Should You Buy the 3 Highest Paying Dividend Stocks on the Nasdaq?

What comes to mind when I mention Nasdaq stocks? I doubt many have considered ultra-high yielding dividend stocks. On the other hand, I suspect that high-flying tech stocks were at the center of many readers’ minds.

The reality, however, is that the Nasdaq is stacked with both top tech stocks. and stocks that offer exceptionally juicy dividends. Should You Buy the Three Highest-Paying Dividend Stocks on the Nasdaq? Here I am.

1. B. Riley Financial

B. Riley Financial (NASDAQ: RILY) is a financial services company based in Los Angeles. It focuses on investing in and acquiring companies. B. Riley also operates subsidiaries that provide asset management, brokerage, direct lending, investment banking, wealth management and other services.

The company’s forward dividend yield is nearly 33%. Why is B. Riley’s yield so high? Mainly because the stock is down over 70% this year.

B. Riley’s troubles stem largely from a federal investigation into a hedge fund operated by Brian Kahn, a business partner of the company’s founder and CEO Bryant Riley. The hedge fund lost hundreds of millions of dollars for investors. Earlier this month, B. Riley received a federal subpoena from the US Securities and Exchange Commission (SEC) regarding the Kahn investigation.

It didn’t help matters that B. Riley posted a net loss of $5.1 million in the first quarter of 2024. The company also delayed its second quarter filing with the SEC. It said the filing could not be made on time “primarily due to delays in completing valuations of certain of the Company’s loans and investments for the quarter ended June 30, 2024.”

2. Icahn Enterprises LP

Icahn Enterprises LP (NASDAQ: IEP) is a master limited partnership (MLP) founded by billionaire Carl Icahn. It is a holding company that owns businesses in the automotive, food packaging, energy, home fashion, pharmaceutical and real estate industries.

The MLP’s forward dividend yield exceeds 25%. Unlike B. Riley, Icahn Enterprises’ ultra-high return is not due to a drop in its stock price. The stock was down last year, but not by a huge percentage.

However, Icahn Enterprises is up more than 25% at the start of 2024. The company’s announcement of a $411 million drop in net asset value (NAV) on Feb. 21 sent some unitholders into a panic. This significant reduction in NAV resulted in large part from the poor performance of Icahn Enterprises’ investments.

3. Trust for Service Properties

Service Property Trust (NASDAQ: SVC) is a real estate investment trust (REIT) that owns 220 hotels in the US, Canada and Puerto Rico. The REIT also owns 749 commercial properties in the US, including department stores, restaurants and truck stops.

The story continues

REITs must return at least 90% of their income to shareholders in the form of dividends. Service Properties Trust pays a quarterly dividend of $0.20 per share, which translates to a forward dividend yield of over 18%.

Why is Service Properties Trust’s dividend yield so high? Partly because its stock is down nearly 50% year to date. The REIT continues to post sizable net losses. Its funds from operations (FFO) fell significantly year over year.

Are These the Highest Yielding Nasdaq Stock Buys?

In my view, investors should be suspicious of all three of these stocks. While their returns are tempting, I believe these temptations should be avoided.

B. Riley Financial is the most worrisome of the bunch because of the SEC investigation. Maybe everything will work out for the company. However, until the dark cloud passes, staying on the sidelines with this stock seems like the smartest move.

Which is most likely to come back? I would go with Service Properties Trust. REITs should benefit if the Fed cuts interest rates in September. Its diversified leasing portfolio also reduces risks to some extent.

Should you invest $1,000 in B. Riley Financial right now?

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Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.

Should You Buy the 3 Highest Paying Dividend Stocks on the Nasdaq? was originally published by The Motley Fool