High-yielding stocks are typically reserved for a certain type of investor. Plenty of companies have dividend yields which are above market average. After all, index investors will note that the current yield on the S&P 500 is 1.2%, which is abhorrently low, particularly for those nearing retirement age who are looking to create passive income streams to supplement social security payouts over time. 

Many baby boomers, or those nearing retirement, may not want to deal with the sort of heightened risk most ultra high-yielding stocks provide. However, not all higher-yielding stocks are created equal. Finding companies that pay out significant yields, but have business models and payout ratios which can support these yields over time, is the trick.

The following three companies I’m going to highlight in this piece are options I’d potentially consider as part of a well-diversified portfolio. These are companies with considerably higher dividend yields than their peers, but yields which I think can be maintained (or grow) over time.

Let’s dive in!

Key Points About This Article:

• Baby boomers looking to equities as an option to create sustainable higher-yielding income streams do have options in the equity market to consider.
• These are three ultra high-yielding stocks that may be worth a look for those looking to diversify their portfolios into higher-yielding names.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Ares Capital (ARCC)

Ares Capital (NASDAQ:ARCC) is a leading business development company (BDC) financing middle-market businesses. The company’s business model does carry some level of risk (whether or not these companies can pay their loans back), but the structure of this particular BDC is one that favors investors. Ares must pay out at least 90% of its earnings to investors to avoid taxes (similar to most real estate investment trusts), which is a model that benefits yield-seeking investors.

Notably, this is a company that’s raised its distributions for 15 consecutive years, so the company’s current 8.9% dividend yield is perhaps more sustainable than many investors may think at first glance. With a diversified business model of loans across 525 companies in over 30 industries (and 60% of its loans secured), this particular BDC is somewhat insulated from bankruptcy-related risks. 

Of course, an economic shock could take place tomorrow that may invalidate this thesis. But with a manageable debt-to-equity ratio of 1.06 and a captive market of companies that banks may not serve, this is an intriguing option for investors looking to move out the risk curve slightly.

EPR Properties (EPR)

EPR Properties (NYSE:EPR) is a real estate investment trust (REIT) – you know I was going to go here on this list – which focuses on experiential properties like movie theaters and entertainment venues. The company owns 352 locations leased to over 200 tenants, providing a steady stream of income the REIT pays out to investors. Currently, EPR expects to receive $4.80 to $4.92 in funds from operations (FFO) per share this year, which should easily support he company’s monthly dividend of $0.285. This payment amounts to a yield of roughly 7.5%, which is far higher than the yield on most index funds and fixed income investments today. 

Notably, the company’s current yield is supported by strong Q3 2024 earnings, which exceeding expectations. The company brought in adjusted funds from operations (AFFO) of $1.30 per share, reflecting 6% year-over-year growth. The company maintained its 2024 AFFO guidance of $4.86 per share, projecting 3% growth. On this report, analysts increased their 2024 and 2025 AFFO estimates due to improved interest rates and higher loan income. EPR has continued to strengthen its financial position by addressing 2024 debt maturities and extending its credit facility, enhancing its flexibility for future growth.

The company has invested over $6.9 billion in its real estate portfolio and sees a $100 billion market opportunity in experiential real estate. If the company can continue to consolidate a fragmented (and rather unloved) area of the real estate market, and this market sees some sort of revival in the coming years, investors could be due for a big win with this particular REIT, though there are obvious risks with this particular investment. 

Arbor Realty Trust (ABR)

Arbor Realty Trust (NYSE:ABR) is a prominent real estate investment trust (REIT) based in Uniondale, New York. The company specializes in providing debt capital for the multifamily and commercial real estate sectors. Established over 30 years ago, Arbor has developed a robust portfolio that includes loan origination and servicing for various asset types, such as multifamily housing, single-family rentals (SFR), and seniors housing. 

Arbor Realty Trust reported a mixed performance for the third quarter. Interest income reached $286.52 million, surpassing the $277.28 million estimate, though it represented a 14.9% decline from the previous year. The company also posted a gain of $18.64 million from sales and fee-based services, slightly exceeding the $18.56 million estimate, with a minimal 0.1% increase year-over-year. 

However, revenue from mortgage servicing rights came in at $13.20 million, falling short of the $16.17 million estimate and marking a 6.5% year-over-year decline. Servicing revenue came in at $31.14 million, below the $31.50 million forecast. This amounted to a 12.2% drop year-over-year, while the company’s net earnings per share matched the forecast at $0.31.

If Arbor Realty Trust can return to growth, this is a stock yielding 11.6% which could see material capital appreciation, though I’d put this stock near the top of the risk stack for investors. This is a particular investment I’d watch closely, and likely add to in small proportion to one’s overall assets.

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