7 Quirky Dividend Stocks


With bond yields in the gutter for these past six years, investors have grown accustomed to looking in… shall we say… “nonconventional” places for yield. Whether in odd corners of the stock market or in dodgy-looking private placements, anything offering a respectable current income is bound to get at least a little attention.

It’s easy enough to understand why. The 10-year Treasury yields barely more than 2%, and traditionally high-yielding sectors like utilities and REITs yield less than 4%. Even “high-yield” junk bonds (and yes, you have to write “high-yield” in quotation marks these days) yield only 5.9%, and these come with the not-so-insignificant risk of default.

Today, we’re going to take a look at seven high-dividend stocks that fall a little outside the mainstream. Not all of these are dividend stocks that I would necessarily recommend, but all are worth at least keeping on your radar. It is their quirkiness and lack of inclusion in major benchmark indexes that tends to keep them off limits to large institutional investors and create the very conditions that make them worth considering for us.

StoneMor Partners

I’ll start with a stock that is one of my personal favorites…but one that also tends to give a lot of investors the heebie jeebies: publicly-traded crypt keeper StoneMor Partners, LP (STON). StoneMor owns and operates 303 cemeteries and 98 funeral homes across the United States and Puerto Rico.

StoneMor’s business is anything is not predictable. As none other than the great Benjamin Franklin noted, nothing can be said to be certain but death and taxes. And as the Baby Boomers—the largest generation in history—enter their golden years, end-of-life services are about to enjoy an unprecedented boom. Based on current life expectancies, the number of annual deaths in America will rise by more than 80% between 2015 and 2035. Even allowing for an increased preference for cremation over traditional burial, there is an incredible amount of growth all but guaranteed to come down the pipeline. And even better, we’re getting paid to wait: StoneMor pays an 8.4% distribution, and it has steadily raised its payout over the past ten years.

If the unpleasant association with death wasn’t enough, StoneMor has some other quirks that make it difficult for a lot of investors to own: It’s structured as a master limited partnership (“MLP”) and can generate unrelated business taxable income (“UBTI”), which makes it all but untouchable for an IRA or Roth IRA account. Its status as an MLP also makes StoneMor problematic for a lot of institutional investors and non-US persons to own.

There loss is our gain. StoneMor is a stable company that throws off a high and growing cash distribution. Buy it and plan to own it until… well… until you become one of StoneMor’s permanent residents.

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Disclosures: Long STON.

Disclaimer: This article is for informational purposes only and should not be considered ...

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