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Yahoo
02-05-2025
- Business
- Yahoo
3 No-Brainer Ultra-High-Yield Dividend Stocks That Are Begging to Be Bought in May
For more than 50 years, dividend stocks have been running circles around non-payers in the return column. Although risk and yield tend to correlate, proper vetting can uncover some true gems among companies with high-octane yields. A trio of deeply discounted dividend stocks -- with yields ranging from 6.4% to 12% -- has the necessary catalysts to make patient investors richer. Though there are countless strategies to grow your wealth on Wall Street, few have proved as successful over the long run as buying and holding high-quality dividend stocks. Public companies that dole out a dividend to their shareholders on a regular basis tend to be recurringly profitable, time-tested, and are often capable of providing transparent long-term growth outlooks. In other words, they're just the type of businesses we'd expect to increase in value over time -- and data backs this up. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » In The Power of Dividends: Past, Present, and Future, the analysts at Hartford Funds, in collaboration with Ned Davis Research, compared the performance of dividend stocks to non-payers over a 51-year period (1973-2024). What they found was a vast outperformance by dividend payers: 9.2% on an annualized basis vs. 4.31% for non-payers (annualized). The biggest challenge for income seekers is balancing risk and reward. Though an investor's natural instinct is to maximize yield, studies have shown that risk and yield tend to correlate. This is to say that ultra-high-yield stocks -- i.e., those with yields four or more times greater than the current yield of the S&P 500 -- can sometimes be more trouble than they're worth. The good news is that some amazing deals have emerged in the wake of Wall Street's tariff-induced sell-off. What follows are three no-brainer ultra-high-yield dividend stocks -- sporting an average yield of 8.63% -- that are begging to be bought by opportunistic investors in May. Arguably the best deal among ultra-high-yield dividend stocks in May is pharmaceutical juggernaut Pfizer (NYSE: PFE), which is generating a nearly 7.5% annual yield that appears completely sustainable. While there's been some concern about the possibility of tariffs impacting pharmaceutical margins, the prime "challenge" for Pfizer is that it's being punished for its own previous success. After its two blockbuster COVID-19 therapies, Comirnaty and Paxlovid, brought in more than $56 billion in combined sales in 2022, they delivered "just" $11 billion in cumulative revenue last year. Even though some investors might view this sales decline as a disappointment, it's important to understand how far Pfizer has come in just four years. At the end of 2020, Pfizer generated full-year sales of $41.9 billion. But in 2024, net revenue hit $63.6 billion, which represents a 52% increase. It's still generating significant revenue tied to its COVID-19 therapies, and its collective non-COVID-19 product portfolio has continued to grow. In short, Pfizer is a much stronger company, financially, than it was four years ago. There's also quite a bit of excitement surrounding its rapidly growing oncology segment. The $43 billion deal to acquire cancer-drug developer Seagen in December 2023 vastly expands Pfizer's oncology pipeline, as well as offers billions of dollars in cost synergies that should result in improved operating efficiency, beginning this year. Additionally, Pfizer has the luxury of bucking recession worries. Demand for brand-name drugs doesn't slow just because the U.S. economy (or stock market) hits a rough patch. Consistent demand for novel therapies, coupled with the strong pricing power Pfizer possesses, is an enviable combination for the company's bottom line. Pfizer's forward price-to-earnings (P/E) ratio of 7.6 represents a 27% discount to its average forward P/E over the trailing five-year period. A second sensational ultra-high-yield dividend stock that's begging to be bought in May is none other than telecom titan Verizon Communications (NYSE: VZ). Verizon's nearly 6.4% yield is 363% higher than the average yield of the S&P 500. The two headwinds that have predominantly held Verizon down are its sluggish growth rate in the wake of the artificial intelligence revolution -- i.e., investors have passed it over in favor of higher-growth tech stocks -- and the rapid increase in interest rates by the Federal Reserve from March 2022 to July 2023. Telecom companies like Verizon tend to rely on debt-financing for big projects. Higher interest rates can make these projects costlier. The silver lining for investors is that neither of these headwinds is long-term in nature or particularly worrisome. For example, even with Verizon's growth heyday a distant memory, the 5G revolution has provided a number of ways for the company to incrementally increase its organic growth rate. The expansion of its 5G wireless network, along with historically low churn rates, have led to highly predictable operating cash flow and modest sales growth. Meanwhile, Verizon saw total broadband connections expand to 12.6 million, as of the end of March 2025, which is 13.7% more than it had in the comparable period one year prior. Though broadband is no longer the growth story it was in the early 2000s, it remains a provider of consistent cash flow, as well as a facilitator of high-margin service bundling. Don't overlook Verizon's efforts to improve its