2 Ultra-Yield Dividend Stocks to Buy and 1 to Sell

hxdbzxy / iStock via Getty Images

Investors love dividend stocks because they not only provide dependable income but also give investors a great opportunity for solid total return. 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 always like to remind our readers about the impact total return has on portfolios because it is one of the best ways to help improve the chances for overall investing success. Total return is the combined increase in a stock’s value plus dividends. For instance, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13%—10% for the increase in stock price and 3% for the dividends paid.

We screened our 24/7 Wall St. dividend stock research database and found two ultra-yield dividends stock investors should load the boat on now and one that shareholders should sell and run away from fast.

Alliance Resource Partners

Source: Adam88xx / iStock via Getty Images

This company is a leader in the thermal coal business and offers solid diversity, and investors are paid a stunning 12.47% distribution. Alliance Resource Partners L.P. (NASDAQ: ARLP), a diversified natural resource company, produces and markets coal primarily to utilities and industrial users in the United States.

The company operates through four segments:

  • Illinois Basin Coal Operations,
  • Appalachia Coal Operations,
  • Oil and Gas Royalties, and
  • Coal Royalties. It produces a range of thermal and metallurgical coal with sulfur and heat contents.

The company operates seven underground mining complexes in:

  • Illinois,
  • Indiana
  • Kentucky
  • Maryland
  • Pennsylvania
  • West Virginia

The company leases land and operates a coal loading terminal on the Ohio River at Mt. Vernon, Indiana, and buys and resells coal, as well as owns mineral and royalty interests in approximately 1.5 million gross acres of oil and gas-producing regions primarily in the Permian, Anadarko, and Williston Basins.

In addition, the company offers various mining technology products and services, including data networks, communication and tracking systems, mining proximity detection systems, industrial collision avoidance systems, and data and analytics software.

FS KKR Capital

Source: Chalirmpoj Pimpisarn / iStock via Getty Images

This well-known name on Wall Street offers a solid entry point at current levels and pays a massive 14.18% dividend. FS KKR Capital Corp. (NASDAQ: FSK) is a business development company specializing in investments in debt securities. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments.

The company also seeks to invest in

  • First-lien senior secured loans,
  • Second-lien secured loans,
  • Subordinated loans or mezzanine loans.
  • In connection with the debt investments, the firm also receives equity interests such as warrants or options as additional consideration.
  • It also seeks to purchase minority interests in common or preferred equity in our target companies, either in conjunction with one of the debt investments or through a co-investment with a financial sponsor.

Additionally, the fund may invest in corporate bonds and similar debt securities. The fund does not seek to invest in start-ups, turnaround situations, or companies with speculative business plans. It aims to invest in small and middle-market companies in the United States. The fund seeks to invest in firms with annual revenue between $10 million to $2.5 billion. It aims to exit from securities by selling them in a privately negotiated over-the-counter market.

The company posted stellar results for the most recent quarter and announced a continuation of a vast stock buyback.

AGNC Investment

Source: Bet_Noire / Getty Images

This stock is down 33% from 52-week highs and could go lower. AGNC Investment Corp. (NASDAQ: AGNC) operates as a real estate investment trust (REIT) in the United States.

The company invests in residential mortgage pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by the United States government-sponsored enterprise or by the United States government agency.

AGNC funds its investments primarily through collateralized borrowings structured as repurchase agreements.  

While posting better results for the quarter than expected, Wall Street shrugged and didn’t aggressively buy shares. Tangible per-share book value has fallen sharply in recent months. Short sellers continue to lean on the company, and almost 6% of the float is sold short. With a stunning distribution of 17.26%, should real estate continue to decline as interest rates spiral higher, it’s possible the huge payout could get cut some.

Sponsored: Tips for Investing

A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.