Investors love dividend stocks, especially the ultra-high-yield varieties, because they offer a significant income stream and have substantial 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 247 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 refers to the collective increase in a stock’s value, including dividends.
At 24/7 Wall St., we have focused on dividend stocks for over 15 years because, despite the stock market’s ups and downs, many people face the reality of needing solid passive income streams to supplement their income from employment or other sources. 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. It can also include income from limited partnerships, stocks, bonds, and other similar enterprises in which the investor is not actively involved.
We screened our 24/7 Wall St. ultra-high-yield passive income stock database, looking for stocks trading under $10 that have supercharged dividends. Four companies look like great ideas for investors with a higher risk tolerance, and all have Buy ratings from top Wall Street firms.
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 employ a barbell approach to generate substantial passive income streams.
Arbor Realty Trust
Arbor Realty Trust (NYSE: ABR) offers nationwide solutions for multifamily finance. Its stock trades at a ridiculous 7.6 times estimated 2026 earnings and comes with a massive dividend. Arbor Realty Trust invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States.
The company operates in two segments:
- Structured Business
- Agency Business
Arbor Realty Trust primarily invests in:
- Bridge and mezzanine loans, including junior participating interests in first mortgages
- Preferred and direct equity and real estate-related joint ventures
- Real estate-related notes
- Various mortgage-related securities
The company offers:
- Bridge financing products to borrowers who seek short-term capital to be used in the acquisition of property
- Financing by making preferred equity investments in entities that directly or indirectly own real property
- Mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction
- Junior participation financing in the form of a junior participating interest in the senior debt
- Financing products to borrowers seeking conventional, workforce, and affordable single-family housing.
Further, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs.
JMP Securities has a Market Outperform rating with a $16.50 target price.
Runway Growth Finance
This business development company (BDC) pays a stunning dividend and has a solid Wall Street following. Runway Growth Finance Corp. (NASDAQ: RWAY) specializes in investments in senior secured loans to late-stage and growth companies.
It prefers to invest in companies engaged in:
- Technology
- Life sciences
- Healthcare
- Information services
- Business services
- Select consumer services and products sectors
Runway Growth Finance prefers investments in companies engaged in these business silos:
- Electronic equipment and instruments
- Systems software
- Hardware, storage, and peripherals
- Specialized consumer services
- Application software
- Healthcare technology
- Internet software and services
- Data processing and outsourced services
- Internet retail, human resources, and employment services
- Biotechnology, healthcare equipment, and education services
It invests between $10 million and $75 million in senior secured loans.
UBS has a Buy rating with an $11 price target.
Townsquare Media
This off-the-radar stock has huge total return potential, in addition to its massive dividend. Townsquare Media Inc. (NYSE: TSQ) is a community-focused digital and broadcast media and digital marketing solutions company.
The company’s segments include:
- Subscription Digital Marketing Solutions
- Digital Advertising
- Broadcast Advertising
The Digital Advertising segment, which is marketed as Townsquare Ignite, includes digital advertising on its digital programmatic advertising platform and its owned and operated digital properties. Tronox
The Subscription Digital Marketing Solutions segment includes its subscription digital marketing solutions business, Townsquare Interactive.
The Broadcast Advertising segment includes local, regional, and national advertising products and solutions delivered via terrestrial radio broadcast. Townsquare Interactive partners with small and medium-sized businesses to help manage their digital presence by providing a SAAS business management platform, website design, creation, hosting, search engine optimization, and other digital services.
Barrington Research has an Outperform rating with a $13 price objective.
Tronox
Some of Wall Street’s biggest banks are very bullish on this company, which is another huge dividend-paying stock worth a look. Tronox Holdings PLC (NYSE: TROX) is a producer of titanium products, including titanium dioxide (TiO2) pigment, specialty-grade titanium dioxide products, high-purity titanium chemicals, and zircon.
The company is a vertically integrated manufacturer of TiO2 pigment. It mines titanium-bearing mineral sands and operates upgrading facilities that produce high-grade titanium feedstock materials, pig iron, and other minerals, including the rare earth-bearing mineral, monazite.
It operates titanium-bearing mineral sand mines and beneficiation and smelting operations in Australia and South Africa to produce feedstock materials that can be processed into TiO2 for pigment, high-purity titanium chemicals, including titanium tetrachloride, and ultrafine TiO2 used in specific specialty applications.
Tronox supplies and markets TiO2 under the brand names TIONA and CristalActiv. It has nine pigment facilities located in these countries and others:
- United States
- Australia
- Brazil
- United Kingdom
UBS has a Buy rating that goes with a huge $10 target price.
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