5 High-Yield Dividend Stocks With Worrisome Payout Ratios

Staples, Inc. (NASDAQ:SPLS)

– Number of Hedge Fund Shareholders (as of June 30): 33
– Total Value of Hedge Funds’ Holdings (as of June 30): $726.37 million
– Hedge Funds’ Holdings as Percent of Float (as of June 30): 13.00%

Given the competition from Amazon.com, Inc. (NASDAQ:AMZN) and its failed merger attempt with Office Depot Inc (NASDAQ:ODP), Staples, Inc. (NASDAQ:SPLS) shares are down by 17% year-to-date. Staples’ fall has caused its quarterly dividend of $0.12 per share to yield north of 6.3%. Seeing as how Staples lost money over the last 12 months, calculating the company’s payout ratio is not possible, but obviously it’s not good. Fortunately, analysts expect things to get better for Staples, as Wall Street expects the office supply company to earn $0.90 per share next year on expectations that the U.S. economy remains robust. If that happens, Staples dividend will be safe, and its forward payout ratio will be a manageable 0.53.

Mattel, Inc. (NASDAQ:MAT)

– Number of Hedge Fund Shareholders (as of June 30): 34
– Total Value of Hedge Funds’ Holdings (as of June 30): $597.47 million
– Hedge Funds’ Holdings as Percent of Float (as of June 30): 5.60%

Toy maker Mattel, Inc. (NASDAQ:MAT) currently pays a $0.38 per share dividend per quarter, good for a forward yield of 4.59%. While that yield is music to many investors’ ears, the company didn’t cover its dividend payout over the last 12 months with its earnings, giving it a payout ratio of 144.6% according to Finviz. Fortunately, Mattel reported a solid third quarter recently, with EPS of $0.70 on revenue of $1.8 billion, missing bottom-line expectations by $0.01 per share, but coming in well ahead of its quarterly dividend payout nonetheless. If the Mattel executes, its future earnings should more than cover its dividend going forward; analysts expect it to deliver EPS of $1.78 next year, versus the company’s current dividend payout of $1.52 per share).

Royal Dutch Shell plc (ADR)(NYSE:RDS.A)
– Number of Hedge Fund Shareholders (as of June 30): 37
– Total Value of Hedge Funds’ Holdings (as of June 30): $1.71 billion
– Hedge Funds’ Holdings as Percent of Float (as of June 30): 0.90%

With a market cap of over $200 billion, tens of thousands of fixed income holders, and a yield of over 7.4%, Royal Dutch Shell plc (ADR)(NYSE:RDS.A) has been without a doubt a dividend investor favorite over the past few quarters. Due to low oil prices, the company has also lost money for the last 12 months, making calculating a payout ratio problematic. Given OPEC’s decision to cut production, oil prices have surged, and Brent is now north of $50 per barrel. The rising prices should help Shell’s dividend; analysts expect the company to earn $4.18 per share next year, which will more than cover the annual cost of $3.76 per share. However, Royal Dutch Shell still needs to do some work to integrate its acquisitions and OPEC will need to follow through in November for the company’s earnings to reach expectations and its payout ratio to drop below 1.00.

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