24/7 Insights
- Those with a higher risk appetite will love ultra-high dividend stocks.
- Passive income generated from stocks can be huge to investors.
- Access 2 legendary, high-yield dividend stocks Wall Street loves.
Investors are drawn to dividend stocks, particularly the ultra-high yield variety. These stocks offer a significant income stream and the potential for massive total returns. In the context of dividend stocks, total return includes the stock’s appreciation in value and the dividends it pays. This measure of return is a key factor in their appeal.
At 247 Wall St., we consistently emphasize the potential of total return to our readers, as it is one of the most effective ways to enhance the prospects of overall investing success. Once again, total return is the collective increase in a stock’s value plus dividends.
For younger investors or those on a tight budget, investing to generate consistent passive income can be daunting because many top dividend stocks trade anywhere from $25 to over $100 per share. Realizing any significant return on investment can be challenging with a small investing capital base of $100.
We screened our 24/7 Wall St. dividend income database for solid, lower-priced stocks that pay ultra-high dividends. We found three that investors can purchase with as little as $100 and start generating positive total returns. All three trade at less than $10 per share.
Cato Corporation
Source: Bobex-73 / iStock via Getty Images
Paying shareholders a gigantic 14.68% dividend, this company, founded in 1946, could attract value buyers at current trading levels. Cato Corp. (NYSE: CATO) and its subsidiaries operate as a specialty fashion apparel and accessories retailer in the southeastern United States.
It operates through two segments:
- Retail
- Credit
The company’s stores and e-commerce websites offer a range of apparel and accessories, including:
- Dressy, career, and casual sportswear
- Dresses
- Coats
- Shoes
- Lingerie
- Costume jewelry
- Handbags
- Men’s wear
- Lines for kids and infants
It operates its stores and e-commerce websites under these names:
- Cato
- Cato Fashions
- Cato Plus
- It’s Fashion
- Fashion Metro
- Versona names
It also provides credit card services and layaway plans for its customers.
Medical Properties Trust
Source: CRobertson / iStock Editorial via Getty Images
Medical Properties Trust Inc. (NYSE: MPW) stands out in the health care industry and pays a rich 12.73% dividend. It acquires, develops, and invests in healthcare facilities, leasing them to healthcare operating companies and providers.
Medical Properties Trust unique position is further enhanced by its provision of mortgage loans, working capital, and other term loans to its tenants/borrowers. This, coupled with a massive 12.80% dividend offers investors incredible value at current price levels.
The company has a massive $18.3 billion portfolio of properties, most acute care facilities.
The stock has rallied recently on news of substantial asset sales and decent earnings, including selling five hospitals in New Jersey and California to Prime Healthcare for $350 million and five hospitals in Utah for $866 million.
Wall Street has applauded the asset sales, and with 206 million shares sold short, representing a stunning 48% of the float, a huge short squeeze could be in order.
Four Favorite Ultra-High-Yield Dividend Stocks to Buy in June
Prospect Capital
Source: nespix / iStock via Getty Images
Hedge Funds love this top Business development company, and the gigantic 13.36% dividend makes it a potential total return home run. Prospect Capital Corp. (NASDAQ: PSEC) specializes in the middle market, mature, mezzanine finance, later stage, emerging growth, leveraged buyouts, refinancing, acquisitions, recapitalizations, turnaround, growth capital, development, capital expenditures and subordinated debt tranches of collateralized loan obligations, cash flow term loans, market place lending, and bridge transactions.
It also invests in the multi-family residential real estate asset class. The fund makes secured debt, senior debt, senior and secured term loans, unitranche debt, first-lien and second-lien, private debt, private equity, mezzanine debt, and equity investments in private and microcap public businesses.
Prospect Capital focuses on both primary origination and secondary loans/portfolios and invests in situations such as debt financing for private equity sponsors, acquisitions, dividend recapitalizations, growth financings, bridge loans, cash flow term loans, and real estate financings/investments.
The company invests in the following sectors and business silos:
- Aerospace and defense
- Chemicals
- Conglomerate and consumer services
- Ecological
- Electronics
- Financial services
- Machinery and manufacturing
- Media
- Pharmaceuticals
- Retail
- Software
- Specialty minerals
- Textiles and leather
- Transportation
- Oil gas and coal production
In addition to favoring materials, industrials, consumer discretionary, information technology, utilities, pipeline, storage, power generation and distribution, renewable and clean energy, oilfield services, healthcare, food and beverage, education, business services, and other select sectors.
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