Investors love dividend stocks, especially the high-yield variety, 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.

With yields on Treasury securities back to the highs posted in the fall of 2023 and the stock market starting the year on a downtrend, it is a good bet that all eyes will be laser-focused on fourth-quarter earnings reports. With the S&P 500 price-to-earnings ratio at a hefty 27.87, companies must deliver in a big way. Those that don’t could very well be punished. We decided to screen our 24/7 Wall St. ultra-high-yield stock research database, looking for the companies that look poised to post solid results for the fourth quarter and continue to pay way above average passive income streams to shareholders. Four looked like outstanding ideas for investors, and all are rated Buy.

Why do we cover ultra-high-yield stocks?

While not suited for everybody, those trying to build strong passive income streams can do exceptionally well with some of these top companies in their portfolios. Paired with more conservative blue-chip dividend giants, investors can use a barbell approach to create significant passive income streams.

Barings BDC

This business development company is an industry leader and pays a massive 11.09% dividend. Barings BDC Inc. (NYSE: BBDC) is a publicly traded, externally managed investment company elected to be treated as a business development company under the Investment Company Act 1940.

It seeks to invest primarily in senior secured loans, first-lien debt, unitranche, second-lien debt, subordinated debt, equity co-investments, and senior-secured private debt investments in private middle-market companies operating across various industries.

It specializes in:

• Mezzanine
• Leveraged buyouts
• Management buyouts
• ESOPs
• Change of control transactions
• Acquisition financings
• Growth financing
• Recapitalizations in lower-middle market, mature, and later-stage companies

Barings BDC invests in manufacturing and distribution, business services and technology, transportation and logistics, and consumer products and services. It invests in the United States in companies with EBITDA of $10 million to $75 million, typically in private equity sponsor-backed.

Starwood Property Trust

This high-yielding company, which is run by real estate legend Barry Sternlicht, offers big-time total return potential and a 10.43% 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

TXO Partners

With a massive 13.7% 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 a master limited partnership,(MLP) focused on the acquisition, development, optimization, and exploitation of conventional oil, natural gas, and natural gas liquid (NGL) reserves in North America.

The company’s acreage positions are concentrated in the Permian Basin of West Texas and New Mexico and the San Juan Basin of New Mexico and Colorado.

Its assets comprise approximately:

• 845,820 gross (371,796 net) leasehold and mineral acres located primarily in the Permian and San Juan Basin
•  50% interest in Cross Timbers Energy, LLC (Cross Timbers)

As an operator, it designs and manages the development, completion, or workover for all of the wells it operates and supervises operation and maintenance activities on a day-to-day basis. It markets the majority of the natural gas, NGL, crude oil, and condensate production from the properties on which it operates. It also markets products produced by third-party working interest owners.

Walgreens Boots Alliance

This huge drugstore chain is a safe retail play, paying a massive 10.85% dividend. Walgreens Boots Alliance Inc. (NASDAQ: WBA) is a pharmacy-led health and beauty retail company with three segments:

• Retail Pharmacy USA
• Retail Pharmacy International
• Pharmaceutical Wholesale

The Retail Pharmacy USA segment sells prescription drugs and various retail products, including health, wellness, beauty, personal care, consumables, and general merchandise products, through its retail drugstores.

It also provides specialty pharmacy services and mail services. This segment operates nearly 10,000 retail stores under the Walgreens and Duane Reade brands in the United States and six specialty pharmacies.

Walgreens Boots Alliance’s Retail Pharmacy International segment is a testament to its diverse product offerings. It sells prescription drugs, health and wellness products, beauty products, personal care products, and other consumer products through its pharmacy-led health and beauty stores and optical practices.

The International segment has operations in:

• The United Kingdom
• Thailand
• Norway
• The Republic of Ireland
• The Netherlands
• Mexico
• Chile

The company also operates 550 optical practices, including 165 on a franchise basis.

The Pharmaceutical Wholesale segment wholesales and distributes specialty and generic pharmaceuticals, health and beauty products, and home healthcare supplies and equipment and provides related services to pharmacies and other healthcare providers.

Walgreens’ fiscal first-quarter results were way ahead of Wall Street expectations. In addition, they are cutting costs and closing thousands of stores over the next few years. Moreover, rumors hint that the company could go private.

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

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