balance sheet, either. It closed out 2022 with $130.6 billion in unsecured debt. In the nine subsequent quarters, Verizon's unsecured debt has shrunk by more than $13 billion to $117.3 billion. This is to say that even though interest rates have risen, Verizon's financial flexibility has improved. The icing on the cake is that Verizon stock is historically cheap. Considering the broader market entered 2025 at its third-priciest valuation in history, Verizon's forward P/E of 8.8 makes this telecom giant a screaming bargain. The third no-brainer ultra-high-yield dividend stock that's begging to be bought by opportunistic income seekers in May is under-the-radar business development company (BDC) PennantPark Floating Rate Capital (NYSE: PFLT). PennantPark pays its dividend on a monthly basis and is yielding north of 12%, as of this writing. A BDC is a type of business that invests in the equity (common and/or preferred stock) or debt of middle-market companies (i.e., generally unproven businesses). As of the end of 2024, PennantPark had approximately $1.964 billion of its $2.194 billion investment portfolio put to work in debt securities, with the remainder in various preferred and common equity positions. Being a debt-focused BDC comes with a big perk for PennantPark: an outsized yield. Since unproven companies often lack access to basic financial services, the loans PennantPark oversees typically sport above market-rate yields. As of the end of 2024, its weighted average yield on debt investments was a delectable 10.6%! More importantly, the entirety of PennantPark Floating Rate Capital's debt securities portfolio sports variable rates (if the company's name didn't already give it away). The Fed's aggressive rate-hiking cycle that began in March 2022 meaningfully increased PennantPark's weighted average yield on its debt investments. Even with the nation's central bank now in a rate-easing cycle, its slow-stepped approach to rate-cutting has given PennantPark ample opportunity to take advantage of higher lending rates. Furthermore, the company's management team has done a phenomenal job of protecting its invested principal. Inclusive of equity investments, an average investment size of $13.8 million ensures that no single wager is imperative to profitability or capable of sinking the proverbial ship. Likewise, all but $3.4 million of its roughly $1.964 billion of debt securities are first-lien secured. First-lien secured debtholders are at the front of the line for repayment in the event of a bankruptcy. The feather in PennantPark's cap is that it's currently valued at a 10% discount to its book value (as of Dec. 31, 2024). BDCs often trade in close proximity to their respective book value, which is what makes PennantPark such a deal right now. Before you buy stock in Pfizer, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Pfizer wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $610,327!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $667,581!* Now, it's worth noting Stock Advisor's total average return is 882% — a market-crushing outperformance compared to 161% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 28, 2025 Sean Williams has positions in PennantPark Floating Rate Capital and Pfizer. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy. 3 No-Brainer Ultra-High-Yield Dividend Stocks That Are Begging to Be Bought in May was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
23-04-2025
- Business
- Yahoo
S&P 500 Sell-Off: 2 Ultra-High-Yield Dividend Stocks That Make for No-Brainer Buys
Though the stock market is a bona fide wealth creator for those who exercise patience and perspective, it's not an investment vehicle that gets from Point A to B in a straight line. Over the last two months, Wall Street has bluntly reminded investors that stocks can also move down. The Dow Jones Industrial Average and S&P 500 (SNPINDEX: ^GSPC) have dipped into correction territory, while the growth-propelled Nasdaq Composite has officially fallen into a bear market. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » But what's made this move so eye-popping is the volatility over the last three weeks. We've witnessed the S&P 500's 12th biggest four-day decline in history (April 3 through April 8), as well as its fifth largest two-day drop (April 3 through April 4). While it's not uncommon for investors to be unsettled by outsized percentage moves lower in Wall Street's benchmark index, what's important is recognizing opportunity when it's staring you square in the face. Historically, the S&P 500's darkest days have offered its brightest investment opportunities. Among the many ways investors can take advantage of the S&P 500 sell-off is by purchasing dividend stocks. Even though no two dividend stocks are alike, most share a few traits. They're typically: Profitable on a recurring basis. Time-tested in the sense that they've navigated their way through one or more recessions. Capable of providing transparent long-term growth outlooks. But the best aspect of dividend stocks is their ability to outperform over long periods. In The Power of Dividends: Past, Present, and Future, the analysts at Hartford Funds, in collaboration with Ned Davis Research, compared the performance of income stocks to non-payers over a 51-year period (1973-2024). What they found was a clear outperformance by dividend stocks: 9.2% versus 4.31% for non-payers, on an annualized basis. The S&P 500 is packed with hundreds of time-tested, dividend-paying companies. But fewer than 20 of these businesses offer an ultra-high-yield (one that's four or more times greater than the yield of the S&P 500, which is currently 1.47%). Two of these ultra-high-yield stocks -- sporting an average yield of 7% -- make for no-brainer buys amid the S&P 500 sell-off. The first S&P 500 component that can be bought with confidence by long-term investors amid a historic bout of stock market volatility is domestic auto giant Ford Motor Company (NYSE: F). Based on its ongoing payout, Ford is yielding north of 6.2%. However, its trailing-12-month yield is approaching 8%, including a recent special dividend payment of $0.15 per share. There's no denying that Ford is working through some very tangible short-term headwinds. There's uncertainty about how President Donald Trump's tariff policy will affect auto industry demand and margins. Additionally, Ford has been contending with higher than anticipated warranty costs, which have dragged on its bottom line. But the silver lining is that its headwinds are primarily short-term in nature. As an example, even though Ford's warranty expenses have been a nuisance, many of these warranty issues occurred under the leadership of prior CEO Jim Hackett. Since Jim Farley took over as CEO in October 2020, there have been demonstrable improvements in the quality of the vehicles Ford is producing. J.D. Power's 2024 U.S. Initial Quality Study, published last June, ranked Ford 9th best out of 34 brands, in terms of problems per 100 vehicles. This is a good indicator that Ford's warranty-related costs are near an end. Pardon the cliché, but Ford's truck division continues to drive over its competition. The F-Series has been the best-selling truck in America for 48 straight years, and the top-selling vehicle, period, for 43 consecutive years. Trucks and SUVs often produce considerably better vehicle margins than sedans for automakers. Thus, the ongoing success of the F-Series is excellent news for Ford. Furthermore, Ford's management is closely monitoring spending. Despite initially committing to $50 billion in electric vehicle (EV) investments through 2026, the company has since pared back its spending to better align with demand and the lack of infrastructure needed to support widespread EV adoption. Having the ability to remain nimble with its capital expenditures will be a long-term positive for Ford's profitability. At roughly 7 times Wall Street's consensus earnings per share (EPS) for the company in 2026, Ford has the look of a long-term bargain. A second ultra-high-yield dividend stock that makes for a no-brainer buy amid the recent tumult in the S&P 500 is pharmaceutical titan Pfizer (NYSE: PFE). Pfizer's yield is nearing 8% and appears to be sustainable for years to come. While tariffs are a potential worry for drugmakers, Pfizer's biggest headwind has been its own recent success. The company's COVID-19 vaccine (Comirnaty) and oral therapy (Paxlovid) raked in more than $56 billion in combined sales in 2022. Last year, combined sales fell to "only" $11 billion. But perspective is important when examining the entirety of Pfizer's drug portfolio. This is a company that wasn't generating any COVID-19 therapy sales four years ago and brought in $11 billion in COVID-19-related revenue last year. Its non-COVID-19 drug sales have, collectively, been growing, too. Over the last four years, Pfizer's net sales are up 52%, which is pretty impressive for a mature pharmaceutical company. This is also a pivotal year following its December 2023 acquisition of cancer-drug developer Seagen. The $43 billion deal to buy Seagen resulted in one-time expenses that weighed down Pfizer's bottom line last year. With these costs now out of the way, investors will be able to focus on the benefits of adding Seagen's pipeline Pfizer's already impressive oncology product portfolio. Investing in defensive sectors and industries has its advantages, as well. No matter how well or poorly the U.S. economy and stock market are performing, people will still become ill and require prescription medicine. This means demand for Pfizer's high-margin novel therapies tends to be highly predictable in any economic and stock market climate. Lastly, Pfizer's valuation is compelling. A forward price-to-earnings (P/E) ratio of just over 7 is historically inexpensive for a time-tested drug developer with a diversified product portfolio. Before you buy stock in Ford Motor Company, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Ford Motor Company wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $532,771!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $593,970!* Now, it's worth noting Stock Advisor's total average return is 781% — a market-crushing outperformance compared to 149% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 21, 2025 Sean Williams has positions in Pfizer. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has a disclosure policy. S&P 500 Sell-Off: 2 Ultra-High-Yield Dividend Stocks That Make for No-Brainer Buys was originally published by The Motley Fool Sign in to access your portfolio
Globe and Mail
04-04-2025
- Business
- Globe and Mail
3 No-Brainer Ultra-High-Yield Dividend Stocks to Buy in April
