4 Stocks Yielding Up to 12% That Income Investors Can Own Today
Not every high-yield payout is a trap waiting to spring, but separating the covered ones from the stretched ones takes more than glancing at a yield number. These four income picks span BDCs and midstream, and the details behind each…
Three of these four income names pay more than 9% on today’s prices, and all four pay distributions fully covered by current earnings or cash flow. This list is built on that covered payout. Business development companies (BDCs) lend to private companies at floating rates and have to pass most of that income on to shareholders. The group’s midstream partnership collects fee-based cash flows from natural gas pipelines and processing plants. Among the three lenders, base payouts range from about 9.6% to 12.4%, and the lowest yielder, Hercules Capital (NYSE:HTGC), posted 125% coverage of its base cash distribution last quarter. Each section below covers yield, coverage, balance sheet strength, and dividend record, so you can judge how secure each payout is before you count on it.
Ares Capital: A 10.3% Yield From the Largest Diversified Lender in the Group
Ares Capital (NASDAQ:ARCC | ARCC Price Prediction) pays $0.48 per quarter, or $1.92 annualized. At a share price of $18.64, the forward yield is approximately 10.3%, placing it in ultra-high-yield territory.
Dividend safety. Q2 core earnings were 47 cents per share, the same as the prior quarter. Management said, “Over the last 12 months, core earnings have exceeded our regular dividend,” and the company added 15 cents per share of net realized gains on top of that. ARCC also holds an estimated $988 million, or $1.38 per share, of taxable income spillover that it can still distribute. That covers a large portion of the $1.92 annualized dividend. Net debt-to-equity was 1.12 times, inside the company’s 0.9 to 1.25 times target range, and available liquidity was about $6 billion. On track record, ARCC has paid $0.48 per share in each of the latest 15 quarters.
Bull case. ARCC spreads its risk across 619 portfolio companies, and no single investment is more than 1.3% of the portfolio. Non-accruals at cost were 2.4%, below the company’s approximate 3% historical average since the global financial crisis. The stock trades at a price-to-book ratio of 0.99, meaning buyers pay approximately book value for a 10% income stream. The CEO summed up the plan: “Taken together, these factors support our outlook for relative stability in earnings and our decision to maintain a stable quarterly dividend.”
Risk. Last quarter’s $0.47 core EPS came in a penny below the $0.48 dividend. If deal activity stays slow, ARCC will rely more on its spillover buffer, and NAV per share has already slid to $19.35 from $19.94 at the end of last year.
Blue Owl Capital: A 12.4% Yield That Already Absorbed Its Reset
Blue Owl Capital (NYSE: OBDC) pays a base dividend of $0.31 per quarter, or $1.24 annualized. At $10.01, that is a forward base yield of about 12.4%, the highest in this group. Blue Owl also pays occasional supplemental dividends, most recently $0.02.
Dividend safety. The board cut the base dividend to $0.31 from $0.37 to match lower earnings power as interest rates fell. Income investors already took that hit, and the new payout is below earnings. Adjusted NII was $0.34 per share in Q2, beating the $0.3208 estimate and covering the base dividend about 1.10x. Leverage fell to 1.11x, a two-year low. Looking back, the regular payout was $0.31 through 2021 and rose to $0.37 in 2024, so today’s base matches a level the company has held before.
Bull case. Shares trade at a price-to-book ratio of 0.77 against a NAV of $14.26 per share. Management is buying back stock at that discount under a $300 million authorization, with approximately $35 million repurchased in each of the first two quarters. The CEO pointed to a “9.6% annualized return on adjusted NII and healthy dividend coverage.” A payout already reset to match earnings carries less cut risk than one extended to its limit.
Risk. Non-accruals rose to 2.8% at cost from 2.0%. If credit keeps weakening, NII coverage will shrink, and the supplemental payouts will likely stop first.
Hercules Capital: A Venture Lender Covering Its Base Dividend at 125%
Hercules pays $0.47 per quarter, made up of a $0.40 base and a $0.07 supplemental. At $1.88 annualized and a price of $16.59, the yield is about 11.3%. Even the base dividend alone is still about 9.6%.
Dividend safety. Q2 NII of $92.9 million covered the base distribution at 125%. In management’s words: “We continue to comfortably cover our base dividend with 125% coverage for Q2.” The loan book is 86.8% first-lien senior secured, and NAV per share rose to $12.15, up 2.1% from the prior quarter. Hercules also added long-term funding by issuing $325 million of 6.300% unsecured notes due July 2031. The payout has been $0.47 for seven straight quarters, after $0.48 throughout 2024.
Bull case. Hercules is growing quickly. Total investment income rose 22.4% YoY to $149.1 million, and first-half originations hit a record $2.74 billion, up 35.6% YoY. Its GAAP effective yield rose to 13.4% from 12.8%, and with 97.8% floating-rate loans, it earns more on a growing loan book. The trailing P/E of 8x is low given that growth rate.
Risk. Investors pay up for that quality. The stock trades at about 1.37x NAV, so any credit losses among its venture-backed borrowers could hit the share price harder than losses would at the discounted BDCs.
MPLX: Ultra-High Yield Plus 12.5% Annual Payout Growth
MPLX (NYSE:MPLX) pays $1.0765 per unit quarterly, or $4.306 annualized. At $57.56, it yields about 7.5%. That falls short of the 9% line in the headline. Units have gained 25.42% over the past year, which pushed the yield down. MPLX still counts as ultra-high-yield, and it makes this list because its payout is the fastest-growing and best covered of the four.
Dividend safety. Q2 distributable cash flow was $1.45 billion, which covers the current distribution about 1.33x. Leverage is 3.7x, below the company’s 4.0x target. The distribution has increased each year in recent history, from $0.775 to $0.85, then $0.9565, then $1.0765.
Bull case. Management has committed to 12.5% annual distribution growth through 2027, which means the yield on cost keeps increasing even if the unit price stays flat. MPLX raised 2026 growth capex to $2.9 billion, with more than 90% going to Permian and Marcellus gas and NGL infrastructure targeting mid-teens returns. Operated gathering volumes rose 15% YoY, and about $1.0 billion remains under the unit buyback authorization.
Risk. MPLX is a partnership that issues investors a K-1 tax form instead of a 1099, making tax filing more complex and potentially a poor fit for some retirement accounts.
Four Covered Payouts, Four Ways to Get Paid
Ares Capital is the diversified core, and its spillover buffer covers a large portion of a full year of dividends. Blue Owl has the highest yield and has already reset its payout to a level covered by earnings. Hercules matches 125% base coverage with record loan originations. MPLX yields less than the others but adds a distribution that management has committed to grow 12.5% a year through 2027, along with the best cash flow coverage in the group.
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Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad, diverse career, including a stint as creative services director at an NBC affiliate in Austin, Texas, gives him unique insight into the financial industry.
Lee Jackson's journey in the financial industry spans more than 30 years, including nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career spanned pivotal sell-side Wall Street events, from the dot-com rise and bubble to the Long-Term Capital Management debacle, 9/11, and the Great Recession of 2008. This reflects his resilience and adaptability amid market volatility.
Lee Jackson’s practical financial industry experience, gained through a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing across various platforms. This unique combination allows him to shed light on the intricacies of Wall Street in a way only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.
Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.
