24/7 Wall Street Insights

• Dividend stocks offer some of the most flexible options to suit investors of all types who seek passive income. 
• Sit back and let dividends do the heavy lifting for a simple, steady path to serious wealth creation over time. Grab a free copy of “7 Things I Demand in a Dividend Stock”, plus get our 2 best dividend stocks to own today.

Among the available avenues for obtaining passive income, dividend stocks are unrivaled in their combinations of  breadth, flexibility, risk tolerance variety, liquidity, and industry sector choices, not to mention return on investment.  For a total $50,000 investment allocated among the below listed ten stocks, an annual return of over $6,000, or over 12% APY, based on market price at the time of this writing, can be obtained. 

24/7 Wall Street has a voluminous database of dividend stocks that it routinely showcases in different configurations to inform prospective investors of the variations available to suit the criteria of practically any investor. 

Kimbell Royalty Partners LP

Stock: Kimbell Royalty Partners LP (NYSE: KRP)

• Yield: 11.55%
• Shares for $5000: 312
• Annual Income: $577.50

Kimbell Royalty Partners’ income is derived from direct mineral rights ownership from 17 million gross acres of oil and gas land supporting 129,000 gross wells. It presently holds mineral rights positions in proximity to 97% of all onshore rigs in the continental United States

The lucrative mineral by-product rights and their corresponding royalty interests from oil and gas production lands can warrant standalone businesses on their own merits. Fort Worth, TX headquartered Kimbell Royalty Partners LP acquires these rights and collects royalties from their sale. Consequently, Kimbell Royalty Partners incurs zero operating costs or capital expenditures, so profit margins are very fat. Since it is neither a traditional Master Limited Partnership, nor a Royalty Trust, Kimbell investors benefit from tax-advantaged distributions via 1099-DIV, as opposed to K-1.

Runway Growth Finance Corp.

Stock: Runway Growth Finance Corp. (NASDAQ: RWAY)

• Yield: 17.31%
• Shares for $5000: 478
• Annual Income: $865.50

Runway Growth Finance Corp, from Menlo Park, CA, is a Business Development Company (BDC) that specializes in financing late-stage technology companies with senior-secured loans so that they can grow to levels that can justify a possible IPO.

Runway Growth’s sweet spot per loan underwriting is between $10 million and $75 million. Qualifying prospects are in technology, life sciences, IT, and other areas where cutting-edge technologies can make significant strides. Runway Growth Finance Corp. prefers companies that make electronic equipment and instruments, create software and hardware systems, that are involved with consumer, retail, healthcare and other services. 

WhiteHorse Finance, Inc.

Stock: WhiteHorse Finance, Inc. (NASDAQ: WHF)

• Yield: 12.79%
• Shares for $5000: 415
• Annual Income: $639.50

Headquartered in Miami, FL, WhiteHorse Finance, Inc. is a BDC that finances lower and mid-tier companies with growth capital in the form of senior secured notes or first lenient notes. 

Its $660 million AUM portfolio has financed $2.66 billion via 140 transactions since going public in 2012. 

WhiteHorse originates its debt underwritings in the the $25 million to $50 million range for US companies in the $50 million to $350 million enterprise value category. WhiteHorse’s preferred industrial sectors are in retail, business office, and healthcare  related supplies and services, building supplies, cable & satellite, software, leisure, and data processing outsource services. 

Saratoga Investment Corp.

Stock: Saratoga Investment Corp. (NYSE: SAR)

• Yield: 12.44%
• Shares for $5000: 210
• Annual Income: $622.00

Like its peers in the BDC field, New York City based Saratoga also may deploy structures such as mezzanine debt, senior secured or unsecured bonds, high-yield debt, preferred or common equity, and other means to close a financing deal. Its sweet spot client companies have EBITDA between $2 million and higher and revenues from $8 to $250 million. Its financing per deal size often falls between $5 and $50 million. The company avoids deals with heavy commodity or energy exposure and reliance for revenues. 

The company only invests in US companies, and while first lien debt underwritings are Saratoga’s primary financing vehicle, it will sometimes syndicate a deal to spread the risk, while still taking a majority stake. 

Carlyle Secured Lending, Inc.

Stock: Carlyle Secured Lending, Inc. (NASDAQ: CGBD)

• Yield: 10.93%
• Shares for $5000: 290
• Annual Income: $546.50

Best known for its involvement with its aerospace and defense industry investments, NY based Carlyle Group has stakes in a number of other financial platforms. With a multi billion portfolio, Carlyle Secured Lending, Inc. is Carlyle Group’s entry into the BDC arena. 

On the debt finance origination side, Carlyle prefers to use lien debt, senior secured notes, second lien secured or unsecured note configurations, and mezzanine loans. It will also consider equity investments. Preferred sectors include: Middle market healthcare, pharmaceutical, aerospace & defense, business services, software, gaming and leisure, high tech, real estate, and banking & finance companies located in the US, UK, Luxembourg, Cyprus and Cayman Islands are the current scope of interest.  Eligibility qualification is for EBITDA between $25 million and $100 million. 