Wall Street offers investors no shortage of ways to grow their wealth. With thousands of publicly traded companies and exchange-traded funds (ETFs) to choose from, pretty much everyone is assured of finding one or more securities that'll help them meet their investment goals. But among these countless avenues investors can take, few have proved more successful over long periods than buying and holding high-quality dividend stocks. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » Businesses that pay a regular dividend to their shareholders typically have a few things in common. They're often: Profitable on a recurring basis. Time-tested in the sense that they've successfully navigated one or more recessions. Capable of providing a transparent long-term growth outlook. In other words, these are companies that investors can hold stakes in without losing sleep at night. But most importantly, they're, collectively, outperformers. In The Power of Dividends: Past, Present, and Future, the researchers at Hartford Funds, in collaboration with Ned Davis Research, compared the performance of dividend stocks to non-payers over a 50-year stretch (1973-2023). What they found was income stocks more than doubled up the non-payers on an annualized return basis -- 9.17% for the dividend stocks vs. 4.27% for the non-payers -- and did so while being less-volatile than the benchmark S&P 500. With the S&P 500 and Nasdaq Composite both falling into correction territory in March, anchoring your portfolio with dividend stocks can be an especially smart move. What follows are three ultra-high-yield dividend stocks -- sporting an average yield of 9.87% -- which make for no-brainer buys in April. Annaly Capital Management: 13.79% yield The first supercharged dividend stock that can be confidently scooped up by investors to begin the second quarter is mortgage real estate investment trust (REIT) Annaly Capital Management (NYSE: NLY). Although Annaly's nearly 13.8% yield might sound unsustainable, it's averaged a roughly 10% yield over the last two decades and has declared approximately $27 billion in dividends since its October 1997 initial public offering. Mortgage REITs might very well be Wall Street's most-disliked industry. They're highly sensitive to interest rate changes, as well as the velocity of moves made the by nation's central bank. The Federal Reserve rapidly increasing in its federal funds rate from March 2022 to July 2023, coupled with an inversion of the Treasury yield curve, drove up short-term borrowing costs and weighed down net interest margin and book value for Annaly and its peers. The good news for Annaly Capital Management is the central bank is now in the midst of a rate-easing cycle. Moreover, the Fed is walking on eggshells when it comes to shifting its monetary policy. The more telegraphed and deliberate the Fed is with its rate adjustments, the more time Annaly and its peers will have to adjust their asset portfolios to maximize profitability. Additionally, Annaly Capital Management predominantly deals with agency securities in its $80.9 billion portfolio. An "agency" asset is backed by the federal government in the event that the underlying instrument (in this case, mortgage-backed securities (MBS)) were to default. While this added protection pushes down the yields Annaly nets on the MBSs it buys, it also opens the door to the use of leverage to pump up its profitability. With yield-curve inversions lessening, the Fed no longer involved in MBS purchases, and mortgage REITs historically performing their best when interest rates are declining, the table is set for Annaly Capital Management's net interest margin and book value to climb. Realty Income: 5.56% yield A second ultra-high-yield dividend stock that makes for a no-brainer buy in April is top-tier retail REIT, Realty Income (NYSE: O). Realty Income, which doles out its dividend on a monthly basis, has increased its payout for 110 consecutive quarters. Though the prospect of a U.S. recession has weighed on retail stocks, Realty Income is ideally positioned to take advantage of the long-term growth of the U.S. economy. Its key advantage can be found in the composition of its commercial real estate (CRE) portfolio. It closed out 2024 with 15,621 CRE properties, approximately 91% of which are, per Realty Income, "resilient to economic downturns and/or isolated from e-commerce pressures." If investors dig into which companies and industries Realty Income leases to, they'll find that they're predominantly brand-name businesses in stand-alone locations that drive traffic to their stores in any economic climate. For example, even if the U.S. were to fall into a recession, consumers are still going to visit grocery stores, drug stores, dollar stores, convenience stores, and automotive service locations, all of which among the top industries by annualized contractual rent in Realty Income's CRE portfolio. Vetting and contract length matter, too. A very low percentage of the company's lessees fail to pay their rent, and most tend to lock in their rental agreements for long periods. There's little concern about frequent turnover, and the company's funds from operations is highly predictable. Realty Income is also historically inexpensive, relative to its future cash flow. Over the trailing-five-year period, shares have averaged a multiple to cash flow of roughly 16.2. But based on the consensus Wall Street forecast for 2026 cash flow, investors can pick up shares of Realty Income right now for 22% below this five-year average. Alliance Resource Partners: 10.26% yield The third no-brainer ultra-high-yield dividend stock to buy in April is coal producer Alliance Resource Partners (NASDAQ: ARLP). Yes, I did say "coal," and also yes, the company's yield of more than 10% has been sustainable. When this decade began, coal stocks were believed to be as good as dead. The push toward clean-energy solutions, such as solar and wind, were expected to meaningfully reduce