Investing

6 Favorite Ultra-High-Yield Dividend Stocks to Buy in June

Lee Jackson

Published: June 9, 2024 8:15 am

24/7 Insights

• Ultra-high-yield dividend stocks help provide passive income.
• The stock market is overbought and companies paying dividends make sense now.
• Access 2 legendary, high-yield dividend stocks Wall Street loves.

Investors love dividend stocks, especially the ultra-yield variety because they offer a significant income stream and massive 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.

Let’s delve deeper into the concept of total return. Imagine you invest in a stock at $20 that offers a 3% dividend. If the stock price escalates to $22 within a year, your total return is 13%. This is calculated by adding the 10% increase in stock price to the 3% dividend. Grasping this calculation can be a game-changer, leading to more informed investment decisions and potentially higher profits.

We screened our 24/7 Wall St. ultra-high-yield dividend stock universe looking for companies that can deliver significant passive income dividend streams while also offering solid upside potential. Six companies look like they can offer investors a very solid entry point now, and all are rated Buy at top Wall Street firms. 

Why are we covering this?

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Despite the rise in interest rates over the last two years, we still see persistent “sticky” inflation on many everyday items we all have to purchase. Those looking to enhance their earnings with passive income can benefit from stocks that pay ultra-yield dividends.

Alliance Resource Partners

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This company is a leader in the thermal coal business, offers solid diversity, and a massive 12.16% yield. Alliance Resource Partners L.P. (NASDAQ: ARLP) is a diversified natural resource company that 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 & Gas Royalties
• 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, and
• West Virginia.

In addition, it leases land and operates a coal loading terminal on the Ohio River at Mt. Vernon, Indiana, buys and resells coal, and 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.

Further, the company offers  various mining technology products and services, including:

• Data networks
• Communication and tracking systems
• Mining proximity detection systems
• Industrial collision avoidance systems
• Data and analytics software

Annaly Capital Management

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This mortgage REIT has been around for years and is a top-income idea paying a huge 12.89% dividend. Annaly Capital Management Inc. (NYSE: NLY) is a diversified capital manager in mortgage finance and corporate middle-market lending.

The company invests in:

• Agency mortgage-backed securities
• Mortgage servicing rights
• Agency commercial mortgage-backed securities
• Non-agency residential mortgage assets
• Residential mortgage loans
• Credit risk transfer securities
• Corporate debts and other commercial real estate investments

Arbor Realty Trust

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This company trades at a ridiculous 8.1 times estimated 2024 earnings and pays a massive 12.47% dividend. Arbor Realty Trust (NYSE: ABR) invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States.

The company operates in two segments:

• Structured Business 
• Agency Business

Arbor Realty Trust primarily invests in:

• Bridge and mezzanine loans, including junior participating interests in first mortgages
• Preferred and direct equity and real estate-related joint ventures
• Real estate-related notes
• Various mortgage-related securities

The company offers:

• Bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property
• Financing by making preferred equity investments in entities that directly or indirectly own real property
• Mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction
• Junior participation financing in the form of a junior participating interest in the senior debt
• Financing products to borrowers seeking conventional, workforce, and affordable single-family housing

Further, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs.

FS KKR

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This is a well-known name on Wall Street, offers a solid entry point at current levels, and pays a staggering 14.43 dividend. FS KKR Capital Corp. (NASDAQ: FSK) is a business development company (BDC) 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 
• Mezzanine loans

The firm also receives equity interests in connection with debt investments, such as warrants or options for 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.

The fund may invest in corporate bonds and similar debt securities opportunistically.

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.

FS KKR 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.

Horizon Technology Finance

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Paying a stout 11.37% dividend, this stock has tremendous upside potential. Horizon Technology Finance Corp. (NASDAQ: HRZN) is a business development company specializing in lending and investing in development-stage investments.

It focuses on making secured debt and venture lending investments to venture capital-backed companies in these industries.

• Technology
• Life science
• Healthcare information and services
• Cleantech
• Sustainability 

Horizon is a leading venture lending platform that offers structured debt products to life science and technology companies. Its experienced investment and operations team has provided debt capital to some of the most exciting companies for decades.

The members of the Horizon team have, collectively, originated and invested more than $5 billion in venture loans to thousands of companies. Since 2004, Horizon has directly originated and invested more than $3 billion in venture loans to more than 315 growing companies.

See which six safe blue chip dividend stocks yield more than Treasury bonds.

Trinity Capital

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Based in Phoenix, this business development company pays a massive 13.69% dividend. Trinity Capital Inc. (NASDAQ: TRIN) is a venture capital firm specializing in venture debt to growth-stage companies looking for loans and equipment financing.

The company is an internally managed business development company and leading provider of diversified financial solutions to growth-stage companies with institutional equity investors.

Trinity Capital’s investment objective is to generate current income and, to a lesser extent, capital appreciation through investments, including term loans, equipment financings, and equity-related investments.

The firm believes it is one of only a select group of specialty lenders with a depth of knowledge, experience, and track record in lending to growth-stage companies.

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