MidCap Financial Investment Corporation

Stock: MidCap Financial Investment Corporation (NASDAQ: MFIC)

• Yield: 11.28%
• Shares for $5000: 370
• Annual Income: $564.00

New York City headquartered MidCap Financial Investment Corporation is a Business Development Company with a $2.44 billion AUM portfolio warchest. 

The company will invest between $20 million and $250 million in primarily, but not exclusively, US businesses with $75 million EBITDA or less. Financing can take the form of first lien loans (97% of portfolio), secured and unsecured debt, collateralized loan obligations, credit linked notes, and other loan structures, as well as PIPE (Private Investment in Public Equity) deals. Debt maturities average between five and ten years. 100% of its financing deals are floating rate. 

TXO Partners L.P.

Stock: TXO Partners L.P. (NYSE: TXO)

• Yield: 12.05%
• Shares for $5000: 259
• Annual Income: $602.50

TXO Partners, L.P. is an oil and gas company headquartered in Fort Worth, TX. Founded in 2012, its focus is in acquiring, developing, and managing oil and natural gas producing properties, primarily in the Permian Basin (NM and TX) and San Juan Basin (NM and CO). 

If putting one’s money where their mouth is any indication of confidence, CEO Bob Simpson’s sizable 10% ownership and additional 100,000 share purchase last quarter should be an indication of rosy future prospects for TXO. 

KKR Income Opportunities Fund

Stock:  KKR Income Opportunities Fund (NYSE: KIO)

• Yield: 10.48%
• Shares for $5000: 359
• Annual Income: $524.00

Kohlberg, Kravis, Roberts & Co. LP, better known as KKR, has a long history of high profile leveraged buyouts and other types of acquisitions, immortalized in the book, Barbarians at the Gate, which detailed the RJR Nabisco Deal, and which starred James Garner and Jonathan Pryce in the 1993 film adaptation. 

Of course, with $569 million AUM, KKR has a lot of different divisions for investment and generating profits. The San Francisco-based KKR Income Opportunities Fund is KKR’s listed, closed-end, high-yield fund. Investing primarily in high-yield “junk” bonds, secured and unsecured loans, but also deploys risk-adjusted strategies for hedging and mitigation of sudden downside trends. 

New Mountain Finance Corporation

Stock:  New Mountain Finance Corporation (NASDAQ: NMFC)

• Yield: 11.77%
• Shares for $5000:  432
• Annual Income: $588.50 

New Mountain Finance Corporation is a BDC that prefers to provide the debt portion of corporate buyout scenarios for upper middle tier defensive growth companies with private equity backing. Unlike some of its peers, New Mountain Finance Corp. also has its own private equity division that may participate in a deal in conjunction with its debt finance arm. 

New Mountain is otherwise open to many industrial sectors, but tis portfolio displays the following preferences:

• Software: 29%
• Business Services: 22%
• Healthcare: 18%

The remaining smaller demographics include Education at 7%, Consumer Services at 6%, Financial Services at 4%, and other comparable service areas. The average New Mountain client company has $179 million EBITDA, 1.7x interest coverage, and a 43% LTV. New Mountain often seeks a majority stake in any company it decides to keep in its portfolio. 

BlackRock Science and Technology Term Trust

Stock: BlackRock Science and Technology Term Trust (NYSE: BSTZ)

• Yield: 12.87%
• Shares for $5000: 250
• Annual Income:  $643.50

BlackRock Science and Technology Term Trust is a closed-end fund tasked exclusively with buying share stakes in publicly traded US and non-US cutting edge technology companies. As the largest asset management company on the planet, BlackRock’s BSTZ is open to stocks of any market cap if the underlying technology is deemed to have substantial growth potential. 

BSTZ also has no qualms over stating up front that its strategy includes covered call option writing to augment its portfolio’s risk-adjusted returns. 

As a general practice, monitoring the portfolio for news that can affect the stock prices or dividends should be conducted on a regular basis. Having alternate stocks with equivalent yields is a prudent strategy to bear in mind, should a replacement stock be required. 

Name	Symbol	Yield	Annual Amount
Kimbell Royalty Partners LP	KRP	11.55%	$577.50
Runway Growth Finance Corp.	RWAY	17.31%	$865.50
WhiteHorse Finance, Inc.	WHF	12.79%	$639.50
Saratoga Investment Corp	SAR	12.44%	$622.00
Carlyle Secured Lending, Inc.	CGBD	10.93%	$546.50
MidCap Financial Investment Corporation	MFIC	11.28%	$564.00
TXO Partners L.P.	TXO	12.05%	$602.50
KKR Income Opportunities Fund	KIO	10.48%	$524.00
New Mountain Finance Corporation	NMFC	11.77%	$588.50
BlackRock Science and Technology Term Trust	BSTZ	12.87%	$643.50
TOTAL:			$6,173.50

 

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.