These Monster Dividend Stocks Aren't for the Faint of Heart
Oil producers Devon Energy (NYSE: DVN) and Diamondback Energy (NASDAQ: FANG) are currently cashing in on higher crude prices. That's giving them the fuel to pay some massive dividends due to their innovative dividend-payment policies. Devon offers a more than 9% annualized dividend yield, while Diamondback's projected payout is closer to 10%.
However, Devon and Diamondback tie a portion of their dividend payments to the cash flows they can produce. Thus, if crude prices come down, their cash flows and dividends will follow. Because of that, these big-time dividend stocks aren't well suited for investors seeking a steady income stream.
Devon Energy is a trendsetter. The oil company launched the industry's first fixed-plus-variable dividend program last year. Devon aims to make fixed base dividend payments each quarter that it can sustain at lower oil prices. On top of that, the company intends on paying out up to 50% of its free cash flow each quarter via a variable dividend.
Source Fool.com
