It’s Friday – the end of the trading week.
And just like how I like to spotlight fast-moving stocks that could deliver quick gains at the beginning of the week…
I like to spotlight a high-yield dividend stock that can pay you sweet passive income as we head into the weekend.
So, with that said…
Today’s stock pick is one that pays an 11.6% dividend yield – without needing to strain its cash flow, with a payout ratio of under 40%.
Yes, there are risks, which I’ll go into later…
But all in all, with a yield that’s touching 12%, this is one stock any income-focused investor should seriously consider.
Uniti Group Inc. (UNIT)
Uniti Group is a specialty REIT that buys and builds fiber optics communications infrastructure. It owns and operates about 138,000 fiber optic route miles and 8.3 million fiber strand miles serving over 275,000 commercial buildings in 300 metro areas.
A couple weeks ago, Uniti released its second-quarter results, which revealed Funds From Operations (FFO) of $0.34 per share. It also announced a quarterly dividend of $0.15 per share, meaning its FFO is more than double its dividends – an extremely healthy coverage ratio. Considering that Uniti has been able to consistently generate FFO more than double its dividends, this is likely to continue.
The biggest risk for Uniti is concentration risk. Over 60% of Uniti’s revenue comes from just one customer – Windstream. The good news is that Windstream’s lease runs until 2030 before it will “reset” to market rate, which might be dramatically lower than what it’s paying to Uniti today.
That means you can still hold Uniti stock for its attractive dividend. Just don’t hold it for too long – and adjust your position sizing accordingly.
To your wealth,
Felix @ Ace of Investing
