Investors love dividend stocks, especially those with ultra-high yields, because they offer a significant income stream and have substantial 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 247 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 refers to the collective increase in a stock’s value, including dividends.
At 24/7 Wall St., we have focused on dividend stocks for over 15 years because, despite the stock market’s ups and downs, many people face the reality of needing solid passive income streams to supplement their income from employment or other sources. According to the Internal Revenue Service (IRS), passive income generally includes earnings from rental activity or any trade, business, or investment in which the individual does not materially participate. It can also include income from limited partnerships, stocks, bonds, and other similar enterprises in which the investor is not actively involved.
We screened our 24/7 Wall St. ultra-high-yield passive income stock database, looking for companies that pay supercharged dividends and have a Buy rating from Wall Street analysts. Five companies look like great ideas for investors with a higher risk tolerance, and all have Buy ratings from top Wall Street firms.
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 employ a barbell approach to generate substantial passive income streams.
Arbor Realty Trust
Arbor Realty Trust offers nationwide solutions for multifamily finance. This company trades at a ridiculous 7.6 times estimated 2026 earnings and pays a massive 12.6% 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 the 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.
JMP Securities has a Strong Buy rating with a $13.50 target.
Blue Owl Capital
This is one of the favorite picks on Wall Street, as seven of the nine analysts covering the stock have Buy ratings. Blue Owl Capital Corporation (NYSE: OBDC) is a specialty finance company focused on lending to United States middle-market companies and offers a strong 11.80% dividend.
The Company’s investment objective is to generate current income and, to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns, including:
- Senior secured
- Subordinated
- Mezzanine loans
- Equity-related instruments
Its investment strategy is intended to generate favorable returns across credit cycles with an emphasis on preserving capital. It has investments in approximately 219 portfolio companies.
The Blue Owl Capital portfolio by industry includes:
- Internet software and services
- Insurance,
- Food and beverage
- Asset-based lending and fund finance
- Healthcare providers and services
- Healthcare technology
- Buildings and real estate
- Consumer products
- Manufacturing
- Aerospace and defense
- Distribution,
- Business services
Blue Owl Credit Advisors LLC externally manages it.
JMP Securities has an Outperform rating with a $17 target price objective.
MFA Financial
This company is one of our favorites in the Mortgage REIT space. MFA Financial (NYSE: MFA) is a specialty finance company that invests in residential mortgage loans, residential mortgage-backed securities, and other real estate assets and delivers a massive 15.5% dividend.
The company’s targeted investments primarily include residential whole loans and residential mortgage securities.
Its residential whole loans include non-QM loans, business purpose loans, and legacy re-performing loans (RPL)/ non-performing loans (NPL).
The residential mortgage securities include:
- Agency mortgage-backed securities (MBS)
- Non-agency MBS, CRT securities
- Mortgage servicing rights (MSRs)-related assets, which include term notes backed directly or indirectly by MSRs
The May Financial business objective is to deliver shareholder value by generating distributable income and enhancing asset performance linked to residential mortgage credit fundamentals. The company, through its wholly owned subsidiary, Lima One Capital (Lima One), also originates and services business-purpose loans for real estate investors.
Runway Growth Finance Corp.
This business development company (BDC) pays a stunning 15.10% dividend and has a solid Wall Street following. Runway Growth Finance Corp. (NASDAQ: RWAY) is known for specializing in investments in senior secured loans to late-stage and growth companies.
It prefers to invest in companies engaged in:
- Technology
- Life sciences
- Healthcare
- Information services
- Business services
- Select consumer services and products sectors
Runway Growth Finance prefers investments in companies engaged in these business silos:
- Electronic equipment and instruments
- Systems software
- Hardware, storage, and peripherals
- Specialized consumer services
- Application software
- Healthcare technology
- Internet software and services
- Data processing and outsourced services
- Internet retail, human resources, and employment services
- Biotechnology, healthcare equipment, and education services
It invests between $10 million and $75 million in senior secured loans.
UBS has a Buy rating with a $12.50 target.
Townsquare Media
This off-the-radar stock has huge total return potential to go with its massive 13.10% dividend. Townsquare Media, Inc. (NYSE: TSQ) is a community-focused digital and broadcast media and digital marketing solutions company.
The Company’s segments include:
- Subscription Digital Marketing Solutions
- Digital Advertising
- Broadcast Advertising
The Digital Advertising segment, marketed as Townsquare Ignite, encompasses digital advertising on its programmatic advertising platform and its owned and operated digital properties.
The Subscription Digital Marketing Solutions segment includes Townsquare Interactive, its subscription digital marketing solutions business.
The Broadcast Advertising segment includes local, regional, and national advertising products and solutions delivered via terrestrial radio broadcast. Townsquare Interactive partners with small and medium-sized businesses (SMBs) to help manage their digital presence by providing a SAAS business management platform, Website design, creation, and hosting, search engine optimization, and other digital services.
Barrington Research has an Outperform rating to go with a huge $13 target price objective.
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