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24/7 Wall St. Insights
- Solid passive income streams can help boost monthly income.
- Ultra-high-yield stocks should get a boost as interest rates fall.
- Passive income is simple: own quality dividends that pay you for doing nothing. Don’t miss out on our brand-new “7 Things I Demand in a Dividend Stock” report. It includes two A++ dividend stocks and how to spot future dividend winners that can put your returns on hyperdrive. Access 2 legendary, high-yield dividend stocks Wall Street loves .
Investors love dividend stocks, especially the ultra-high-yield variety, because they offer significant passive income streams and have massive total return potential. Total return includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or a portfolio consists of income and stock appreciation.
The more passive income can help cover costly and rising costs like mortgage, insurance, taxes, and other monthly bills and expenses, the easier it is for investors to put away money for future needs as they build to retirement.
We screened our 24/7 Wall St. ultra-high-yield universe, looking for companies paying among the largest dividends and offering investors the best current entry point. Five came up that those looking to generate passive income to help with monthly bills should grab now.
Why do we cover ultra-high-yield stocks?
While not suited for everybody, those who are trying to build passive income streams can do extremely well having some of these top companies in their portfolios. Paired with more conservative blue-chip dividend giants, investors can use a barbell approach to get passive income streams that make a significant difference.
Arbor Realty Trust
Arbor Realty Trust offers nationwide solutions for multifamily finance.
This company trades at a ridiculous 7.7 times estimated 2024 earnings and pays a massive 12.97% dividend. Arbor Realty Trust ( NYSE: ABR ) invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States.
The company operates in two segments:
- Structured Business
- Agency Business.
Arbor Realty Trust primarily invests in:
- Bridge and mezzanine loans, including junior participating interests in first mortgages
- Preferred and direct equity and real estate-related joint ventures
- Real estate-related notes
- Various mortgage-related securities
The company offers:
- Bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property
- Financing by making preferred equity investments in entities that directly or indirectly own real property
- Mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower's equity in a transaction
- Junior participation financing in the form of a junior participating interest in the senior debt
- Financing products to borrowers seeking conventional, workforce, and affordable single-family housing
Further, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs.
Ares Capital
The company specializes in financing solutions for the middle market.
This high-yielding business development company (BDC) pays a massive 9.26% dividend. Ares Capital Corp. ( NASDAQ: ARCC ) specializes in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle-market companies.
It also makes growth capital and general refinancing. It prefers to invest in companies engaged in basic and growth manufacturing, business services, consumer products, health care products and services, and information technology service sectors.
The fund will also consider investments in industries such as:
- Restaurants
- Retail
- Oil and gas
- Technology sectors
The fund typically invests between $20 million and $200 million and a maximum of $400 million in companies with an EBITDA between $10 million and $250 million. It makes debt investments between $10 million and $100 million.
The fund invests through:
- Revolvers
- First-lien loans
- Warrants
- Unitranche structures
- Second-lien loans
- Mezzanine debt
- Private high yield
- Junior Capital
- Subordinated debt
- Non-control preferred and common equity.
The fund also selectively considers third-party-led senior and subordinated debt financings and opportunistically finds the purchase of stressed and discounted debt positions.
Ares Capital prefers to be an agent and lead the transactions it invests in. The fund also seeks board representation in its portfolio companies.
Horizon Technology Finance
Horizon is a venture lending platform that provides structured debt products to life science and technology.
Paying a stout 11.73% dividend, this stock has tremendous upside potential. Horizon Technology Finance Corp. ( NASDAQ: HRZN ) is a business development company specializing in lending and investing in development-stage investments.
It focuses on making secured debt and venture lending investments to venture capital-backed companies in these industries:
- Technology
- Life science
- Healthcare information and services
- Cleantech
- Sustainability
Horizon is a leading venture lending platform that offers structured debt products to life science and technology companies. Its experienced investment and operations team has provided debt capital to some of the most exciting companies for decades.
Collectively, the members of the Horizon team have originated and invested more than $5 billion in venture loans to thousands of companies. Since 2004, Horizon has directly originated and invested more than $3 billion in venture loans to more than 315 growing companies.
NextEra Energy Partners
NextEra Energy Partner acquires, owns, and manages contracted clean energy projects in the United States.
This outstanding idea now offers investors a massive 14.34% dividend and years of solid performance. NextEra Energy Partners L.P. ( NYSE: NEP ) acquires, owns, and manages contracted clean energy projects in the United States. It owns a portfolio of contracted renewable generation assets, including wind, solar, and battery storage projects.
The company owns contracted natural gas pipeline assets. It is considered one of the world's largest generators of renewable energy from wind and sun and a world leader in battery storage.
Headquartered in Juno Beach, Florida, NextEra Energy Partners owns, or has a partial ownership interest in, a portfolio of contracted renewable energy assets consisting of wind, solar, and solar-plus-storage projects and a stand-alone battery storage project in the United States, as well as contracted natural gas pipeline assets in Pennsylvania.
Trinity Capital
Trinity Capital provides venture debt financing for high-growth venture capital-backed startups.
Based in Phoenix, this business development company pays a massive 14.54% dividend. Trinity Capita Inc. ( NASDAQ: TRIN ) is a venture capital firm specializing in venture debt to growth-stage companies looking for loans and equipment financing.
The company is an internally managed business development company that is a leading provider of diversified financial solutions to growth-stage companies with institutional equity investors.
Trinity Capital's investment objective is to generate current income and, to a lesser extent, capital appreciation through investments, including term loans, equipment financings, and equity-related investments.
The firm believes it is one of only a select group of specialty lenders with a depth of knowledge, experience, and track record in lending to growth-stage companies.
Five Blue Chip Dividend Giants Passive Income Investors Can Always Count On
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