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 critical 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.
We screened our 24/7 Wall St. ultra-high-yield research database, looking for the best companies that pay dependable monthly dividends. Four stocks stood out in the group, making sense for growth and income investors with a higher risk tolerance.
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.
ARMOUR Residential REIT
This real estate investment trust invests in residential mortgage-backed securities in the United States.
With a massive 15.02% dividend yield and years of solid performance, this company is a perfect monthly dividend idea. ARMOUR Residential REIT Inc. (NYSE: ARR) invests in residential mortgage-backed securities (MBS) in the United States.
Its securities portfolio primarily consists of securities issued or guaranteed by the United States Government-sponsored entity (GSE) and the Government National Mortgage Administration backed by fixed-rate, hybrid adjustable-rate, and adjustable-rate home loans, unsecured notes and bonds issued by the GSE and the United States treasuries, and money market instruments.
Oxford Square Capital
A business development company that operates as a closed-end, non-diversified management investment company.
This company pays a massive 15.91% dividend, which could result in a substantial total return home run if the stock moves higher. Oxford Square Capital Corp. (NASDAQ: OXSQ) is a business development company that operates as a closed-end, non-diversified management investment company.
It is a private equity and mezzanine firm.
The firm invests in both public and private companies. It invests in:
- Secured and unsecured senior debt
- Subordinated debt
- Junior subordinated debt
- Preferred stock
- Common stock
- Syndicated bank loans
Oxford Square Capital primarily invests in debt and equity securities of technology-related companies that operate in:
- Computer software
- Internet
- Information technology infrastructure and services
- Media
- Telecommunications and telecommunications equipment
- Semiconductors
- Hardware
- Technology-enabled services
- Semiconductor capital equipment
- Medical device technology
- Diversified technology
- Networking systems
Prospect Capital
A leading flexible private debt and equity capital provider with a monthly dividend.
Hedge funds love this top business development company, and the gigantic 12.33% dividend makes it a potential total return home run. Prospect Capital Corp. (NASDAQ: PSEC) specializes in:
- Middle market, mature, mezzanine finance
- 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.
Stellus Capital
Another business development company, this one specializing in investments in private middle-market companies.
With an 11.94% yield and trading close to a 52-week high, this stock could break out soon. Stellus Capital Investment Corp. (NYSE: SCM) is a business development company specializing in investments in private middle-market companies.
It invests through first-lien, second-lien, unitranche, and mezzanine debt financing, often with a corresponding equity investment.
The fund prefers to invest in the United States and Canada and seeks to invest in companies with an EBITDA between $5 million and $50 million.
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