UWM Holdings Yields Tops 19%. Here's Why That Huge Payout Is a Warning, Not a Gift.
What seems like a windfall on the surface could turn out to be a yield trap.
Overview
With a forward dividend yield of 19.2%, UWM Holdings (NYSE: UWMC) may seem like a golden opportunity for yield-hungry investors. But while this may represent an extremely high yield, especially for a high-profile financial stock, I wouldn't count on buying it, collecting the double-digit yield, and generating above-average total returns.
UWM's newfound status as a high-yield dividend stock is largely due to its share price collapse. Put simply, the market thinks that the mortgage wholesaler's high payout won't last. Even though the stock's valuation may account for a possible dividend suspension, such an event, along with other potential negative developments, could lead to further significant losses.
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Originally published at www.fool.com.