Up to date on October thirtieth, 2025 by Felix Martinez
Excessive-yield shares pay dividends which might be considerably greater 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 will be very useful to shore up earnings 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 record of all excessive dividend shares with 5%+ yields (together with necessary monetary metrics comparable to dividend yield and payout ratio) by clicking on the hyperlink beneath:
Subsequent on our record of excessive dividend shares to evaluation is Cogent Communications Holdings, Inc. (CCOI).
The corporate has a good 13-year streak of dividend will increase. The yield is extraordinarily excessive right this moment at about 9.4%, however the dividend’s security is much from assured.
Enterprise Overview
In 1999, Cogent Communications Holdings was established on the idea that bandwidth could possibly be traded and offered like some other good or service (i.e., a commodity).
The corporate supplies small and medium-sized enterprises in 50 totally different nations with low-cost, high-speed web entry and personal community providers. The corporate accounts for a big share of world web visitors annually.
Cogent supplies high-speed web connections to 2 forms of clients: company or “on web” clients, who account for the majority of gross sales, and netcentric or high-bandwidth customers, who generate the steadiness of income.
With its telecommunications providers producing resilient, recurring money flows, the corporate’s efficiency has remained strong over the previous a number of quarters regardless of the robust market atmosphere.
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 providers confirmed sturdy development, 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% 12 months over 12 months 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 2026. These initiatives reveal 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 knowledge facilities in North America. GAAP gross margin remained regular at 13.6%, with non-GAAP gross margin at 44.4%. Cogent’s give attention to high-growth providers like wavelength, coupled with disciplined price administration and strategic capital deployment, positions the corporate to take care of regular income streams and shareholder worth regardless of a slight general decline in complete service income.
We see the corporate with an adjusted earnings-per-share goal of 42 cents, with some extraordinarily risky earnings performances in latest quarters.
Progress Prospects
Cogent’s earnings-per-share technology has been fairly erratic over the past ten years. Earnings per share have ranged from $0.02 in 2014 to $26.88 in 2023.
Earnings tax bills, unrealized FX achieve on euro notes, and debt redemption losses have contributed to web earnings’s wild swings. The bumper earnings in 2023 had been attributable to a cut price buy achieve from an acquisition, not sustainable working earnings.
The corporate’s efficiency is thus higher assessed by its adjusted working earnings, which function the metric for these one-off gadgets, together with its capital expenditures. Cogent had seen years of fairly sturdy working earnings development, 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 observe that the latest quarter noticed very weak buyer numbers, that means top-line development and the margin enlargement that might include will probably be more durable to realize.
We’re estimating 4% development from 2025 ranges, however that is extra of a reversion-to-the-mean estimate than outright development. We’re involved about buyer losses and see the street forward for earnings as bumpy, to say the least.
Aggressive Benefits
Cogent provides slim product units, which may have vital price benefits in comparison with telecommunication majors, whose choices are typically broad.
The corporate’s transmission and community operations rely primarily on two units of kit, 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 clients.
This provides them loads of capability to draw new clients. Nonetheless, we observe that this hasn’t all the time translated into massive buyer development, and certainly, Cogent has had loads of intervals when it has been ceding clients.
The truth that the company elevated its dividend each three months through the COVID-19 pandemic ought to illustrate the resilience of its enterprise mannequin, though the corporate’s potential to climate recessions by way of payouts has not but been examined.
Nonetheless, because of the nature of telecommunications, we’d anticipate comparatively strong 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 is probably not as protected because it as soon as was.
Cogent’s earnings per share have by no means, prior to now decade, really lined the dividend. That’s the case right this moment as properly, however we observe that Cogent’s money accessible to pay the dividend is way 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 change into more and more tough to pay.
Free money circulation was optimistic annually till 2023 and stays adverse on a trailing-twelve-months foundation right this moment. We advise traders maintain an in depth eye on this, as it could end in more durable circumstances for paying the dividend going ahead.
Ultimate Ideas
Earnings traders are more likely to admire 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 circulation numbers have deteriorated considerably in latest quarters.
Cogent’s inherently defensive enterprise traits are a supply of energy from a dividend investor’s perspective, however we observe that circumstances have deteriorated for the corporate. The declining share value suggests an elevated yield, but it surely may additionally sign a warning of the dividend’s sustainability.
If you’re focused on discovering high-quality dividend development shares and/or different high-yield securities and earnings securities, the next Positive Dividend assets might be helpful:
Excessive-Yield Particular person Safety Analysis
Different Positive Dividend Sources
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