June 9, 2011 | In: Trivia

Which Stock Has the Highest Dividend in 2011?

Long term investors seeks stocks with the high dividend yield, as they prefer to make money on a recurring basis rather than selling and buying stock to make money (which can be very risky).

Some stocks can provide investors with dividend yields up to 40%, so, you can invest $100,000 in this stock at the beginning of the year and make $40,000 by the end of the year. Provided, of course, the company still exists.

Now what is the stock with the highest dividend so far in 2011?

It is TGS (NYSE:TGS) which is issued by Transportadora de Gas del Sur SA (what, you haven’t heard of this company before?), an Argentinian based natural gas company. TGS has a dividend per share of $1.5, a dividend yield of 41.61%, is currently priced at $3.61, has a P/E of 12, and it has been trading in the NYSE since November of 1994, so it’s not like a Chinese stock that was listed yesterday, and employing some Ponzi scheme technique offering high dividends to lure investors.

Now, let’s look at closer at TGS, the company has a very low volume. On average, only 85,000 shares trade hands each day, doesn’t this raise some eyebrows? If the stock is offering a dividend yield of 40%/year ($1.5/share), why aren’t investors flocking in?

Well, let’s take at TGS’s chart for a second:

Chart 1: TGS 2011 Chart

You can see form the above how the stock dropped almost $2 in 2 days 2 weeks ago, and that’s why investors are staying away from this stock, because it’s dangerous. Let’s do some math here: Imagine you bought 10,000 shares of this stock on January 20th at around $6. The stock right now is trading at $3.61, let’s assume that the stock will close this year at $3.61. If you want to get out of the position by the end of the year, then here’s how much you would have made:

Total cost: 10,000 x $6 = $60,000
Sold at: 10,000 x $3.61 = $36,100
Dividend: 10,000 x $1.5 = $15,000

You made: $36,100 + $15,000 – $60,000 = -$8,900, or about -15% of your initial investment. What an excellent idea to make money!

Usually very high dividend yields are associated with underperforming stocks, that’s why investors stay away from them. The old saying All that glitters is not gold applies perfectly to stocks with high dividends.

By the way, my personal opinion is that TGS is at a bargain price right now, but I’m not going to buy it.

2 Responses to Which Stock Has the Highest Dividend in 2011?


How Can Stocks Make You Money? « Fadi El-Eter

August 15th, 2011 at 9:06 am

[…] 3 months, which you can re-invest to even buy more RY!). You have to be careful from companies offering very high dividends, which may be a sign of an underperforming stock. Note that there are some great stocks, such as […]


How to Know What Is the Dividend of a Stock « Fadi El-Eter

November 4th, 2011 at 9:02 am

[…] As for MAS, it is currently priced at $9.45 and is paying a dividend of $0.30/share. Which means that if you own a 1,000 shares with MAS worth $9,450, you will make $300, which is about 3% of your initial investment. Not that great but not too bad either, if you take into consideration the bad economy. However, keep in mind that MAS lost 25.36% of its value this year, which means that you would have lost 22.36%, even after taking the dividends into consideration, if you bought MAS at the beginning of the year. Always remember, a high dividend is not a good sign. […]

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