4 High-Yield Dividend Stocks That Actually Earn Enough to Cover Their Payouts
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A double-digit yield only helps your income if the lender behind it actually earns it. Business development companies (BDCs) lend to mid-sized private companies and pay out most of what they earn to shareholders. That makes net investment income (NII), which is what a BDC collects from its loans after expenses, the simplest test of whether a dividend is earned or funded some other way. All four senior-secured middle-market lenders below earned at least their regular payout in the third quarter, and the best of the group covered its dividend at a 115% rate. Below, each one is checked on coverage, non-accruals (loans that have stopped paying interest), book value, and the one risk worth tracking.
Kayne Anderson BDC: Widest Coverage Cushion in the Group
At a recent price of $12.96, Kayne Anderson BDC (NYSE:KBDC) pays an annualized $1.60 per share. That works out to an ultra-high yield of about 12.3%.
Dividend safety: Third-quarter adjusted NII came in at $0.46 per share against a $0.40 base dividend, and undistributed NII stood at about $0.32 per share. Co-CEO Kenneth Leonard said that “even setting aside the $1.7 million of nonrecurring income during the quarter, our net investment income comfortably exceeded the dividend.” Most of that income is cash, since PIK (interest paid in more debt instead of cash) made up only 4.9% of total interest income. Debt-to-equity was 1.17x, inside the 1.0x–1.25x target, and liquidity totaled $508.7M. Its public history is short because it went public in May 2024, but the regular $0.40 has been paid every quarter since mid-2025.
Book value: NAV per share slid to $15.71 from $16.00, and shares are priced at 0.791 times book. Management is buying shares below NAV, with $92.8M left on its repurchase plan.
Bull case: About 95.1% of the portfolio is floating rate, priced at an average of 587 bps over SOFR. Management expects SOFR to rise above 4.5%, which would add directly to income.
Risk: Non-accruals rose to 3.6% of debt at fair value from 2.7%, and to 5.4% at cost. Centerline Communications alone made up about $28 million of the $78.4 million on non-accruals.
Main Street Capital: Coverage Backed by a Record Book Value
Main Street Capital (NYSE:MAIN | MAIN Price Prediction) pays an annualized regular dividend of $3.18, a high yield of about 5.6% at a price of $57.21. Add in supplementals and the trailing 12-month payout of $4.34 raises the yield to about 7.6%.
Dividend safety: Adjusted distributable NII came in at $0.96 per share, well above the $0.795 in regular monthly dividends for the quarter. GAAP NII was $0.89. Management pays supplementals only when DNII before taxes “significantly exceeds our regular monthly dividends paid or we generate meaningful net realized gains,” and it declared its 21st consecutive quarterly supplemental. Regulatory debt-to-equity is 0.7x, below the 0.8x to 0.9x target, and cash plus available credit totals $1.6 billion. Dividend records go back to 2007, and the regular monthly payment has risen from 0.125 during 2009 and 2010 to 0.265 today.
Book value: NAV reached a record $34.22, up 4.4% from a year ago. Non-accruals are 0.9% of the portfolio at fair value and 3.5% at cost. Investors pay up for that consistency: shares trade at 1.662 times book.
Bull case: Annualized ROE of 14.7% lets Main Street pay its dividend and still grow NAV. Management expects fourth-quarter DNII before taxes of at least $0.98 per share.
Risk: DNII before taxes of $0.98 came in $0.09 per share lower than a year earlier as dividend income from lower middle market companies fell. CEO Dwayne Hyzak said, “Some companies have seen their earnings and cash flows decline.”
Fidus Investment: Zero Non-Accruals and a Fat Spillover
Fidus Investment (NASDAQ:FDUS) has an annualized forward payout of $2.16, an ultra-high yield of about 11.0% at $19.65. On the base dividend alone, the yield is about 8.8%.
Dividend safety: Adjusted NII of $0.54 per share matched the total distribution of $0.54, made up of a $0.43 base and an $0.11 supplemental. Retained income of $37.7M ($0.95/share) adds a second layer of protection. At quarter-end, Fidus had no debt investments on non-accrual, first-lien loans made up 88% of the debt book, and the weighted loan-to-value was about 41%. Net debt-to-equity was 0.9x, and the company borrows at a weighted 5.8% while its debt investments earn an effective 12.6%. The dividend history includes 65 quarterly records going back to 2011.
Book value: NAV per share fell to $19.47 from $19.55 after $10.9M of net realized losses tied to Virtex, investments that had already been written down. The stock sells for 1.009 times book.
Bull case: Adjusted NII grew 18% year over year, and CEO Edward Ross said, “We continue to amply cover our base dividend.”
Risk: The total payout moves around because the supplemental matches 100% of the surplus over the base from the prior quarter. This year’s quarterly payments have run from 0.62 to 0.5, so the only steady figure to plan around is the $0.43 base.
Barings BDC: Dollar-for-Dollar Coverage at a Discount to Book
Barings BDC (NYSE:BBDC) pays $1.04 a year, an ultra-high yield of about 11.9% at $8.77.
Dividend safety: NII of $0.26 per share exactly covered the $0.26 dividend, and management said year-to-date NII “has fully covered our dividend.” Retained income of about $0.80 per share adds a buffer, though management expects it to shrink by year-end. Non-accruals sit at 1.1% of the portfolio at fair value, or 0.7% excluding Sierra assets covered by a credit support agreement. PIK rose to 10% of revenue, and debt-to-equity rose to 1.28x from 1.23x. The dividend has held at $0.26 every quarter since late 2025, and payment records go back to 2018. CFO Elizabeth Murray spelled out where the company stands: “We will decrease the dividend if we have to. We will not eat into NAV to preserve a dividend.”
Book value: NAV was $10.92 versus $10.94 in June, and the stock changes hands at 0.791 times book.
Bull case: Its $2.5B portfolio is spread across 349 companies and is 93% floating rate. The strategy calls for selling Security Holdings, a large equity stake that produces little income, and putting that capital into income-producing loans.
Risk: Coverage has no margin as funding gets more expensive. A roughly $396.3M CLO priced at SOFR plus 1.64% will replace $350M of 3.300% notes due Nov 23, 2026.
Earned Dividends Set These Four Lenders Apart
All four lenders earned their regular dividend last quarter, which separates them from BDCs paying out of capital. Kayne Anderson has the widest coverage margin. Main Street pairs coverage with a record NAV, Fidus has zero non-accruals and a $0.95 retained, and Barings offers the largest discount to book with dollar-for-dollar coverage. In the next earnings reports, watch non-accrual trends and funding costs closely, because those two numbers will decide whether this coverage holds. (A double-digit yield that isn’t earned is the classic setup for a cut, which is why we put the seven warning signs in a free dividend trap guide.)
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
