24/7 Wall St. Insights
- Interest rates have plunged, and dividend stocks got hit during the sell-off.
- The futures market has priced in a 100% chance of a September rate cut.
- Grab this free report today: Access 2 legendary, high-yield dividend stocks Wall Street loves.
Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contributed 68%. Therefore, sustainable dividend income and capital appreciation potential are essential for total return expectations.
A study from the Hartford Funds, in collaboration with Ned Davis Research, found that dividend stocks delivered an annualized return of 9.18% over the past half-century (1973-2023). Over the same timeline, this was more than double the annualized return for non-payers (3.95%).
The recent global market sell-off punched the long-running Magnificent 7-led rally in the face in a big way. It should be noted that the S&P 500 has rallied a stunning 40% since the 2022 lows. While the buy-the-dip crowd is likely licking their proverbial chops to snap up some of the top tech stocks, growth and income investors may be doing the same, as some of the best high-yield companies got caught in the tsunami of selling.
We screened our 24/7 Wall St. high-yield dividend stock database, looking for top companies that got caught up in the recent selling, and found four that investors should start nibbling at now. The selling may not be over, so buying partial positions now may make sense. Dividend investors should also get this free report today.
Ares Capital
This high-yielding business development company (BDC) pays a massive 9.70% dividend. Ares Capital Corp. (NASDAQ: ARCC) specializes in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle-market companies.
It also makes growth capital and general refinancing. It prefers to invest in companies engaged in basic and growth manufacturing, business services, consumer products, health care products and services, and information technology service sectors.
The fund will also consider investments in industries such as:
- Restaurants
- Retail
- Oil and gas
- Technology
The fund typically invests between $20 million and $200 million and a maximum of $400 million in companies with an EBITDA between $10 million and $250 million. It makes debt investments between $10 million and $100 million
The fund 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
The fund also selectively considers third-party-led senior and subordinated debt financings and opportunistically finds the purchase of stressed and discounted debt positions.
Blackstone Mortgage Trust
Run by one of the biggest asset managers in the world and still paying a hefty 10.94% dividend after being recently cut by 24%, this stock is a steal at current levels. Blackstone Mortgage Trust Inc. (NYSE: BXMT) is a real estate finance company that originates senior loans collateralized by commercial properties in North America, Europe, and Australia.
The company originates and acquires senior floating-rate mortgage loans secured by a first-priority mortgage on commercial real estate assets. For federal income tax purposes, it operates as a real estate investment trust.
When the company reported earnings recently, it announced its Board of Directors authorized a share repurchase program for up to $150.0 million of the Company’s class A common stock. In addition, the CEO, Katie Keenan, noted, ” With strong liquidity, accelerating repayments, and an emerging investment pipeline, Blackstone Mortgage Trust is well positioned to deploy capital accretive in this environment and continue its forward trajectory through the cycle.”
British American Tobacco
This European giant continues to print money, has a vast product line, and pays a massive 9.11% 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 these brands:
- 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
USA Compression Partners
While perhaps less known than their energy master limited partnership peers, this top company pays shareholders a hefty 9.96% dividend. USA Compression Partners L.P. (NYSE: USAC) provides natural gas compression services.
The company offers compression services to:
- Oil companies and independent producers
- Processors
- Gatherers
- Transporters of natural gas and crude oil, as well as operating stations
USA Compression Partners primarily provides natural gas compression services to infrastructure applications, including centralized natural gas gathering systems, processing facilities, and gas lift applications for crude oil wells.
Near a 15% Dividend, This Ultra-High-Yield Giant Is on Sale
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