividends in excess of 4.50% and are insiders’ favorites. I am bullish on the three stocks as they pay elevated and stable dividends during such challenging times when the 10-year Treasuries are offering 1.83%.
Additionally, the recent insider buying makes me more bullish on the three stocks under consideration. Therefore, I recommend you buy Inland Real Estate Corporation (NYSE:IRC), American Capital Agency Corp. (NASDAQ:AGNC) , and Invesco Mortgage Capital Inc (NYSE:IVR) . The remaining of the investment thesis aims to touch the individual stocks briefly.
Inland Real Estate Corporation (NYSE:IRC) operates as an equity REIT. The company focuses on developing, acquiring, and managing prime retail centers. The company has investments in over 146 properties. These properties are leased to generate rental income for Inland Real Estate Corporation (NYSE:IRC), which is then transferred as dividends to shareholders.
The company is currently yielding 4.88% on its monthly dividend of $0.05 per share, which was maintained for a very long time. Besides, since the company distributes dividends on a monthly basis, it is more attractive for regular income investors.
During the month of February, one of the company’s directors bought 1,000 shares at an average price of $9.41 per share. Among other recent purchases are over 110,000 shares of the company, which were bought during the month of November last year by its officers.Remember, these were not stock options which are granted to the top executives as part of their annual compensation. This insider buying signals the insiders’ bullishness on the company’s future.
American Capital Agency Corp. (NASDAQ:AGNC) operates as a mortgage REIT, and is exclusively invested in acquiring and managing fixed rate residential mortgage backed securities for which any of the government Agencies guarantees the principal and interest payments.
The company pays a quarterly dividend of $1.25 per share, yielding around 16.9%. The company has maintained its quarterly dividend for a long time now and I believe it will be able to do so in the future as its cash dividend coverage ratio comes out to 1.2 times.
During the month of February, the company’s CEO bought 15,500 shares of American Capital Agency Corp. (NASDAQ:AGNC) at an average price of $32.40 per share. Again, these are not part of the annual compensation. Besides, the company’s President doubled his stakes in American Capital Agency Corp. (NASDAQ:AGNC) after he exercised his options to buy 332,794 shares in May this year.