Key Points
- A second Trump term is very bullish for the stock market.
- The Federal Reserve may cut rates again in December by 25 basis points.
- Find out how to buy these great stocks with a qualified financial advisor. Click here to find one. (sponsored)
Investors love dividend stocks, especially the high-yield variety. That’s because they offer a significant income stream and have massive total return potential. 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.
Let’s take a closer look at the concept of total return. Imagine you purchase a stock at $20 that offers a 3% dividend. If the stock price rises to $22 within a year, your total return is 13%. This is calculated by adding the 10% increase in stock price to the 3% dividend.
Many investors are very bullish about Donald Trump’s re-election as the 47th President of the United States. Four years of over-regulation and massive government spending could be coming to an end in 2025. Growth and income investors looking for solid passive income streams can move up the risk ladder and add companies paying huge ultra-high-yield dividends.
We screened our 24/7 Wall St. ultra-high-yield database. And we found four quality companies that investors with a higher risk tolerance should add to their portfolios now. All have Buy ratings at the top Wall Street firms we cover and a very bright future. Two are energy MLPs, and two are top business development companies.
Why do we cover ultra-high-yield stocks?
While only suited for some, those trying to build passive solid income streams can do exceptionally well having some of these top companies in their portfolios. Paired with more conservative blue-chip dividend giants, investors can use a barbell approach to get passive income streams that make a significant difference.
FS KKR
FS KKR is a publicly traded BDC that provides customized credit solutions to private middle-market U.S. companies.
This well-known name on Wall Street posted stellar third-quarter results. It also offers a solid entry point at current levels, and pays a massive 13.37% dividend. FS KKR Capital Corp. (NASDAQ: FSK | FSK Price Prediction) 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 opportunistically in corporate bonds and similar debt securities. It 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.
Goldman Sachs BDC
Goldman Sachs BDC is a specialty finance company focused on lending to middle-market companies.
Run by one of the premier investment banks in the world, with strong third-quarter results and a huge 13.72% dividend, this BDC is an outstanding buy now. Goldman Sachs BDC Inc. (NYSE: GSBD) is a business development company specializing in middle market and mezzanine investment in private companies.
It seeks to make capital appreciation through direct originations of secured debt, senior secured debt, junior secured debt, including first lien, first lien/last-out unitranche and second lien debt, unsecured debt, including mezzanine debt, and, to a lesser extent, investments in equities.
The fund primarily invests in the United States. It seeks to invest between $10 million and $75 million in companies with EBITDA between $5 million and $75 million annually.
Mach Natural Resources
This independent upstream oil and gas company acquires, develops, and produces oil, natural gas, and NGLs.
This 2023 IPO is trading below the initial offering price. Mach Natural Resources L.P. (NYSE: MNR) recently conducted a secondary offering to purchase more producing assets and will pay an estimated 15.65% dividend or $2.40 per share over the next 12 months.
Mach Natural Resources is an independent upstream oil and gas company. It is focused on acquiring, developing, and producing oil, natural gas, and natural gas liquids reserves in the Anadarko Basin region of Western Oklahoma, southern Kansas, and the Texas panhandle.
The analysts at Raymond James noted that Mach is led by Tom Ward, co-founder of Chesapeake Energy. Mach is another entrant into the E&P MLP space. It is a pure-play operator in the Anadarko Basin, leveraging its strong position (1 million net acres) to become the primary consolidator in the region.
Mach’s midstream position and lower base decline (~20%) allow the company to target a lower reinvestment rate (~30%) relative to the overall industry. In addition, it is one of the only exploration and production companies organized as a limited partnership as it is an oil and gas producer.
TXO Partners
TXO Partners acquires, develops, optimizes, and exploits conventional oil, natural gas, and natural gas liquid reserves.
With a massive 12.42% dividend and trading not far from a 52-week low, this company is a bargain at current levels. TXO Partners L.P. (NYSE: TXO) is an oil and natural gas company focusing on acquiring, developing, optimizing, and exploiting conventional oil, natural gas, and natural gas liquid reserves in North America.
Its acreage positions are concentrated in the Permian Basin of West Texas and New Mexico and the San Juan Basin of New Mexico and Colorado.
Last summer, Bob Simpson, the company’s board chair and chief executive, made a statement by purchasing 100,000 company shares.
Trading at a ridiculously cheap 9.5 times estimated 2025 earnings, the stock is a passive income winner and is a potential total return grand slam.
Grab Magnificent Monthly Passive Income From 5 High-Yielding Quality Stocks
Top Gaining Stocks
Top Losing Stocks