After years of a low-interest rate environment, which has reversed in a big way over the last 18 months but is once again trending lower, many investors continue to turn to equities not only for the growth potential but also for solid and dependable dividends, which help to provide an income stream. This equates to total return, one of the most influential investment strategies.
We always like to remind our readers about the impact total return has on portfolios because it is one of the best ways to help improve the chances for overall investing success. Again, total return is the combined increase in a stock’s value plus dividends. For instance, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13%—10% for the increase in stock price and 3% for the dividends paid.
We screened our 24/7 Wall St. dividend equity research database, looking for stocks that pay big dividends and are growing their business faster than the average competitor. Six top companies hit our screens. All pay at least a 7% dividend and grow their business exponentially.
Arbor Realty Trust
This company trades at a ridiculous 6.9 times trailing earnings and pays a massive 14.13% 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, real estate-related joint ventures, actual estate-related notes, and various mortgage-related securities.
The company offers
- Bridge financing products to borrowers who seek short-term capital to be used in the 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.
- Underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs
Ares Capital
This company is a high-yielding Business Development Company (BDC) paying a massive 9.72% dividend. Ares Capital Corporation (NASDAQ: ARCC) specializes in:
- Acquisition,
- Recapitalization
- Mezzanine debt
- Restructurings
- Rescue financing
- Leveraged buyout transactions of middle-market companies
It also makes growth capital and general refinancing. It prefers to invest in companies engaged in primary and growth manufacturing, business services, consumer products, health care products and services, and information technology service sectors.
The fund will also consider investments in:
- 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
Energy Transfer
The top master limited partnership is a safe way for investors looking for energy exposure and pays a whopping 9.03% distribution. Energy Transfer LP (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all of the major domestic production basins.
The company is a publicly traded limited partnership with core operations that include:
- Complementary natural gas midstream
- Intrastate and interstate transportation and storage assets
- Crude oil
- Natural gas liquids (NGL)
- Refined product transportation and terminalling assets
- NGL fractionation and various acquisition and marketing assets
After the purchase of Enable Partners in December of 2021, Energy Transfer owns and operates more than 114,000 miles of pipelines and related assets in all of the major U.S. producing regions and markets across 41 states, further solidifying its leadership position in the midstream sector.
Through its ownership of Energy Transfer Operating, L.P., formerly known as Energy Transfer Partners, L.P., the company also owns Lake Charles LNG Company, as well as the general partner interests, the incentive distribution rights, and 28.5 million standard units of Sunoco LP (NYSE: SUN), and the public partner interests and 39.7 million standard units of USA Compression Partners, LP (NYSE: USAC).
Highwoods Properties
Trading just above a 52-week low, this company pays a stellar 8.66% dividend and has enormous upside potential. Highwood Properties, Inc. (NYSE: HIW) is a fully integrated office real estate investment trust publicly traded (NYSE: HIW).
The company owns, develops, acquires, leases, and manages properties primarily in the best business districts (BBDs) of:
- Atlanta
- Charlotte
- Dallas
- Nashville
- Orlando
- Raleigh
- Richmond
- Tampa
Highwoods Properties’ biggest customers include
- The U.S. Government
- Financial services firms
- Industrial supply retailers
- Healthcare companies
Enterprise Products Partners
This company is the most significant publicly traded energy partnership and a leading North American provider of midstream energy services to producers and consumers, paying a 7.64% distribution. Enterprise Products Partners L.P. (NYSE: EPD) provides various midstream energy services, including:
- Gathering,
- Processing
- Transporting
- Storing natural gas
- Natural gas liquids
- (NGL) fractionation
- Import and export terminalling
- Offshore production platform services
The company has four reportable business segments:
- Natural Gas Pipelines and Services
- NGL Pipelines and Services
- Petrochemical Services
- Crude Oil Pipelines and Services
One of the reasons many analysts may like the stock might be its distribution coverage ratio. The company’s distribution coverage ratio is well above 1x, making it relatively less risky in the MLP sector.
Verizon Communications
This top telecommunications company offers tremendous value while paying a 7.06% dividend. Verizon Communications, Inc (NYSE: VZ) is one of the largest US telecom companies. It provides wireless and wireline services to retail, enterprise, and wholesale customers.
The company’s wireless network serves approximately 120 million mobile connections with 115 million postpaid subscribers. Verizon’s wireline business has undergone a period of secular decline due to wireless substitution and cable competition.
Verizon also provides:
- Converged communications
- Information
- Entertainment services over America’s most advanced fiber-optic network
- Delivers integrated business solutions to customers worldwide
Verizon and the other big telecom giants have been mauled this year over concerns over lead phone lines, and while this could keep a lid on the stock in the near term, many feel it’s the best buying opportunity in years.
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