Investors love dividend stocks, especially the ultra-high-yield variety because they offer a significant income stream and have 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. At 24/7 Wall St., we consistently emphasize the potential of total return to our readers. It is one of the most effective ways to enhance the prospects of overall investing success. Once again, total return is the collective increase in a stock’s value plus dividends.
Why do we cover ultra-high-yield stocks?
While not suited for everybody, those trying to build strong passive income streams can do exceptionally well with some of these top companies in their portfolios. Paired with more conservative blue-chip dividend giants, investors can use a barbell approach to create significant passive income streams. We found four rated Buy on Wall Street companies, and all can be bought and held for decades of dependable income.
British American Tobacco
This British multinational company manufactures and sells cigarettes and other tobacco and nicotine products.
European giant British American Tobacco PLC (NYSE: BTI) is a consumer-centric, multi-category consumer goods company that pays shareholders a hefty 7.90% dividend.
The company provides tobacco and nicotine products. Its segments include:
- United States
- Asia Pacific
- Middle East
- Africa
- The Americas
- Europe
The company’s product categories include:
- Vapor
- Tobacco Heating Products (THPs)
- Modern Oral, Traditional Oral, and Combustible cigarettes
Vapor products are handheld, battery-powered devices that heat a liquid (called an e-liquid) to produce an inhalable aerosol known as vapor. THPs are a new category of tobacco product designed to heat rather than burn tobacco.
Modern Oral products are smoke-free oral nicotine products called nicotine pouches, designed for use in the mouth. Traditional oral products include snus and snuff.
British American Tobacco brands include:
- Vuse
- glo
- Velo
- Grizzly
- Dunhill
- Kent
- Lucky Strike
- Pall Mall
- Rothmans
- Newport
- Natural American Spirit
- Camel
- Vogue
- Viceroy
- Kool
- Peter Stuyvesant
- Craven A
- State Express 555
- Shuang Xi
Barclays has a price target of $40, which is equal to £32.50.
Starwood Property Trust
Starwood Capital is an established global investor with international investments that encompass more than 30 countries.
This high-yielding company, run by real estate legend Barry Sternlicht, offers big-time total return potential and a 10% dividend. Starwood Property Trust Inc. (NYSE: STWD) operates as a real estate investment trust (REIT) in the United States, Europe, and Australia.
It operates through four segments:
- Commercial and Residential Lending
- Infrastructure Lending
- Property
- Investing and Servicing segments
The Commercial and Residential Lending segment:
- Originates, acquires, finances, and manages commercial first mortgages
- Non-agency residential mortgages
- Subordinated mortgages
- Mezzanine loans
- Preferred Equity
- Commercial mortgage-backed securities (CMBS)
- Residential mortgage-backed securities
The Infrastructure lending segment originates, acquires, finances, and manages infrastructure debt investments.
The Property segment primarily develops and manages equity interests in stabilized commercial real estate properties, such as multifamily properties and commercial properties subject to net leases, that are held for investment.
The Investing and Servicing segment:
- Manages and works out problem assets
- Acquires and contains unrated, investment grade, and non-investment grade rated CMBS comprising subordinated interests of securitization and re-securitization transactions
- Originates conduit loans to sell these loans into securitization transactions and acquire commercial real estate assets, including properties from CMBS trusts
Keefe Bruyette & Woods has a Buy rating with a $22 target price.
TXO Partners
TXO Partners acquires, develops, optimizes, and exploits conventional oil, natural gas, and natural gas liquid reserves.
With a massive 12.11% dividend and trading at a very solid entry point, this company is a bargain at current levels. TXO Partners L.P. (NYSE: TXO) is a master limited partnership focused on the acquisition, development, optimization, and exploitation of conventional oil, natural gas, and natural gas liquid (NGL) reserves in North America.
The company’s acreage positions are concentrated in the Permian Basin of West Texas and New Mexico and the San Juan Basin of New Mexico and Colorado. Its assets comprise approximately 845,820 gross (371,796 net) leasehold and mineral acres located primarily in the Permian and San Juan Basin.
TXO Partners’ assets include a 50% interest in Cross Timbers Energy (Cross Timbers). As an operator, it designs and manages the development, completion, or workover for all the wells it operates and supervises daily operation and maintenance activities
It markets the majority of the natural gas, NGL, crude oil, and condensate production from the properties on which it operates. It also markets products produced by third-party working interest owners.
Stifel has a Buy rating with a $26 target.
USA Compression Partners
USA Compression Partners provides natural gas compression services under term customer contracts.
While perhaps less known than their peers, this top company pays shareholders a hefty 8.02% 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.
Raymond James has an Outperform rating to go with a $30 target price.
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