Safe Dividend Investing
In 2000, I lost $300,000 in mutual funds that an investment advisor had put my lifesavings into.... I lost it because I had entrusted it to an industry that does not educate investors nor encourage them to look closely at what that industry is doing with their money..... I set out to find a better, safer way to invest..... My podcasts relate to what I learned in creating a generous, reliable income and in growing my wealth.... A few of the more important lessons I learned and explore are:.... (1) It is critical that you become a self-directed investor.....(2) If you can not easily measure the risk and potential in an investment, then do not invest in it. This excludes from your portfolio bundled investment devices, like mutual funds, ETFs and Index funds,..... (3) Financially strong companies who have paid “good dividends” for decades will continue to stay strong and continue to pay good dividends because it is both part of their "character" and in their executives selfish interest.....(4) Diversification is critical. Investing equally in the best 20 strong dividend stocks is the ideal.....A portfolio of 20 limits your risk in any one stock to 5% of your wealth..... No matter how strong you think a stock is, do not fall in love with it..... I have lived very well off my steady dividend income for 18 years, through two market crashes and one pandemic. I have watched my portfolio’s capital more than triple from where I started, despite taking out a generous dividend income every year to live on... In charts, for my second investment book,(Safer Better Dividend Investing), I spent months scoring all 628 dividend stocks paying dividends of 6% or greater traded on the TSX, NYSE and the NASDAQ. I discovered dozens of stocks that can provide not only a generous dividend income but outstanding capital growth.....Financial independence is realizable for careful, patient, dividend investors.
Safe Dividend Investing
Podcast 268 - ARE HIGH DIVIDEND PAYING STOCKS MONEY TRAPS?
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Welcome to Safe Dividend Investing’s Podcast # 268 on March 28th of 2026.
My name is Ian Duncan MacDonald, and I am the author of 7 investment books. My seventh investment book, Achieving Financial Independence Safely - 200 NYSE Stocks Analyzed and Scored" became available January 3rd on Amazon. You can easily find it by searching in Amazon or Google for "Ian Duncan MacDonald books". For more information on all my books, stock scoring software and podcasts go to www.informus.ca
Who are those ultra high dividend stocks that you are warned against investing in? Investment advisors like to paint high dividend stocks as traps to rob you of your money. I was curious to investigate if I should consider adding some ultra high dividend stocks to my portfolio.
While I have found that most advisors know little about dividend stocks, I was curious to investigate the differences between several ultra high dividend stocks paying a dividend yield percent exceeding 20% to a stock like Citigroup that 15 analysts recommend buying but only pays a dividend yield percent of 2.13%.
In this podcast I calculate the IDM stock scores of several ultra high dividend stocks and analyze their risk. If you have ever been considered adding an ultra high dividend stock to your portfolio, you will find this podcast interesting.
Ian Duncan MacDonald
Author and Commercial Risk Consultant,
President of Informus Inc
2 Vista Humber Drive
Toronto, Ontario
Canada, M9P 3R7
Toronto Telephone - 416-245-4994
imacd@informus.ca
Podcast 268
Safe Dividend Investing
28 March 2026
Greetings to investors all around the world. Welcome to Safe Dividend Investing’s Podcast #268, recorded on March 28th of 2026. My name is Ian Duncan MacDonald. I am the author of seven investment books. My latest book “Achieving Financial Independence Safely – 200 NYSE Exchange Stocks Analyzed and Scored” was available for delivery from Amazon on January 3rd.
To learn about the benefits of my investment books, please visit my website www.informus.ca. Alternatively, you can also do a Google search or an Amazon search for "Ian Duncan MacDonald books”. Reviews by readers and sample chapters are available at Amazon.
Who are the ultra high dividend stocks that you are warned against investing in? Investment advisors like to paint high dividend stocks as traps to rob you of your money.
While I have found that most advisors know little about dividend stocks, I was curious to find out what are the differences between an ultra high dividend stock paying a dividend yield percent over 20% that no analyst recommends from a stock like Citigroup that 15 analysts recommend as a buy but it only pays a dividend yield percent of 2.13%.
To buy 1,000 shares of Citicorp I would have to pay $112,730. However, to buy 1,000 shares of the high dividend stock Yiren Digital Ltd (stock symbol YRD) I would only need to risk $1,970.
What if I were a gambler and decided that half of that $112,730 that I was going to invest totally in Citicorp would be better invested in Yiren Digital. This would be $56,365 which would, at YRD’s current price of $1.97 would give me approximately 29,000 shares. With a dividend yield off 23.16% I would hopefully expect to realize an attractive annual dividend payout of about $13,054. Investing the same $56,365 in Citicorp I would only realize an annual dividend payout of $1,200.57 with its dividend yield of 2.13%.
