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 might 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 vital monetary metrics corresponding to dividend yield and payout ratio) by clicking on the hyperlink beneath:
Subsequent on our record of excessive dividend shares to assessment is Cogent Communications Holdings, Inc. (CCOI).
The corporate has a good 13-year streak of dividend will increase. The yield is extraordinarily excessive immediately 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 may very well 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 nations with low-cost, high-speed web entry and personal community providers. The corporate accounts for a major share of world web visitors every year.
Cogent gives high-speed web connections to 2 varieties 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 sturdy over the previous a number of quarters regardless of the powerful 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. Complete buyer connections declined 7.8% yr over yr to 118,730, whereas on-net and wavelength connections continued to broaden.
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 way of 2026. These initiatives show Cogent’s dedication to returning capital to shareholders whereas persevering with community growth.
Operationally, the corporate leveraged the Dash acquisition to broaden 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 providers like wavelength, coupled with disciplined value administration and strategic capital deployment, positions the corporate to keep up regular income streams and shareholder worth regardless of a slight total decline in whole service income.
We see the corporate with an adjusted earnings-per-share goal of 42 cents, with some extraordinarily unstable earnings performances in current quarters.
Progress Prospects
Cogent’s earnings-per-share era 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 web earnings’s wild swings. The bumper earnings in 2023 have been because of a discount buy achieve from an acquisition, not sustainable working earnings.
The corporate’s efficiency is thus higher assessed by way of its adjusted working earnings, which function the metric for these one-off objects, together with its capital expenditures. Cogent had seen years of moderately 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 trying to get working prices underneath management. These components ought to assist margins over time, however we additionally word that the newest quarter noticed very weak buyer numbers, that means top-line development and the margin growth that would include will probably be harder to attain.
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 gives slender product units, which might have vital value benefits in comparison with telecommunication majors, whose choices are usually 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 word that this hasn’t at all times translated into large buyer development, and certainly, Cogent has had loads of durations when it has been ceding clients.
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, despite the fact that the corporate’s means to climate recessions by way of payouts has not but been examined.
Nonetheless, as a result of nature of telecommunications, we might anticipate 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 current working losses piling up, the dividend will not be as protected because it as soon as was.
Cogent’s earnings per share have by no means, previously decade, truly coated the dividend. That’s the case immediately as effectively, however we word that Cogent’s money accessible 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 turn out to be more and more troublesome to pay.
Free money circulate was optimistic every year till 2023 and stays detrimental on a trailing-twelve-months foundation immediately. We propose traders maintain a detailed eye on this, as it might end in harder circumstances for paying the dividend going ahead.
Last Ideas
Revenue traders are prone to respect Cogent’s 10% dividend yield and its historical past of frequent dividend will increase. Cogent’s dividend, in our view, may very well be in danger over time as working earnings and money circulate numbers have deteriorated considerably in current quarters.
Cogent’s inherently defensive enterprise traits are a supply of energy from a dividend investor’s perspective, however we word that circumstances have deteriorated for the corporate. The declining share value suggests an elevated yield, however it may additionally sign a warning of the dividend’s sustainability.
If you’re interested by discovering high-quality dividend development shares and/or different high-yield securities and earnings securities, the next Certain Dividend assets might be helpful:
Excessive-Yield Particular person Safety Analysis
Different Certain Dividend Sources
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