Seeking 10% Dividend Yield? Jefferies and BTIG Suggest 2 Dividend Stocks to Buy

In a low-interest-rate environment, investors are increasingly drawn to high-yield dividend stocks. While 10% dividend yields are rare, Jefferies and BTIG have identified two compelling picks that offer such payouts while balancing growth and risk. Below is an in-depth analysis of these two stocks, supported by analyst insights and financial metrics.

Ask Aime: Which two high-yield dividend stocks do Jefferies and BTIG recommend for investors seeking growth and risk balance in a low-interest-rate landscape?

1. Blue Owl Capital Corporation (OBDC): A 10.7% Yield with BDC Resilience

Dividend Yield: 10.7% (annualized dividend of $1.48/share).
Business Overview: Blue Owl Capital is a Business Development Company (BDC) specializing in middle-market debt investments. Its $17.7 billion portfolio is anchored in first-lien senior secured loans (76% of assets), with 96.5% of holdings in floating-rate instruments. This structure mitigates interest rate risk while targeting higher-yielding opportunities.

Ask Aime: "Should I invest in Blue Owl Capital for its high-yield dividend?"

Jefferies’ Take: Analyst Matthew Hurwit rates OBDC Buy, citing its conservative lending practices and $16 price target (15% upside from its current price of $13.89). Including the dividend yield, the total one-year return potential is 25.7%. Hurwit highlights the company’s 83% senior secured loan exposure and low non-accruals as key strengths, though he acknowledges risks tied to economic downturns.

Financial Health:
- Q1 2025 adjusted net investment income: $0.39/share (slightly below forecasts but stable).
- Regular dividend of $0.37/share plus a supplemental $0.01/share, signaling resilience.

Ask Aime: Which BDC offers a 10.7% yield with Blue Owl Capital Corporation?

Why It’s a Buy:
Blue Owl’s scale and Blue Owl Credit Advisors’ platform provide a competitive edge. While BDCs are sensitive to credit cycles, OBDC’s portfolio diversification and floating-rate focus offer a buffer against rising rates.

2. Apollo Commercial Real Estate (ARI): 10.4% Yield with Strategic Agility

Dividend Yield: 10.4% (annualized dividend of $1/share).
Business Overview: ARI is a global REIT focused on commercial real estate debt investments. Its $7.7 billion portfolio spans offices, residential, and hospitality sectors, with 52% of loans in the UK/Europe—a strategic move to reduce U.S. market exposure.

BTIG’s Analysis: Analyst Tom Catherwood rates ARI Buy, with a $11 price target (15% upside from its current price of $9.59). Including dividends, the total return potential is 16%. Catherwood emphasizes ARI’s resolution of problematic loans (e.g., NYC’s Steinway Tower) and its institutional backing by Apollo Global Management.

Financial Highlights:
- Q4 2024 revenue: $78.25 million (7.8% YoY growth, slightly below estimates).
- 32% of assets in the UK, 20% in New York, and 17% in Europe, diversifying geographic risk.

Why It’s a Buy:
ARI’s European focus and Apollo’s underwriting expertise position it to outperform peers in volatile U.S. commercial real estate markets. While risks like rising vacancies exist, the company’s debt portfolio structure and geographic mix reduce downside exposure.

Key Risks and Considerations

Both stocks carry inherent risks:
- Economic Downturns: OBDC’s BDC model and ARI’s REIT exposure could face pressure if credit defaults rise or office demand weakens.
- Dividend Sustainability: While both firms have maintained payouts, a prolonged recession could force cuts.

However, Jefferies and BTIG’s analysis underscores their defensive qualities:
- OBDC’s conservative lending (83% senior secured loans) and ARI’s diversified portfolio reduce immediate risk.
- Both stocks trade below consensus price targets, offering entry points with upside potential.

Conclusion: A Balanced Approach to High-Yield Investing

Jefferies and BTIG’s recommendations reflect a strategy to prioritize income over volatility in 2025. Blue Owl Capital (OBDC) and Apollo Commercial Real Estate (ARI) offer 10%+ dividend yields with structural advantages:
- OBDC benefits from its floating-rate portfolio and Blue Owl’s platform, targeting a 25.7% total return.
- ARI leverages Apollo’s expertise and European diversification for a 16% total return.

Investors should weigh these opportunities against their risk tolerance. Both stocks are rated Buy by their respective analysts but face sector-specific headwinds. For income-focused portfolios, these picks represent high-yield alternatives with growth potential—if managed carefully.

Final Take: In a search for 10%+ yields, OBDC and ARI stand out as well-researched options. However, diversification and close monitoring of macroeconomic trends remain critical to maximizing returns.