Up to date on October thirtieth, 2025 by Felix Martinez
Excessive-yield shares pay dividends which are considerably larger than the market common. For reference, the S&P 500’s present yield is just ~1.2%, which is low on an absolute foundation and relative to the index’s historic values.
Excessive-yield shares could be very useful to shore up revenue after retirement. A $120,000 funding in shares with a mean dividend yield of 5% creates a mean of $500 a month in dividends.
You’ll be able to obtain your free full listing of all excessive dividend shares with 5%+ yields (together with vital monetary metrics akin to dividend yield and payout ratio) by clicking on the hyperlink beneath:
Subsequent on our listing of excessive dividend shares to evaluation is Cogent Communications Holdings, Inc. (CCOI).
The corporate has a decent 13-year streak of dividend will increase. The yield is extraordinarily excessive as we speak at about 9.4%, however the dividend’s security is way from assured.
Enterprise Overview
In 1999, Cogent Communications Holdings was established on the premise that bandwidth could possibly be traded and bought like another good or service (i.e., a commodity).
The corporate gives small and medium-sized enterprises in 50 completely different international locations with low-cost, high-speed web entry and personal community companies. The corporate accounts for a major share of worldwide web site visitors annually.
Cogent gives high-speed web connections to 2 forms of prospects: company or “on internet” prospects, who account for the majority of gross sales, and netcentric or high-bandwidth customers, who generate the stability of income.
With its telecommunications companies producing resilient, recurring money flows, the corporate’s efficiency has remained sturdy over the previous a number of quarters regardless of the powerful market surroundings.
Cogent Communications (CCOI) reported Q2 2025 service income of $246.2 million, barely down 0.3% from Q1 2025 and 5.5% from Q2 2024. Wavelength companies confirmed sturdy progress, with income rising 27.2% sequentially and 149.8% year-over-year to $9.1 million. Leasing IPv4 addresses additionally grew, reaching $15.3 million. EBITDA elevated 10.8% sequentially to $48.5 million, whereas adjusted EBITDA, accounting for Dash acquisition prices and IP Transit funds, rose 6.9% to $73.5 million, reflecting improved operational effectivity. Whole buyer connections declined 7.8% yr over yr to 118,730, whereas on-net and wavelength connections continued to develop.
Cogent strengthened shareholder returns by elevating its quarterly dividend by $0.005 to $1.015 per share, marking its 52nd consecutive improve. The corporate additionally boosted its inventory buyback program, buying 293,000 shares in Q2 and July 2025 and approving a $100 million improve by means of 2026. These initiatives show Cogent’s dedication to returning capital to shareholders whereas persevering with community enlargement.
Operationally, the corporate leveraged the Dash acquisition to develop its optical wavelength community throughout 938 information facilities in North America. GAAP gross margin remained regular at 13.6%, with non-GAAP gross margin at 44.4%. Cogent’s concentrate on high-growth companies like wavelength, coupled with disciplined price administration and strategic capital deployment, positions the corporate to keep up regular income streams and shareholder worth regardless of a slight total decline in complete service income.
We see the corporate with an adjusted earnings-per-share goal of 42 cents, with some extraordinarily unstable earnings performances in latest quarters.
Progress Prospects
Cogent’s earnings-per-share technology has been fairly erratic during the last ten years. Earnings per share have ranged from $0.02 in 2014 to $26.88 in 2023.
Revenue tax bills, unrealized FX achieve on euro notes, and debt redemption losses have contributed to internet revenue’s wild swings. The bumper earnings in 2023 had been resulting from a discount buy achieve from an acquisition, not sustainable working earnings.
The corporate’s efficiency is thus higher assessed by means of its adjusted working earnings, which function the metric for these one-off gadgets, together with its capital expenditures. Cogent had seen years of moderately sturdy working earnings progress, however that resulted in 2024 with an working lack of $180 million.
Income is on the rise, and the corporate is making an attempt to get working prices underneath management. These components ought to assist margins over time, however we additionally word that the latest quarter noticed very weak buyer numbers, that means top-line progress and the margin enlargement that might include it will likely be harder to attain.
We’re estimating 4% progress from 2025 ranges, however that is extra of a reversion-to-the-mean estimate than outright progress. We’re involved about buyer losses and see the street forward for earnings as bumpy, to say the least.
Aggressive Benefits
Cogent provides slender product units, which might have vital price benefits in comparison with telecommunication majors, whose choices are usually broad.
The corporate’s transmission and community operations rely primarily on two units of apparatus, enabling larger management and superior supply. Whereas they’ve tens of hundreds of company connections, this accounts for less than 5% of the market, in comparison with the 95% they personal with net-centric prospects.
This provides them loads of capability to draw new prospects. Nonetheless, we word that this hasn’t at all times translated into huge buyer progress, and certainly, Cogent has had loads of durations when it has been ceding prospects.
The truth that the company elevated its dividend each three months throughout the COVID-19 pandemic ought to illustrate the resilience of its enterprise mannequin, although the corporate’s capacity to climate recessions by way of payouts has not but been examined.
Nonetheless, as a result of nature of telecommunications, we might count on comparatively sturdy outcomes throughout a possible recession.
Dividend Evaluation
Within the final decade, Cogent has boosted its dividend by a mean of about 15% yearly, which is extraordinarily spectacular. Administration is firmly dedicated to returning money to shareholders, however with latest working losses piling up, the dividend will not be as secure because it as soon as was.
Cogent’s earnings per share have by no means, previously decade, really lined the dividend. That’s the case as we speak as effectively, however we word that Cogent’s money obtainable to pay the dividend is far nearer to working earnings than to earnings per share.
Even so, trailing-twelve-month working losses have totaled almost $162 million, and the dividend prices about $180 million yearly. Given the corporate’s balance-sheet leverage, we imagine the dividend will grow to be more and more tough to pay.
Free money movement was optimistic annually till 2023 and stays unfavourable on a trailing-twelve-months foundation as we speak. We recommend buyers hold a detailed eye on this, as it could lead to harder situations for paying the dividend going ahead.
Ultimate Ideas
Revenue buyers are more likely to recognize Cogent’s 10% dividend yield and its historical past of frequent dividend will increase. Cogent’s dividend, in our view, could possibly be in danger over time as working earnings and money movement numbers have deteriorated considerably in latest quarters.
Cogent’s inherently defensive enterprise traits are a supply of power from a dividend investor’s perspective, however we word that situations have deteriorated for the corporate. The declining share worth suggests an elevated yield, however it might additionally sign a warning of the dividend’s sustainability.
If you’re desirous about discovering high-quality dividend progress shares and/or different high-yield securities and revenue securities, the next Certain Dividend assets can be helpful:
Excessive-Yield Particular person Safety Analysis
Different Certain Dividend Sources
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