Investors love dividend stocks, especially the ultra-yield variety because they provide a significant income stream and offer massive total returns. 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.

For example, 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. Ultra-Yield dividend stock research database, looking for companies that pay at least an 11% dividend to shareholders. We found five companies that, while possibly unsuitable for more conservative investors, look like incredible ideas for those with a higher risk tolerance.

Why are we covering this

Despite the rise in interest rates over the last two years, we are still seeing persistent “sticky” inflation on many everyday items that we all have to 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

This company has paid solid monthly dividends for years; its current yield is 15.43%. 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.

The company 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.

Alliance Resource Partners

This company is a leader in the thermal coal business, offers solid diversity, and a massive 13.24% yield. Alliance Resource Partners L.P. (NASDAQ: ARLP) is a diversified natural resource company that produces and markets coal primarily to utilities and industrial users in the United States.

The company operates through four segments:

• Illinois Basin Coal Operations
• Appalachia Coal Operations
• Oil & Gas Royalties
• Coal Royalties

It produces a range of thermal and metallurgical coal with sulfur and heat contents.

The company operates seven underground mining complexes in:

• Illinois,
• Indiana,
• Kentucky,
• Maryland,
• Pennsylvania, and
• West Virginia.

In addition, it leases land and operates a coal loading terminal on the Ohio River at Mt. Vernon, Indiana, buys and resells coal, and owns mineral and royalty interests in approximately 1.5 million gross acres of oil and gas-producing regions, primarily in the Permian, Anadarko, and Williston Basins.

Further, the company offers  various mining technology products and services, including:

• Data networks
• Communication and tracking systems
• Mining proximity detection systems
• Industrial collision avoidance systems
• Data and analytics software

Arbor Realty Trust

This company trades at a ridiculous 7.7 times estimated 2024 earnings and pays a massive 13.42% 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 and
• 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

Paying a hefty 13.09% 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 an agency of the U.S. government 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

This is a quality mortgage REIT company that is a favorite across Wall Street and pays a massive 13.32% dividend monthly. Ellington Financial Inc. (NYSE: EFC), through its subsidiary, Ellington Financial Operating Partnership LLC, 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.

FS KKR

This is a well-known name on Wall Street, offers a solid entry point at current levels, and pays a massive 14.49 dividend. FS KKR Capital Corp. (NASDAQ: FSK) is a business development company specializing in investments in debt securities. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments.

The company also seeks to invest in:

• First-lien senior secured loans
• Second-lien secured loans
• Subordinated loans 
• Mezzanine loans

The firm also receives equity interests in connection with debt investments, such as warrants or options for additional consideration. It also seeks to purchase minority interests in common or preferred equity in our target companies, either in conjunction with one of the debt investments or through a co-investment with a financial sponsor.

The fund may invest in corporate bonds and similar debt securities opportunistically.

The fund does not seek to invest in start-ups, turnaround situations, or companies with speculative business plans. It aims to invest in small and middle-market companies in the United States.

FS KKR seeks to invest in firms with annual revenue between $10 million to $2.5 billion. It aims to exit from securities by selling them in a privately negotiated over-the-counter market.

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