Wall Street Loves 4 Ultra-High-Yield Stocks You Can Hold for Decades

By Lee Jackson Published Apr 12, 7:19AM EDT

Quick Read

The Federal Reserve likely leaves interest rates where they are until March or even May.
Ultra-high-yield stocks are a safer and better idea than high-yield junk bonds.
Some stocks offer dividend reinvestment or DRIP programs.

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Investors love dividend stocks, especially the ultra-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. At 24/7 Wall St., we consistently emphasize the potential of total return to our readers. 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.

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. We found four rated Buy on Wall Street companies, and all can be bought and held for decades of dependable income.

British American Tobacco

This British multinational company manufactures and sells cigarettes and other tobacco and nicotine products.

European giant British American Tobacco PLC (NYSE: BTI | BTI Price Prediction) is a consumer-centric, multi-category consumer goods company that pays shareholders a hefty 7.90% dividend.

The company provides tobacco and nicotine products. Its segments include:

United States
Asia Pacific
Middle East
Africa
The Americas
Europe

The company’s product categories include:

Vapor
Tobacco Heating Products (THPs)
Modern Oral, Traditional Oral, and Combustible cigarettes

Vapor products are handheld, battery-powered devices that heat a liquid (called an e-liquid) to produce an inhalable aerosol known as vapor. THPs are a new category of tobacco product designed to heat rather than burn tobacco.

Modern Oral products are smoke-free oral nicotine products called nicotine pouches, designed for use in the mouth. Traditional oral products include snus and snuff.

British American Tobacco brands include:

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

Barclays has a price target of $40, which is equal to £32.50.

Starwood Property Trust

Starwood Capital is an established global investor with international investments that encompass more than 30 countries.

This high-yielding company, run by real estate legend Barry Sternlicht, offers big-time total return potential and a 10% 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

Keefe Bruyette & Woods has a Buy rating with a $22 target price.

TXO Partners

TXO Partners acquires, develops, optimizes, and exploits conventional oil, natural gas, and natural gas liquid reserves.

With a massive 12.11% dividend and trading at a very solid entry point, this company is a bargain at current levels. TXO Partners L.P. (NYSE: TXO) is a master limited partnership 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.

TXO Partners’ assets include a 50% interest in Cross Timbers Energy (Cross Timbers). As an operator, it designs and manages the development, completion, or workover for all the wells it operates and supervises daily operation and maintenance activities

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.

Stifel has a Buy rating with a $26 target.

USA Compression Partners

USA Compression Partners provides natural gas compression services under term customer contracts.

While perhaps less known than their peers, this top company pays shareholders a hefty 8.02% dividend. USA Compression Partners L.P. (NYSE: USAC) provides natural gas compression services.

The company offers compression services to:

Oil companies and independent producers
Processors
Gatherers
Transporters of natural gas and crude oil, as well as operating stations

USA Compression Partners primarily provides natural gas compression services to infrastructure applications, including centralized natural gas gathering systems, processing facilities, and gas lift applications for crude oil wells.

Raymond James has an Outperform rating to go with a $30 target price.

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About the Author Lee Jackson →

Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad and diverse career, which included a stint as the creative services director at the NBC affiliate in Austin, Texas, gives him unique insight into the financial industry and world.

Lee Jackson's journey in the financial industry spans over 30 years, with nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career was marked by his presence on the sell side during pivotal Wall Street events, from the dot.com rise and bubble to the Long Term Capital Management debacle, 9/11, and the Great Recession of 2008. This is a testament to his resilience and adaptability in the face of market volatility.

Lee Jackson’s practical financial industry experience, acquired from a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing on various platforms. This unique combination allows him to shed light on the intricacies and workings of Wall Street in a way that only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.

Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.