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5 Dividend Picks Set to Break Out

These are companies that could be right at the beginning of their next growth curve.

By Bryan Perry of InvestorPlace

High-yield dividend stocks are great investments right now, and I have loaded my

Cash Machine

advisory service full of them. But the fact is that many dividend picks have already seen a lot of buying pressure as investors seek safety, and their big runs are over. Take

Dow

component

Dupont

(DD) - Get DuPont de Nemours, Inc. Report

, up nearly 25% on the year as the broader index is down slightly. You can bet the 4% yield in DD stock has a lot to do with that.

But rather than rehash stocks that have already seen big gains, I want to share with you the next round of high-yield dividend stocks that could break out. These are income investments on my "Watch List," which could be the next investments I make in the coming weeks if conditions are right. That means these are companies that could be right at the beginning of their next growth curve.

Here are five such dividend stocks to watch this fall.

Triangle Capital (TCAP)

Dividend Yield: 10.2%

Market Cap: $188 million

Business development companies can be great high-yield dividend investments, and

Triangle Capital

(TCAP)

TheStreet Recommends

is a strong candidate for your portfolio. As a private equity and venture capital firm specializing in buyouts, the time is now for TCAP to pick up. I currently recommend

BlackRock Kelso Capital

(BKCC) - Get BlackRock Capital Investment Corporation Report

and

Fifth Street Finance

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to subscribers of my

Cash Machine

advisory service, and would probably have this one on the list too if I didn't want to stay diversified outside of financials.

Triangle delivered some impressive second-quarter results, beating estimates and providing sound forward guidance, but the yield just isn't as high as BKCC and FSC at "only" +10%, and the market cap is significantly smaller -- about a quarter of BlackRock's. Still, Triangle is providing as good, if not better, organic growth as these other picks. TCAP stock is worth a look, as it has already notched +30% returns year-to-date.

Windstream (WIN)

Dividend Yield: 8.3%

Market Cap: $5.7 billion

Windstream

(WIN) - Get Windstream Holdings, Inc. Report

is a telecom based out of Little Rock, Ark., and bundles services to rural and semi-rural cities. The yield is attractive enough, but the company missed estimates by a few cents for the fourth straight quarter, raising a yellow flag in my camp. On the surface, it appears as if the quality of the earnings have improved, but when 14 analysts are following the stock and the company comes up short, potential downgrades are very possible and would likely adversely affect the stock price. Still, the company has posted a return of +9% on the year so far in 2010 and just set a new 52-week high on Tuesday as traders returned from the long weekend. This means Windstream could be back on the updraft.

Cellcom Israel (CEL)

Dividend Yield: 11.3%

Market Cap: $2.7 billion

Cellcom Israel

(CEL) - Get Cellcom Israel Ltd. Report

is exactly what it sounds like, an Israeli cell phone service provider. CEL stock seems to have bottomed out after the government issued new rules on how much service operators can charge each other for sharing network access. A lot of Israeli companies are hugely shareholder friendly, paying out most of their profits, CEL being no different as evidenced by the mammoth +11% yield. My only concern at this point is geopolitical. Any skirmish with Iran and markets across the Middle East will take a severe hit. If the situation improves, I'll consider adding CEL to my

Cash Machine

advisory service. But if you're an aggressive investor, you could buy in at the bottom. CEL shares are down -13% on the year, and may be set for a rally after strong quarterly results were released on Aug. 26.

MV Oil Trust (MVO)

Dividend Yield: 13.8%

Market Cap: $3.2 billion

I always seem to be recommending "depletion trusts," since they are big cash cows for dividend investors. At

Cash Machine

, I'm recommending

Whiting USA Trust

(WHX)

, but another good trust to consider is

MV Oil Trust

(MVO) - Get MV Oil Trust Report

-- with the exception, of course, that WHX yields a better dividend with 15% yield. Both are depleting oil income trusts that have finite reserve lives and are pure plays on the spot oil market. If and when we see the next big spike in oil, both the WHX and MVO trusts could see a spike, too. And with its outsized dividend yield, MVO has some cushion for investors looking to avoid risk.

DPO Fund

Dividend Yield: 10.2%

Market Cap: N/A

Shares of

Dow 30 Enhanced Premium & Income Fund

(DPO)

follow the Dow, but are also leveraged via other investments to provide a hefty dividend yield the index can't even come close to matching. I have done well in the past by timing the purchase of index-related covered call funds when the market corrects and the funds trade close to Net Asset Value. So if we can identify a true technical bottom for the blue chip index, look to go long in a name like DPO to capture the next leg up for the big caps -- as well as some mammoth dividend yield.

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