Investing

7 ‘Strong Buy’ Ultra Dividend Leaders To Grab Before It’s Too Late

Lee Jackson

Published: January 17, 2024 9:39 am

Investors love dividend stocks because they provide dependable income and 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 actual investment or portfolio return consists of dividend income and stock appreciation.

Wall Street tends to follow the crowd on almost everything, as those in the investment business want to know others and share portfolios and ideas. One thing that has proven true over many years is that some top companies don’t get the love they deserve due to a lack of analyst coverage and other reasons.

We screened our 24/7 Wall St. dividend stock database for stocks that pay fat and dependable dividends; they look like good investment ideas but need to be noticed by the analysts and portfolio managers who run the show. We found seven companies that are all but seemingly ignored by most of Wall Street but have Buy ratings.

Ares Capital

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This company is a high-yielding Business Development Company (BDC) paying a massive 9.41% dividend. Ares Capital Corporation (NASDAQ: ARCC) specializes in:

• Acquisition
• Recapitalization,
• Mezzanine debt
• Restructurings
• Rescue financing
• Leveraged buyout transactions of middle-market companies

It also makes growth capital and general refinancing. It prefers to invest in companies engaged in primary and growth manufacturing, business services, consumer products, health care products and services, and information technology service sectors.

The fund will also consider investments in

• 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 the Chicago office, and the Western region from the Los Angeles office.

Ares Capital 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

British American Tobacco

Source: Getty Images/Justin Sullivan

This European giant continues to print money and pays a hefty 9.30% dividend. British American Tobacco plc (NYSE: BTI) offers:

• Vapor
• Tobacco heating
• Modern oral nicotine products
• Combustible cigarettes
• Traditional oral products, such as snus and moist snuff

The company offers its products under:

• Vuse,
• Glo
• Velo
• Grizzly
• Kodiak
• Dunhill
• Kent
• Lucky Strike
• Pall Mall
• Rothmans
• Camel
• Natural American Spirit
• Newport
• Vogue
• Viceroy
• Kool
• Peter Stuyvesant
• Craven A
• State Express 555
• Shuang Xi brands

Medifast

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This company offers fast weight loss products and a huge 10.79% dividend. Medifast, Inc. (NYSE: MED) manufactures and distributes weight loss, weight management, healthy living products, and other consumable health and nutritional products in the United States and the Asia-Pacific.

The company offers these under OPTAVIA, Optimal Health by Take Shape for Life, and Flavors of Home brands.

• Bars
• Bites,
• Pretzels,
• Puffs,
• Cereal crunch,
• Drinks,
• Hearty choices,
• Oatmeal,
• Pancakes,
• Pudding,
• Soft serves
• Shakes
• Smoothies
• Soft bakes,
• Soups

It markets its products through point-of-sale transactions over e-commerce platforms.

MPLX

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This company is one of the top holdings in the Alerian MLP energy exchange-traded fund, paying shareholders a strong 9.10% dividend. MPLX LP. (NYSE: MPLX) is primarily engaged in transporting crude oil and refined products and terminating in the US Midwest and Gulf Coast regions and natural gas gathering and processing in the northeast. Independent US refiner Marathon Petroleum Corp (NYSE: MPC) formed MPLX.

The company’s assets include:

• Network of crude oil and refined product pipelines
• Inland marine business
• Light-product terminals
• Storage caverns
• Refinery tanks
• Docks,
• Loading racks and associated piping
• Crude and light-product marine terminals

MPLX also owns crude oil and natural gas gathering systems, pipelines, and natural gas and NGL processing and fractionation facilities in key U.S. supply basins.

Nu Skin Enterprises

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Skin products for women rarely go out of style, and this company pays a massive 8.61% dividend. Nu Skin Enterprises, Inc. (NYSE: NUS) develops and distributes beauty and wellness products worldwide.

It offers skincare devices, cosmetics, and other personal care products, including ageLOC LumiSpa and ageLOC LumiSpa iO, ageLOC Body Spa, and nutraceuticals skin care products.

The company also provides wellness products like:

• ageLOC Meta,
• LifePak nutritional supplements,
• ageLOC TR90 weight management system
• Beauty Focus Collagen+

In addition, it is involved in the research and product development of skin care products and nutritional supplements.

The company sells its products under the Nu Skin, Pharmanex, and ageLOC brands through retail stores, websites, digital platforms, independent direct sellers and marketers, and a service center.

OneMain Holdings

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This off-the-radar company has been around for over 100 years and pays a rich 8.30% dividend. OneMain Holdings, Inc. (NYSE: OMF), a financial service holding company, engages in the consumer finance and insurance businesses.

The company:

• Originates
• Underwrites
• Services personal loans secured by automobiles, other titled collateral, or unsecured.

OneMain Holdings also offers:

• Credit cards and insurance products comprising life, disability, and involuntary unemployment insurance
• Optional non-credit insurance
• Guaranteed asset protection coverage as a waiver product or insurance
• Membership plans

It operates through a network of approximately 1,400 branch offices in 44 states in the United States and through its website onemainfinancial.com.

Billionaire George Soros once had a prominent position in the company as he bought a massive 275,000 shares in the fourth quarter of 2022. We could not confirm if he still held the stock. With excellent books and risk controls that keep net charge-offs low, the company offers big-time risk rewards for investors.

PennantPark Floating Rate

Almost ignored by Wall Street, this is another business development company with a massive 10.13% dividend. PennantPark Floating Rate Capital Ltd. (NYSE: PFLT) seeks to invest through floating rate loans in private or thinly traded or small market-cap, public middle market companies.

It primarily invests in the United States and, to a limited extent, non-U.S. companies. The fund typically invests between $2 million and $20 million.

The fund also invests in

• Equity securities
• Preferred stock
• Common stock
• Warrants or options received in connection with debt investments or through direct investments

It primarily invests between $10 million and $50 million in senior secured loans and mezzanine debt. It seeks to invest in companies not rated by national rating agencies.

The fund invests 30% in non-qualifying assets like:

• Investments in public companies whose securities are not thinly traded or do not have a market capitalization of less than $250 million,
• Securities of middle-market companies located outside of the United States
• High-yield bonds
• Distressed debt
• Private Equity
• Securities of public companies that are not thinly traded
• Investment companies as defined in the 1940 Act

Under normal conditions, the fund expects at least 80 percent of its net assets plus any borrowings for investment purposes to be invested in floating-rate loans and investments with similar economic characteristics, including cash equivalents invested in money market funds. It expects to represent 65 percent of its portfolio through senior secured loans.