I'm Seeking High-Yield Investments -- Can You Recommend Durable Stocks or ETFs That Yield 8% or More?

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a day ago

Ares Capital is an outstanding business development company with an ultra-high dividend yield.
The JPMorgan Equity Premium Income ETF boosts its income by writing call options on the S&P 500.
The Alerian MLP ETF owns high-yield master limited partnership (MLP) stocks.
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Go big or go home: That's a common mentality in business and sports. It's also a mindset shared by some income investors.
A recent Reddit user asked about durable stocks or exchange-traded funds (ETFs) that offer dividend yields of 8% or more. That's a lofty threshold that eliminates many great dividend stocks and funds from contention. However, I can think of three ideas that income investors wanting ultra-high yields might consider.
Looking for high yield 8%+byu/PomegranatePlus6526 individends
Ares Capital (NASDAQ: ARCC) pays an exceptionally juicy forward dividend yield of 8.59%. What's more, the company has either maintained or grown its dividend for 63 consecutive quarters (nearly 16 years).
How can Ares Capital pay such great dividends? First, it's a business development company (BDC). BDCs are required to return at least 90% of profits to shareholders as dividends to be exempt from federal income taxes.
Second, Ares Capital is a truly extraordinary BDC. The company ranks as the largest publicly traded BDC. It has delivered the highest regular dividend growth of any externally managed BDC with a market cap of over $800 million that's traded publicly for the last 10 years.
Ares Capital has generated the highest net asset value per share growth among this group. And it's provided the highest stock-based total returns among its peers, too.
Middle-market businesses with annual revenue of between $10 million and $1 billion have been increasingly turning to BDCs for raising capital in recent years. This trend seems likely to continue. I think Ares Capital will be one of the biggest beneficiaries as the private capital market grows.
If you want turbocharged income, the JPMorgan Equity Premium Income ETF (NYSEMKT: JEPI) could be right up your alley. This ETF pays a mouthwatering 30-day SEC yield of 11.38%. The SEC yield, by the way, is the net investment income earned over a 30-day period on an annualized basis.
As you can guess from its name, this ETF is managed by JPMorgan Chase. The fund invests in stocks based on fundamental research. It boosts income by writing out-of-the-money call options on the S&P 500 (SNPINDEX: ^GSPC).
The JPMorgan Equity Premium Income ETF currently owns 126 stocks. Its holdings include top-tier names such as Visa, Mastercard, Meta Platforms, Microsoft, and Amazon.
This ETF has only been available since May 2020, so some investors might be skeptical about its durability. However, its portfolio managers have between 10 and 38 years in the financial services industry. Morningstar awarded the fund four out of five stars. I think the JPMorgan Equity Premium Income ETF could be a great pick for income investors.
The Alerian MLP ETF (NYSEMKT: AMLP) is another good pick for investors seeking high income. This ETF's yield of 8.03% barely tops 8%, but it still clears the bar right now. Over the last 12 months, the fund's yield was 7.94%.
This ETF is managed by SS&C ALPS Advisors, an investment company that focuses on income and alternative growth strategies. The Alerian MLP ETF attempts to track the Alerian MLP Infrastructure Index, which invests in energy infrastructure master limited partnerships (MLPs).
The fund currently owns positions in 13 stocks. Its top holdings include MPLX LP, Energy Transfer LP, Enterprise Products Partners, Western Midstream Partners LP, and Sunoco LP. These five stocks together make up nearly 60% of the ETF's total portfolio.
One downside with this ETF is its relatively high annual expense ratio of 0.85%. However, a positive with investing in the Alerian MLP ETF versus directly buying the MLP stocks it owns is that you can avoid the tax hassles associated with investing in MLPs.
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JPMorgan Chase is an advertising partner of Motley Fool Money. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Keith Speights has positions in Amazon, Ares Capital, Energy Transfer, Enterprise Products Partners, Mastercard, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Amazon, JPMorgan Chase, Mastercard, Meta Platforms, Microsoft, and Visa. The Motley Fool recommends Enterprise Products Partners and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
I'm Seeking High-Yield Investments -- Can You Recommend Durable Stocks or ETFs That Yield 8% or More? was originally published by The Motley Fool