4 Safe-Money Stocks Yielding 10% That Savvy Boomer Investors Are Quietly Buying
Four stocks quietly paying over 10% sound too good to be true, but the real question is which ones actually earn their payouts and which are one bad quarter away from a cut.
Retirees seeking double-digit income usually have to choose between a high yield and a dividend they can trust. The four ultra-high-yield names below close some of that gap. Core earnings, long distribution records, or both back their payouts. Even the group’s lowest yielder pays about 10.22% on its latest quarterly payout at today’s price. The list runs from the strongest dividend coverage to the weakest, so you see how safe each payout is before you see the yield.
Hercules Capital: An 11% Yield With Coverage to Spare
Hercules Capital (NYSE:HTGC) lends to venture-backed technology and life sciences companies. It pays $0.47 per quarter, split into a $0.40 base and a $0.07 supplemental. At $16.42, that works out to a yield of about 11.45%.
Hercules has the best coverage in this group. Net investment income covered the base distribution by 125% last quarter and 120% the quarter before. Second-quarter EPS of $0.50 exceeded the full payout, including supplemental. The portfolio is 97.8% floating rate and 86.8% first-lien senior secured, so Hercules gets paid first if a borrower runs into trouble.
Net asset value per share rose to $12.15. Hercules also locked in longer-term funding by issuing $325 million of 6.300% notes due July 2031. The regular distribution has been $0.47 at every ex-dividend date since early 2025.
For income investors, growth is the draw. First-half originations hit a record $2.74 billion (+35.6% year over year), and management expects its core yield to stay between 12.0% and 12.5% through year-end. The stock trades at a trailing price-to-earnings (P/E) of about 8.
The concern is credit drift. The weighted average credit grade fell to 2.17 from 2.11, and non-accruals ticked up. If losses keep building, the variable supplemental is the first payout piece that could shrink.
Ares Capital: 68 Straight Quarters of Stable or Rising Payouts
Ares Capital (NASDAQ:ARCC | ARCC Price Prediction) is a business development company that lends to middle-market firms. It pays $0.48 per quarter, for a yield of about 10.28% at $18.68.
Coverage is tight but well protected. Core EPS was $0.47 in each of the last two quarters, just short of the payout. Behind that sits roughly $988 million, or $1.38 per share, of spillover income that can be paid out later. Over the past 12 months, core earnings exceeded the regular dividend, and $0.15 per share of net realized profits added further support. Leverage is 1.12x net of cash, inside the company’s target range of 0.9x to 1.25x, and liquidity is about $6 billion. Ares has paid stable or rising regular dividends for 68 consecutive quarters. CEO Kort Schnabel said on the second-quarter call, “We continue to believe ARCC’s current regular dividend appropriately reflects our long-run underlying earnings power.”
The portfolio is spread across 619 companies, and no single investment is more than 1.3% of the total. The stock trades at a price-to-book ratio of 0.99 and a forward P/E of about 10, so buyers are paying roughly book value for a lender that, according to management, has grown net asset value (NAV) per share by more than 30% since inception.
The concern is credit. Non-accruals rose to 2.4% at cost from 1.8% at the end of last year, and $183 million of net unrealized losses cut GAAP EPS to $0.24. Management notes that non-accruals are still below the company’s historical average of about 3%.
Hess Midstream: A Payout Raised Every Quarter Since 2017
The latest Hess Midstream (NYSE:HESM) quarterly distribution was $0.7888. That payout has risen in every quarter from 2017 through the most recent one, up from $0.2703 at the start of that run. The partnership earns fees on pipelines and processing plants and generated trailing EBITDA of $1.2255 billion. It trades at an EV/EBITDA multiple of 6.96.
Trailing distributions of $3.087 are higher than GAAP EPS of $2.90. That is common for asset-heavy midstream partnerships, where large depreciation charges make GAAP earnings look smaller than the cash the business brings in. The bigger change came in October. Chevron (NYSE:CVX) agreed to a restructuring in which Hess Midstream buys Chevron’s DJ Basin gathering and storage assets, Chevron returns its stake in Hess Midstream, and in exchange receives lower Bakken tariffs starting in 2027.
In return, the deal extends its contracts well into the next decade (per the deal terms). The payout will keep rising through year-end and then hold flat through 2027. The units fell 21.16% over the past month on the news.
The bull case is that fewer units outstanding make a frozen payout cheaper to fund in total. Longer contracts make the cash flow more predictable, and the company is set to become independent with a fully elected board by 2028 (per the restructuring announcement). At $30.88, the yield is about 10.22%.
The concern is that the adjustment lowers the company’s 2027 earnings outlook. That puts the distribution growth story on hold until the new contracts prove what they can earn.
Starwood Property Trust: A 15% Yield Held at $0.48 Since 2014
Starwood Property Trust (NYSE:STWD), a commercial mortgage real estate investment trust (REIT), has paid $0.48 every quarter from 2014 through the latest declaration. At a price of $12.52, the yield is about 15.34%, the highest of the four.
Coverage is the weak spot. Distributable earnings were $0.40 per share last quarter and $0.39 the quarter before, and GAAP EPS was just $0.01. The balance sheet gives management time to fix that. $2.1 billion of corporate debt deals drove the weighted average maturity out to 3.7 years, and total assets reached a record $31.8 billion.
The bull case is a deep discount. The stock trades at 0.837 times book value of $17.54 and is down 23.84% this year. Starwood deployed $6.7 billion through July, generating double-digit returns on equity. It also plans to resolve about $900 million of underperforming assets by year-end, freeing up capital to lend again. CEO Barry Sternlicht has pointed to improving real estate fundamentals.
The concern is that the dividend depends on those workouts. Until distributable earnings reach the payout, keep an eye on the third-quarter earnings report for progress on the problem loans.
Double-Digit Yields, Different Levels of Safety
All four pay more than 10% at current prices, but safety varies widely across the group. Hercules and Ares back their payouts with earnings coverage, spillover income, and diversified loan books. Hess Midstream brings a long record of increases that is now heading into a planned freeze. Starwood offers the biggest check and the deepest discount to book, and it needs its loan workouts to succeed to keep that dividend covered. Double-digit yields always come with a shortlist of things that could go wrong, and we outlined the seven warning signs that a big payout is about to be cut in a free report here.
Contact [email protected] for any questions or corrections.
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.
