"AMAZING DIVIDEND PLAYS" BY FRED CARACH

In 47 years as an investor I have never seen the amazing dividend plays that are available in today's market. The dividend plays that I am listing below are paying dividends that range from about 12% to 25%. When investors see stocks that are paying dividends in this range their automatic assumption is that the dividend is too good to be true and that the stock should not be bought because the dividend is about to be eliminated. They are so certain of this that they don't even consider researching the stock. And in ordinary times this would be a reasonable assumption.
It is not a reasonable assumption today. The stock market has collapsed dividend paying stocks to such an extant that their dividend yield has exploded to mind blowing levels. If the dividends that these stocks are paying are reinvested in a dividend reinvestment program the rewards over a five year period are staggering.
At 10% interest compounded money doubles every 7 years, at 15% money doubles every 4.8 years. At 20% money doubles every 3.6 years. At 25% money doubles every 2.88 years.
In my opinion there is almost no chance that any of the stocks that I have listed below will have their dividends cut by more than 50%. Indeed I will be amazed if any of these plays have their dividends cut by more than 25%. My worst case assumption is that the group as a whole will have a dividend cut of no greater than 20%. I would not be surprised if at least half of the stocks in this group did not cut their dividends at all.
Indeed most of the companies on this list have already savagely slashed their dividends. During the next turn of the wheel these companies should recover and will have the capacity to reinstate their old dividends. If this happens their dividend return will be phenomenal.
It goes without saying that I own these stocks. I have invested about 1% of my investment capital in each of these plays. All data is from S&P and was collected recently.

MEDICAL PROPERTIES TRUST-sells at $5.00 and pays a dividend yield of 16%. It is a REIT or real estate investment trust as are all the below plays. This is a sector that has been absolutely hammered by the market. It is important to realize that in analyzing REITS the key metric as to whether a dividend is covered and can be maintained is not EPS or earnings per share as so many mistaken investors believe but by a metric called FFO or funds from operations. This is the cash that is actually in the till and that is available to pay dividends. According to S&P this stock has an estimated FFO of $1.15 per share in 2009. This stock is currently paying a dividend of .80 cents per share. Its tangible book value is $9.85 a share

SUN COMMUNITIES-sells at $13.00 a share and pays a dividend yield of 19%. This REIT specializes in high quality mobile home rental communities. It has an estimated 2009 FFO of $2.88 per share. Its current dividend is $2.52 per share. Its tangible book value is $1.27 per share

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST- sells at $4.85 per share and pays a dividend yield of 23%. This REIT specializes in retail malls. It has an estimated 2009 FFO of $3.41 per share. Its current dividend is $1.16 per share. Its tangible book value is $16.70 per share.

HRPT PROPERTIES TRUST- sells at $3.30 per share and pays a dividend yield of 14%. This REIT specializes in office and industrial properties. Its estimated 2009 FFO is also $1.03 per share. Its current dividend is $0.48 per share. Its tangible book value is $9.75 per share

NORTHSTAR REALTY FINANCE CORPORATION- sells at $3.08 per share and pays a dividend yield of 12%. This REIT specializes in commercial mortgages. Its estimated 2009 FFO is $1.32 per share. Its current dividend is $.40 per share. Tangible book value is $5.96 per share.

CBL & ASSOCIATES PROPERTIES-sells at $5.80 per share and pays a dividend yield of 25%. This REIT is a large owner of regional malls in mid-sized markets. Its estimated 2009 FFO is $ 3.51 per share. Its current dividend is $1.48 per share. Tangible book value is $13.91 per share.

I know that these dividends appear to be too good to be true. Indeed they are so high that they frighten me. Nonetheless, within the parameters that I have laid out I believe that these dividends are sustainable.
I can't help thinking about what Clint Eastwood said in one of his "Dirty Harry" films.
"Well screw do you feel lucky?"
Well do you?

Fred Carach is the author of the book Forty Years A Speculator. His blog is located at fortyyearsaspeculator.blogspot.com