While the $13,054 of dividend income sounds very attractive, would it be lost if the shares of YRD declined from their current value of $1.97. How low could their share price go?
When it was first listed in 2016 the share price for YRD was $9.31. It fell to 86 cents in 2022 and rebound to $8.61 on March 19 of 2025 only to decline to $1.81 this month. Is YRD a deep value bargain or a money trap? It is important to investigate why this stock has declined so rapidly.
Before investigating the reason for the decline, I first used the IDM stock scoring software which calculated that YRD had a score of 39. This is well below my self-imposed cut off score limit of 50. Should I make an exception to my self-imposed limit. I was curious what a further internet search would reveal.
Doing the search, I learned that although the current stock research data showed YRD with a dividend yield percent of 23.16%, in the last few days it had suspended its dividend payments. Its high dividend yield had attracted many investors. Now with the suspension of dividend payments the investors are selling those shares.
The reason for the suspension of dividends was reported to be a loss of $822 million dollars in the fourth quarter of 2025. The news was so current that it had not appeared in my research source. YRD revenues are reported to have fallen by 34% year-over-year.
By comparison, what was Citigroup’s IDM stock score? It was 72. Very few companies score this high. What contributed to this high score?
Its $112.73 share price is one contributor to its high score. In 2022 the share value of Citigroup was than $57.50. Since then, its share value has almost doubled.
It’s current book value of $121.48 is unusually strong in that it is higher than its current share price. This is an indication the share price is likely to increase. The 15 analysts recommending Citigroup as a buy help encourage the buying of Citigroup shares. Its price-to-earnings ratio of 15.7x also helps explain why it traded over 3,000,000 shares today. Compare this trading volume to YRD that only traded 19,000 shares.
Citigroup would be attractive to conservative investors whose focus is on safe capital gain. However, for those who live off their dividends, Citigroup with its low dividend yield would have little appeal. There are too many good stocks that have IDM scores over 50 that pay dividend yields between 5% and 9%. Citicorp’s 2.13% yield would not even be enough to offset inflation that traditionally runs at about 3.5%.
My selection of YRD was not random. I had done a search for the highest yielding dividend stocks on the New York Stock Exchange. Of those few I extracted, YRD was the one with the lowest share price of $1.97. None of the other high dividend stocks with their dividend yield percents over 20%scored over 50.
The highest scoring of these high dividend stocks was Gluggenheim Strategic Opportunities Fund (stock symbol GOF). It had an IDM score of 48.
It is a $10.82 stock paying a dividend yield of 20.20%. Its $11.43 book value exceed its share price which makes the stock look like a bargain. An unusually high operating margin of 75.83%.is another indicator of financial strength. Yet like most of the high dividend stocks I analyzed for this podcast, there were no analyst recommendation for the stock. The volume of daily stocks traded for GOF was a respectable 122,000 shares.
As with every stock you might consider purchasing it is recommended that you always do a Google search for legal filings and complaints. As you saw with Yiern digital (YRD), you do not want to encounter negative surprises after purchasing the stock. An internet search for GOF disclosed no publicly reported Security Exchange Commission enforcement actions, lawsuits, or investor complaints.
In March of 2022 GOF had been trading at $19.02. The share price drop to $10.82 is attributed to its low yielding bond assets it holds. If I had bought YRD when it was probably scoring over 50, I would not have sold it. I only sell a stock when its IDM score falls below 50 while at the same time its dividend yield percent falls below 5%. Over 20 years I have found these two occurrences never seem to occur together. While share prices of carefully chosen dividend stocks may fall, they almost always recover to new highs and reward your patience.
The lowest scoring of the highest dividend stocks reviewed was Elme Communities (stock symbol ELME) with an IDM stock score of 25. Its low score is attributed to such things as an operating margin of minus 55.54% and a price-to-earnings ration of zero. Without profits you would wonder how it could be paying a dividend yield percent of 35.64%. Where is the money coming from to pay these dividends?
This is a $2.02 stock that paid 4 cent dividends in December of 2024 and in March, June and September of 2025. Its last dividend was a seemingly remarkable $14.67 paid out in January of 2026. On that day the stock dropped from $17.49 down to $3.08. In 2022 the stock had been trading at $25.57. What happened to this stock?
What you are observing is a Real Estate Investment Trust being liquidated. It is not a fraud. Nothing illegal has happened.
