A dividend yield over 5 percent represents an outstanding annual return to look forward to. That being said, a dividend yield of 10 percent is outstanding, the sort of stock that can anchor a portfolio.
Unfortunately, there are very few companies out there offering such a high yield and those that do often are the result of distressed share prices from a weak outlook. However, there are at least four companies out there offering yields over 10 percent but still have a forward P/E under 15.
Fifth Street Finance Corp. (FSC)
Fifth Street Finance is a finance company that invests in mid-sized companies working in connection with investments coming from private equity sponsors. The company offers a monthly dividend that began in 2011 but decreased in January, falling to $0.096 per share from the $0.107 it stayed at for all of 2011. This decrease, though, still leaves the company with an annual yield of 11.3 percent. Combine this with a forward P/E of 8.45 and Fifth Street may warrant a second (maybe even a fifth) look from the savvy investor.
LRR Energy (LRE)
LRR Energy is a limited partnership formed by affiliates of Lime Rock Resources to operate, acquire, exploit and develop producing oil and natural gas properties. The company has a hefty dividend yield of 10.56 percent, but still features a forward P/E of 11.46. Add to this a gross margin of over 90 percent, and LRR Energy might be just the sort of dividend that can really benefit an investor's portfolio.
Cedar Fair (FUN)
Cedar Fair owns and operates amusement parks throughout the United States, including Cedar Point, considered by many to be the best amusement park in the world. While a company in the business of roller coasters might bring up a metaphor that doesn't appeal to investors, Cedar Fair could offer an attractive value in other ways. Its dividend yield recently reached 10.54 percent while the company still boasts a forward P/E of 11.86. Roller coaster or not, if the dividend holds Cedar Fair could be a FUN ride.
Oxford Resource Partners (OXF)
Oxford Resources is an Ohio based coal mining company. Coal mining is often a good business to be in, and Oxford has used it to offer a dividend yield to shareholders of 10.25 percent. Some investors might get scared off by the debt/equity ratio approaching 2 (and with reason, to be sure), but the forward P/E of 14.72 and P/S of 0.91 could give reason to hop onto the Oxford dividend train.