Most dividend investors seek solid passive income streams from quality dividend stocks. Passive income is a steady stream of unearned income that does not require active traditional work. Shared ideas for earning passive income include investments like dividend stocks, bonds, mutual funds, real estate, and additional income-producing side hustles.

According to the Internal Revenue Service (IRS), passive income generally includes earnings from rental activity or any trade, business, or investment in which the individual does not materially participate.

The consensus on Wall Street for 2025 is that while there could be a break in the Federal Reserve’s interest rate reduction, rates will be considerably lower by this time in 2026. That will pump a premium into quality ultra-high-yield stocks, as they will likely outperform even high-yield junk bonds with less volatility.

We screened our 24/7 Wall Street quality ultra-high-yield dividend stock database and found four stocks that are perfect ideas for investors with a slightly higher risk tolerance.

Why do we cover ultra-high-yield stocks?

While only suited for some, those who are trying to build strong passive income streams can do extremely 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 can make a significant difference.

British American Tobacco

This European giant continues to print money, has a vast product line, and pays a massive 7.95% dividend. British American Tobacco PLC (NYSE: BTI) offers:

• Vapor
• Tobacco heating
• Modern oral nicotine products
• Combustible cigarettes
• Traditional oral products, such as snus and moist snuff

The company noted last year that it had added 1.4 million more consumers of its smokeless brands, and this part of the business now accounted for nearly 18% of its group revenue. This could be huge as some European Union countries move towards more rigid smoking rules.

British American Tobacco offers its products under these well-known brands:

• Vuse
• Glo
• Velo
• Grizzly
• Kodiak
• Dunhill
• Kent
• Lucky Strike
• Pall Mall
• Rothmans
• Camel
• Natural American Spirit
• Newport
• Vogue
• Viceroy
• Kool
• Peter Stuyvesant
• Craven A
• State Express 555
• Shuang Xi brands

FS KKR

This is a well-known name on Wall Street that offers a solid entry point at current levels and pays a massive 13% dividend. FS KKR Capital Corp. (NASDAQ: FSK) 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 its 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. However, it does not seek to invest in start-ups, turnaround situations, or companies with speculative business plans. Instead, 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 and $2.5 billion. It aims to exit from securities by selling them in a privately negotiated over-the-counter market.

Starwood Property Trust

This high-yielding company, run by real estate legend Barry Sternlicht, offers big-time total return potential and a 9.56% dividend. Starwood Property Trust Inc. (NYSE: STWD) operates as a real estate investment trust (REIT) in the United States, Europe, and Australia.

It operates through four segments:

• Commercial and Residential Lending
• Infrastructure Lending
• Property
• Investing and Servicing segments

The Commercial and Residential Lending segment:

• Originates, acquires, finances, and manages commercial first mortgages
• Non-agency residential mortgages
• Subordinated mortgages
• Mezzanine loans
• Preferred Equity
• Commercial mortgage-backed securities (CMBS)
• Residential mortgage-backed securities

The Infrastructure lending segment originates, acquires, finances, and manages infrastructure debt investments.

The Property segment primarily develops and manages equity interests in stabilized commercial real estate properties, such as multifamily properties and commercial properties subject to net leases, that are held for investment.

The Investing and Servicing segment:

• Manages and works out problem assets
• Acquires and contains unrated, investment grade, and non-investment grade rated CMBS comprising subordinated interests of securitization and re-securitization transactions
• Originates conduit loans to sell these loans into securitization transactions and acquire commercial real estate assets, including properties from CMBS trusts

Western Union

Western Union is an American multinational financial services corporation.

While the demand for telegrams is long gone, the demand to transfer money is not, and this famous company has grown as a result. It pays a strong 8.70% dividend. Western Union Co. (NYSE: WU) provides worldwide money movement and payment services. It operates in two segments.

The Consumer-to-Consumer segment facilitates international cross-border and intra-country money transfers, primarily through a network of retail agent locations, websites, and mobile devices.

The Business Solutions segment provides payment and foreign exchange solutions, primarily cross-border and cross-currency transactions for small and medium-sized enterprises, other organizations, individuals, and foreign currency forward and option contracts.

It also offers bill payment services that facilitate payments from consumers to businesses and other organizations, as well as offers money orders and other services.

Four High-Yield Stocks With 7% and Higher Dividends Are 2025 Home Runs

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