4 Dividend-Paying For-Profit College Stocks

Unless you've been living off the grid for the past 15 years, you already know some of these names: The University of Phoenix, Devry College, The Chubb Institute, and Kaplan College. They are but a few of the over 200 for-profit post-secondary schools now operating in the US. According to research group Eduventures, 9% of all college and graduate students now attend a for profit institution (see here)

These schools operate in a rather grey area, and debate to their merits and effectiveness has grown heated in the past few years. Advocates claim they can operate more efficiently (leading to lower student costs), and that financial competition forces the schools to seek better results. Opponents counter that by turning educating into profit-seeking, corners will be cut, and students will pay the price.

By far the largest criticism of these schools is the heavy debt its pupils accumulate while there. According to an article by John Hechinger, who covers education for the Wall Street Journal, even though they enroll only 1 in 8 students, they account for 1 of every 2 federal loan defaults. Bachelor degree students from for-profit schools graduate with a median debt of $31,000, compared to $17,000 for private non-profits, and $7,000 at public institutions (see here).

Deciding to invest in a for-profit school involves a serious moral decision, in addition to normal due diligence. These companies can provide a high yield and strong growth, but don't take the decision lightly.

Lincoln Educational Services Corp (LINC) Lincoln Educational Services Corporation is a provider of career-oriented post-secondary education. As of December 31, 2009, the Company operated 43 campuses in 17 states. It offers recent high school graduates and working adults degree and diploma programs in five areas of study health sciences, automotive technology, skilled trades, hospitality services and business and information technology. Yield 6.3%

National American University Holdings Inc. (NAUH) formerly Camden Learning Corporation, is a provider of post-secondary education primarily focused on the needs of working adults and other non-traditional students. The Company also has multi-family residential real estate operations in Rapid City, South Dakota, which generated 2.1% of its revenues in fiscal year 2010. Yield 1.6%

Strayer Education Inc. (STRA) Strayer Education, Inc. is a post-secondary education services corporation. The Company offers a range of academic programs through its wholly owned subsidiary Strayer University, Inc., both in classroom courses and online via the internet. Yield 2.86%

Devry Inc. (DV) DeVry Inc. (DeVry) is a provider of educational services and the parent organization of Advanced Academics, Becker Professional Education, Carrington College and Carrington College California, Chamberlain College of Nursing, DeVry Brasil, DeVry University, and Ross University. Yield 0.44%

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.