The liquidation process pushes share prices towards their final expected cash payment to shareholders from the estimated net proceeds derived from the sale of liquidated assets, the settlement of debts and after the paying of advisor fees, taxes and dissolution expenses.
High interest rates and the ongoing turmoil in the 2026 economy is causing a shrinkage in real estate prices and in turn the liquidation of ELME’s assets. Don’t be surprised if you see more REITs being liquidated. Since liquidation requires the quick selling of properties you might expect to see commercial property prices declining. As you can see it is important to do your thorough research before buying any stock, especially those paying unusually high dividend yields.
The next high dividend stock that caught my attention was Sound Point Meridian Capital Inc (stock symbol SPMC). It was trading at $8.50 a share. It had two analysts recommending it as a buy. Only two of the high dividend stocks reviewed had any buy recommendations.
SPMC is now paying an unusually high dividend yield of 26.66%. If its reported operating margin of 58.42% is still accurate, it indicates that the profits should be there from which dividends could be paid.
However, SPMC’s share price has dropped from $21.90 in February of 2025 to $8.50 on March 25 of 2026. Its earnings per share have also dropped from $0.54 in November of 2025 to $0.44 in February of 2026. Yet, its monthly dividend payouts have remained the steady at $0.25 per share. These share price declines have mathematically elevated its steady dividend yield percent to its lofty position of 26.66%.
Two other unusually high dividend yield stocks reviewed were:
(1) Black Rock Capital Allocation Term Trust (stock symbol BCAT) paying a dividend yield of 22.74% with an IDM stock score of 44
(2) Black Rock ESG Capital Allocation Term Trust (stock symbol ECAT) paying a dividend yield of 25.59% yield with and IDM stock scitore of 46 .
Black Rock has been in the news in the last week because it prevented investors from selling their shares in BCAT. Black Rock’s contract with investors allows them to limit redemptions. This restriction is done to avoid selling illiquid loans at injuriously low sale prices. Panic selling would harm those investors wishing to remain in the investment- It protect the fund’s long term performance record.
Black Rock wants its restriction on selling its shares to be interpreted as a standard liquidity management safeguard not as a sign of impending insolvency. However, many investors facing economic uncertainty and increased defaults want to liquidate their holdings in Black Rock now. In addition to Black Rock other fund managers such as Blackstone and Blue Owl have also limited redemptions. This has further increased the anxiety of investors.
Investors want to withdraw $1.2 billion dollars. This is 9.3% of one of Black Rock’s funds. However, Black Rock in selling their shares had cleverly established contractual rules that allowed investors to only redeem 5% of their shares each quarter. This is the first time Black Rock have used this rule. While they have tried to sell this redemption blocking as a benefit to investors, many investors are not happy.
BlackRock own mutual funds, ETFS, private credit and real estate. The company is worth approximately $170 billion. In addition, they control client assets worth many trillion dollars through their management of pension funds, government funds and the wealth of ultra wealthy individuals. They are the largest asset manager in the world.
Their clientele are those investors seeking the higher interest yields from loans made to mid-sized companies. Their private credit lending had been an investment vehicle largely restricted to niche institutional companies. However, to grow their revenues Black Rock extended their investment offering to the public who did not fully grasp that the private loans they were investing through Black Rock while paying high interest rates were illiquid, long term and difficult to understand. This reminds me very much of the defaulting mortgage-backed securities that brought about the 2008 market crash.
Investors now realize that what they thought was going to be an institutional-grade, high yield, low volatility, stable investment income is not as it seemed. The possibility of rapid fluctuations was never understood nor that the liquidity of their investment was not guaranteed nor that the value of the investments was not market based. It now appears the redemption cap of 5% which appeared to be irrelevant at the time they were sold the investment was there to protect Black Rock not the investor.
The purpose of my podcasts and books is to make investors aware that only they are responsible for the health of their investment portfolio. It is dangerous to totally delegate that responsibility to anyone else. I have shown you that even these 5 stocks I analyzed that were paying dividends can not be assumed to be safe. There are 3 more that I have not analyzed that I am leaving up to you to investigate and analyze. Let me know at imacd@informus.ca if you think their low IDM stock scores reflect your understanding of their investment strength. Details on scoring stocks are in my books and my website www.informus.ca
The three are:
(1) Ellington Credit Company (stock symbol = EARN) IDM score 33
(2) Orchid Island Capital Inc (stock symbol = ORC) IDM score 44
(3) The Global Multimedia Trust Inc (stock symbol =GGT score 27
That’s all for this week, folks.