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Investors love dividend stocks, especially the ultra-high-yield variety, because they offer a significant income stream 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.
Let's take a closer look at the concept of total return. Imagine you purchase a stock at $20 that offers a 3% dividend. If the stock price rises to $22 within a year, your total return is 13%. This is calculated by adding the 10% increase in stock price to the 3% dividend.
We screened our 24/7 Wall St. dividend stock research database, looking for companies trading below the $15 level that offer investors big total return potential. While more suited for growth and income investors with higher risk tolerance, all six of these stocks look like solid ideas as we head into September. Investors should also grab this new report .
Why are we covering this
Despite the rise in interest rates over the last two years, we still see persistent "sticky" inflation on many everyday items we must purchase. Those looking to enhance their earnings with passive income can benefit from stocks that pay ultra-yield dividends. In addition, three of the companies pay their massive dividends monthly.
AGNC Investment
AGNC Investment provides private capital to the housing market in the United States.
This company has paid solid monthly dividends for years; its current yield is 14.40%. AGNC Investment Corp. ( NASDAQ: AGNC ) is a real estate investment trust (REIT) in the United States.
The company invests in residential mortgage pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by the United States government-sponsored enterprise or by the United States government agency.
AGNC Investment funds its investments primarily through collateralized borrowings structured as repurchase agreements. It has elected to be taxed as a REIT under the Internal Revenue Code 1986. However, it would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders.
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 12.04% 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.
Dynex Capital
Dynex Capital is an internally managed mortgage REIT that invests in mortgage-backed securities.
Paying a hefty 12.82% dividend, Dynex Capital Inc. ( NYSE: DX ) is a passive income champion for more aggressive investors. It is a mortgage real estate investment trust that invests in mortgage-backed securities (MBS) on a leveraged basis in the United States.
It invests in agency and non-agency mortgage-backed securities (MBS), including residential, commercial, and interest-only securities. Agency MBS has a guarantee of principal payment by a U.S. government agency or a U.S. government-sponsored entity, such as Fannie Mae and Freddie Mac.
Non-agency MBS has no such payment guarantee. The company has qualified as a real estate investment trust for federal income tax purposes. It is generally not subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders as dividends.
Ellington Financial
Ellington has been at the forefront of data-driven investing since its founding in 1994.
This quality mortgage REIT company is a favorite across Wall Street and pays a massive 12.22% monthly dividend. Ellington Financial Inc. ( NYSE: EFC ), through its subsidiary, Ellington Financial Operating Partnership, acquires and manages mortgage-related, consumer-related, corporate-related, and other financial assets in the United States.
The company develops and manages residential mortgage-backed securities (RMBS) backed by:
- Prime jumbo
- Alt-A, manufactured housing, and subprime residential mortgage loans
- RMBS for which the principal and interest payments are guaranteed by the U.S. government agency or the U.S. government-sponsored entity
- Residential mortgage loans
- Commercial mortgage-backed securities
- Commercial mortgage loans and other commercial real estate debt
Ellington Financial also provides collateralized loan obligations, mortgage-related and non-mortgage-related derivatives, corporate debt and equity securities, corporate loans, and other strategic investments. In addition, the company offers consumer loans and asset-backed securities backed by consumer and commercial assets.
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.
The members of the Horizon team have, collectively, 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.
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 14.40% dividend. Trinity Capital 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.
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