3 Ultra-High-Yield Dividend Stocks for a Decade-Long Hold
Sunday, Nov 24, 2024 2:26 am ET
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In the pursuit of passive income, investors often seek high-yield dividend stocks. However, finding the right balance between high yields and long-term sustainability is crucial. This article highlights three ultra-high-yield dividend stocks with the potential to generate substantial income over a decade: Ares Capital (ARCC), PennantPark Floating Rate Capital (PFLT), and Rithm Capital (RITM).
1. Ares Capital (ARCC)
Ares Capital is the world's largest publicly traded business development company (BDC), filling the lending gap left by big banks. With a 9.1% yield, ARCC offers investors an attractive income stream. Its highly diversified portfolio, with the largest borrower responsible for just 1.7% of the total, ensures minimal risk concentration. Additionally, ARCC's non-accrual loans represent only 1.3% of its portfolio, indicating a strong balance sheet. The company's dividend has increased by 26% over the past decade, demonstrating its commitment to shareholders.
2. PennantPark Floating Rate Capital (PFLT)
PennantPark Floating Rate Capital is another lender for mid-sized companies, generating substantial interest income through variable-rate loans. With an 11% yield, PFLT offers one of the highest dividend yields in the industry. Its underwriting team's capability to find borrowers that generate enough cash to repay their debts supports its dividend sustainability. Notably, PFLT has raised or maintained its payout since 2015, indicating a consistent and growing income stream for investors.
3. Rithm Capital (RITM)
Rithm Capital is a real estate investment trust (REIT) dealing in mortgage origination and servicing, mortgage-backed securities, and single-family rentals. With a 9.5% yield, RITM offers a substantial income stream for investors. Its diverse portfolio of mortgage-related assets allows Rithm to maintain a strong balance sheet and distribute earnings as dividends. The company's dividend payout has increased twice since 2020, demonstrating its commitment to shareholder value.
When investing in ultra-high-yield dividend stocks, it's essential to consider the risks and potential growth prospects. High dividend yields may indicate concerns about the underlying businesses or market conditions. However, these three stocks exhibit strong financial footing and potential for long-term growth. By carefully evaluating each company's credit risk, interest rate exposure, and potential growth prospects, investors can make informed decisions when selecting ultra-high-yield dividend stocks for a decade-long hold.
In the pursuit of passive income, investors often seek high-yield dividend stocks. However, finding the right balance between high yields and long-term sustainability is crucial. This article highlights three ultra-high-yield dividend stocks with the potential to generate substantial income over a decade: Ares Capital (ARCC), PennantPark Floating Rate Capital (PFLT), and Rithm Capital (RITM).
1. Ares Capital (ARCC)
Ares Capital is the world's largest publicly traded business development company (BDC), filling the lending gap left by big banks. With a 9.1% yield, ARCC offers investors an attractive income stream. Its highly diversified portfolio, with the largest borrower responsible for just 1.7% of the total, ensures minimal risk concentration. Additionally, ARCC's non-accrual loans represent only 1.3% of its portfolio, indicating a strong balance sheet. The company's dividend has increased by 26% over the past decade, demonstrating its commitment to shareholders.
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2. PennantPark Floating Rate Capital (PFLT)
PennantPark Floating Rate Capital is another lender for mid-sized companies, generating substantial interest income through variable-rate loans. With an 11% yield, PFLT offers one of the highest dividend yields in the industry. Its underwriting team's capability to find borrowers that generate enough cash to repay their debts supports its dividend sustainability. Notably, PFLT has raised or maintained its payout since 2015, indicating a consistent and growing income stream for investors.
3. Rithm Capital (RITM)
Rithm Capital is a real estate investment trust (REIT) dealing in mortgage origination and servicing, mortgage-backed securities, and single-family rentals. With a 9.5% yield, RITM offers a substantial income stream for investors. Its diverse portfolio of mortgage-related assets allows Rithm to maintain a strong balance sheet and distribute earnings as dividends. The company's dividend payout has increased twice since 2020, demonstrating its commitment to shareholder value.
RITM Net Income YoY, Net Income
When investing in ultra-high-yield dividend stocks, it's essential to consider the risks and potential growth prospects. High dividend yields may indicate concerns about the underlying businesses or market conditions. However, these three stocks exhibit strong financial footing and potential for long-term growth. By carefully evaluating each company's credit risk, interest rate exposure, and potential growth prospects, investors can make informed decisions when selecting ultra-high-yield dividend stocks for a decade-long hold.
