Investors love dividend stocks, especially those with ultra-high yields, because they provide a substantial passive income stream and offer significant 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 refers to the collective increase in a stock’s value, including dividends.
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. The more passive income can help cover rising costs, such as mortgages, insurance, taxes, and other expenses, the easier it is for investors to set aside money for future needs as they prepare for retirement. Dependable recurring dividends are a recipe for success.
We screened our ultra-high-yield 24/7 stock database, looking for the best ideas for 2026, and four winners have emerged, all of which have a Buy rating on Wall Street.
Why do we cover ultra-high-yield dividend 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 generate substantial passive income.
Ares Capital
The company specializes in providing financing solutions for the middle market and appears poised to reach new highs, garnering a Buy rating from 12 analysts and yielding a 9.34% return. It is a high-yielding business development company. Ares Capital Corp. (NASDAQ: ARCC | ARCC Price Prediction) specializes in acquisitions, recapitalizations, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions for middle-market companies.
It also makes growth capital and general refinancing. It prefers to invest in companies engaged in basic and growth manufacturing, business services, consumer products, healthcare products and services, and information technology sectors.
The fund will also consider investments in industries such as:
- Restaurants
- Retail
- Oil and gas
- Technology
It focuses on investments in the Northeast, Mid-Atlantic, Southeast, and Southwest regions from its New York office; the Midwest region from its Chicago office; and the Western region from its Los Angeles office.
The fund typically invests between $20 million and $200 million, with a maximum investment of $400 million, in companies with an EBITDA between $10 million and $250 million per year. It makes debt investments between $10 million and $100 million.
The fund invests through:
- Revolvers
- First-lien loans
- Warrants
- Unitranche structures
- Second-lien loans
- Mezzanine debt
- Private high yield
- Junior Capital
- Subordinated debt
- Non-control preferred and common equity
The fund also selectively considers third-party-led senior and subordinated debt financings and opportunistically acquires stressed and discounted debt positions.
Ares Capital prefers to be an agent and lead the transactions in which it invests. The fund also seeks board representation in its portfolio companies.
J.P. Morgan has an Overweight rating and a $22 target price.
Delek Logistics Partners
While way off the radar of many investors, this midstream giant may be our top “forgotten stocks” idea. Delek Logistics Partners L.P. (NYSE: DKL) is a midstream energy master limited partnership with a substantial 9.80% dividend yield. The company provides gathering, pipeline, and other transportation services for crude oil and natural gas customers, as well as storage, wholesale marketing, and terminalling services.
Its segments include:
- Gathering and processing
- Wholesale marketing and terminalling
- Storage and transportation
- Investment in pipeline joint ventures
The gathering and processing segment consists of:
- Midland Gathering Assets
- Midland Water Gathering Assets
- Delaware Gathering Assets
The marketing and terminalling segment provides wholesale marketing and terminalling services to Delek Holdings’ refining operations and to independent third parties.
The storage and transportation segment comprises tanks, offloading facilities, trucks, and ancillary assets that provide transportation and storage services for crude oil, intermediates, and refined products. Its operations also include integrated full-cycle water systems in the Permian Basin.
Raymond James has a Buy rating with a $46 target price.
TXO Partners
TXO Partners L.P. (NYSE: TXO) acquires, develops, optimizes, and exploits conventional oil, natural gas, and natural gas liquids reserves in North America. With a massive 15.9% dividend and trading near a 52-week low, this is a master limited partnership with acreage positions concentrated in three main areas:
- Permian Basin of West Texas and New Mexico
- San Juan Basin of New Mexico and Colorado
- Williston Basin of Montana and North Dakota
Its assets consist of approximately 1,117,628 gross (549,229 net) leasehold and mineral acres located primarily in those basins. The assets include a 50% interest in Cross Timbers Energy, also known as Cross Timbers.
As an operator, it designs and manages the development, recompletion, or workover of all the wells it operates, and supervises day-to-day operations and maintenance activities. The company markets the majority of the natural gas, NGL, crude oil, and condensate production from the properties on which it operates.
Stifel has a Buy rating with a $19 target price.
Starwood Property Trust
Starwood Capital is a well-established global investor with international investments spanning over 30 countries and is an affiliate of this high-yielding company, which boasts a 9.61% dividend yield led by real estate legend Barry Sternlicht. 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
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, including multifamily and net-leased commercial properties, held for investment purposes.
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
Wells Fargo has an Outperform rating and a $22 target price.
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