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Ultra-High-Yield Wake-Up Call: 4 Monthly Dividend Stocks Yielding as Much as 14.5%
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Key Points
- As expected, the Federal Reserve lowered interest rates by 25 basis points.
- Look for another 25-basis-point cut in December.
- Are monthly dividend stocks right for you? A financial advisor can review your portfolio and let you know. Click here to learn more.
Investors love dividend stocks, especially the ultra-yield variety, because they provide a significant income stream and give investors a great opportunity for 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.
Most dividend investors also seek solid passive income streams of quality dividend stocks. Passive income is a steady stream of unearned income that doesn’t require active traditional work. Shared ideas for earning passive income include investments, real estate, or side hustles.
Most stocks pay quarterly dividends, which is fine for many shareholders who reinvest dividends. However, many investors rely on dividends as part of a passive income stream, and getting a monthly dividend payout is more beneficial. Typically, real estate investment trusts, business development companies, and closed-end funds are among the investment vehicles that pay distributions monthly.
We screened our 24/7 Wall St. looking for ultra-yield dividend stocks universe that pay monthly dividends and found four top companies that aggressive income investors should consider now. Now is the wake-up call for those who have waited to grab these sought-after shares.
Why we recommend monthly income stocks
In a world where prices seem to be consistently rising, a monthly check makes sense for many who have bills and expenses due on a 30-day basis. Items like mortgage payments or rent, utility bills, trash collection, and even grocery bills are always due each month, and a steady stream of passive monthly income can be a huge helping hand to meet those obligations. All four of these top companies pay 10% and higher dividends.
AGNC Investment
This company has paid solid monthly dividends for years; its current yield is 14.50%. 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 a United States government-sponsored enterprise or 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.
Dynex Capital
Paying a hefty 14.50% 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. For federal income tax purposes, the company has qualified as a real estate investment trust. It is generally not subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders as dividends.
Horizon Technology Finance
Paying a stout 13.11% 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.
Prospect Capital
Hedge funds love this top business development company, and the gigantic 13.56% dividend makes it a potential total return home run. Prospect Capital Corp. (NASDAQ: PSEC) specializes middle market and mezzanine debt, in addition to:
- Later stage
- Emerging growth
- Leveraged buyouts
- Refinancing
- Acquisitions
- Recapitalizations
- Turnaround
- Growth capital
- development,
- Capital expenditures
- Subordinated debt tranches of collateralized loan obligations, cash flow term loans, marketplace 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. It invests in 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, health care, food and beverage, education, business services, and other select sect.
Six of Wall Street’s Most Beloved High-Yield Stocks Are On Sale
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