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High yielding stocks are often misunderstood. Sometimes investors shun high yielding stocks because they're concerned that the company won't be able to continue to finance the dividend. High yielding stocks are similar to high-yield bonds, which are considered riskier than investment-grade debt because the chances that the issuer could potentially default on its debt are higher. Peris admits that there are times when a high yielding stock is actually under distress, but there are other times when that stock may be mispriced by the markets. High yielding stocks are often undervalued, Peris says, which leaves investors with an attractive buying opportunity.
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