3 Higher-Risk Dividend Stocks With Yields up to 15.2%

Dividends help investors grow their portfolios and compensate for declines in stock prices. Also, according to Royal Bank of Canada Global Asset Management, dividend stocks have outperformed the broader market over time. However, extremely high or unusually high yields are red flags.

Small cap stocks Good Financial (TSX:WFC), Capital of the Fiera (TSX:FSZ), and Gear Energy (TSX:GXE) are attractive prospects for their high dividend yields, but investors should be cautious. High payments may not be sustainable or well covered by earnings. Unless you are willing to take higher risks, research each stock carefully before investing.

Flexible dividend policy

Wall Financial acquires and develops mixed-use residential and commercial properties, primarily in Metro Vancouver and the Lower Mainland. At $19.15 per share, investors are sharing in a staggering 15.2% dividend. Despite the uncertainty in Canada’s real estate sector, the stock is up 66.17% year to date.

The $621.2 million real estate company maintains a flexible dividend policy with payouts being either annual or semi-annual. In addition, the amount and time of payment depends on cash flow and cash flow requirements to meet or finance current or future developments and investments.

In the year ending January 31, 2021, Wall Financial did not pay a dividend due to lower profits. Fast forward to the first quarter (Q1) of fiscal 2024, and net income was $2.7 million compared to $29.9 million in Q1 fiscal 2023. In the three months ended April 30, 2023, dividend payments reached $97.3 million ($3 per share) .

The steady quarterly payout

Fiera Capital provides customized multi-asset solutions across public and private asset classes in the North American, European, and select Asian markets. The customer base of this $664.27 million independent asset management firm includes institutional, financial intermediary, and private wealth clients.

The financial stock trades at $6.46 per share (-21.37% year to date) and pays a 13.44% dividend, although the payout ratio (452.63%) is in the danger zone. But in fairness to Fiera, it has never missed a quarterly dividend payment since October 2010. A $6,460 investment (1,000 shares) will generate $217.50 in passive income per quarter.

In Q1 2023, revenue decreased 8.8% to $157.1 million compared to Q1 2022, while net loss reached $748,000 compared to $5.45 million net income a year ago. However, management believes that its strategies should provide positive returns in the long term. A recent distribution partnership with New York Life Investments was a factor in the growth.

Monthly dividends

Gear Energy is a cheap but profitable option, given its share price ($0.96) and dividend yield (12.9%). However, the energy stock has not fared well with a 10.06% year-to-date loss due to the overall collapse of the sector. The $251.13 million exploration and production company maintains low-cost, oil-focused operations in three principal areas.

In Q1 2023, revenue and net income decreased 27.3% and 68% year over year to $29.5 million and $1.99 million. Macro commodity price weakness and continued inflationary pressure are business threats. However, management’s goals in 2023 are to strike a balance between strong return on capital, production and reserve stability and continuous monthly dividends.

Strongest foundation

Most market analysts doubt the ability of Wall Financial, Fiera Capital, and Gear Energy to maintain their high yields. If I invest, the asset management company has a solid foundation to support its quarterly payments.