Up to date on October thirtieth, 2025 by Felix Martinez
Excessive-yield shares pay dividends which are considerably greater than the market common. For reference, the S&P 500’s present yield is barely ~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 may obtain your free full checklist of all excessive dividend shares with 5%+ yields (together with vital monetary metrics similar to dividend yield and payout ratio) by clicking on the hyperlink under:
Subsequent on our checklist of excessive dividend shares to evaluate is Cogent Communications Holdings, Inc. (CCOI).
The corporate has a decent 13-year streak of dividend will increase. The yield is extraordinarily excessive immediately 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 might be traded and offered like every other good or service (i.e., a commodity).
The corporate offers small and medium-sized enterprises in 50 completely different nations with low-cost, high-speed web entry and personal community companies. The corporate accounts for a major share of world web site visitors every year.
Cogent offers high-speed web connections to 2 kinds of clients: company or “on internet” clients, who account for the majority of gross sales, and netcentric or high-bandwidth customers, who generate the steadiness of income.
With its telecommunications companies 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 companies confirmed robust 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% 12 months over 12 months 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 enhance. The corporate additionally boosted its inventory buyback program, buying 293,000 shares in Q2 and July 2025 and approving a $100 million enhance by way of 2026. These initiatives reveal 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 companies like wavelength, coupled with disciplined value administration and strategic capital deployment, positions the corporate to take care of 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 risky 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.
Earnings tax bills, unrealized FX acquire on euro notes, and debt redemption losses have contributed to internet earnings’s wild swings. The bumper earnings in 2023 have been as a consequence of a cut price buy acquire 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 gadgets, together with its capital expenditures. Cogent had seen years of moderately robust working earnings progress, however that led to 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 notice that the latest quarter noticed very weak buyer numbers, which means top-line progress and the margin growth that might include will probably 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 affords slim product units, which may have vital value benefits in comparison with telecommunication majors, whose choices are typically 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 under 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 notice 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 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, though the corporate’s capacity to climate recessions when it comes to payouts has not but been examined.
Nonetheless, because of the nature of telecommunications, we’d count on 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 current working losses piling up, the dividend is probably not 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 immediately as nicely, however we notice that Cogent’s money out there to pay the dividend is far nearer to working earnings than to earnings per share.
Even so, trailing-twelve-month working losses have totaled practically $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 troublesome to pay.
Free money circulate was constructive every year till 2023 and stays unfavorable on a trailing-twelve-months foundation immediately. We advise traders preserve a detailed eye on this, as it might end in harder situations 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, might 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 notice that situations 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 all for discovering high-quality dividend progress shares and/or different high-yield securities and earnings securities, the next Certain Dividend assets shall be helpful:
Excessive-Yield Particular person Safety Analysis
Different Certain Dividend Sources
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