demand for dirtier fuels. But when the COVID-19 pandemic struck, it tipped the scales back toward time-tested energy sources. Even though the spot price of coal is now well off of its pandemic high, Alliance Resource has enjoyed a resurgence in demand. Three factors allow this relatively little-known coal producer to stand out from its peers. First, management has done an excellent job of locking in volume and price commitments years in advance. Securing deals when the price of coal was higher than it is now will ensure consistent operating cash flow for years to come. It also leads to a level of cost and cash flow transparency that most mining-oriented companies lack. Secondly, the company's management team has historically taken a very conservative approach when expanding production. Even when the per-ton coal price rocketed higher during the pandemic, Alliance Resource Partners' management team edged production higher. While many peers have struggled under the weight of crippling debt, Alliance Resource ended 2024 with only $221.4 million in net debt. Its financial flexibility is superior to other coal producers. The third variable that makes Alliance Resource Partners special has been its foray into oil and natural gas royalties. Diversifying its operations into oil and gas allows the company to take advantage of pure increases in the spot price of two core energy commodities. At an estimated 8.5 times forward-year earnings, Alliance Resource Partners' stock remains a solid value amid a historically pricey market. Should you invest $1,000 in Annaly Capital Management right now? Before you buy stock in Annaly Capital Management, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Annaly Capital Management wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $675,119!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of April 1, 2025
Yahoo
24-03-2025
- Business
- Yahoo
Want $300 in Safe Monthly Dividend Income? Invest $35,125 Into the Following 3 Ultra-High-Yield Stocks.
For well over a century, Wall Street has been a wealth-building machine. Though there is no shortage of pathways to grow your wealth in the stock market, few strategies have proved more fruitful over long periods than buying and holding high-quality dividend stocks. Companies that pay a dividend to their shareholders on a regular basis are: Usually time-tested and have demonstrated their ability to navigate turbulent economic climates. Profitable on a recurring basis, which is what facilitates regular dividend payments. Capable of providing transparent long-term growth outlooks. But perhaps the most-defining of all characteristics for top-tier income stocks is their long-term outperformance. In The Power of Dividends: Past, Present, and Future, the analysts at Hartford Funds, in collaboration with Ned Davis Research, compared the performance of dividend stocks to non-payers over a half-century (1973-2023). What they found was a night-and-day difference in performance, with companies paying a dividend more than doubling up the return on non-payers on an annualized basis: 9.17% vs. 4.27%. The good news for income seekers is you don't have to wait three months to receive a payout. For those looking for more instant gratification, there are dozens of stocks doling out monthly dividends. Among these is a trio of safe, ultra-high-yield dividend payers -- yielding an average of 10.25% -- capable of generating $300 in monthly dividend income from a starting investment of $35,125 (split equally, three ways). The first ultra-high-yielding stock capable of generating $300 in monthly dividend income is none other than mortgage real estate investment trust (REIT) AGNC Investment (NASDAQ: AGNC). AGNC's 14% dividend yield isn't a glitch, with the company averaging a double-digit yield in 14 of the last 15 years. There might not be an industry that's been more universally disliked by Wall Street analysts than mortgage REITs. The reason being it's a highly interest-sensitive industry that typically performs poorly when interest rates are rapidly climbing, as occurred from March 2022 through July 2023. The historic inversion of the Treasury yield curve hasn't helped, either. But in spite of these challenges, the worst for AGNC Investment looks to be in the rearview mirror. With the prevailing rate of inflation well off of its 9.1% peak, the Federal Reserve have shifted to a rate-easing cycle. Mortgage REITs historically perform well during rate-easing cycles, largely due to the fact that it reduces short-term borrowing costs and can widen their net interest margin. Even more important, the nation's central bank is slow-stepping any changes to the federal funds rate and its monetary policy. The more transparent and telegraphed the Fed is, the greater the opportunity for AGNC to adjust its asset portfolio to maximize returns. Another key to AGNC Investment's success is its laser focus on agency assets. An "agency" security is backed by the federal government in the unlikely event of default. While this added level of protection does reduce the yield AGNC nets on the mortgage-backed securities (MBS) it purchases, it also allows the company to lever its MBS investments to maximize its profits and sustain its outsized dividend yield. If Fed policy remains predictable and the Treasury yield curve steepens over time, AGNC's book value and net interest margin should both increase. A second ultra-high-yield dividend payer that can help produce $300 monthly from a starting investment of $35,125 split three ways is premier retail REIT, Realty Income (NYSE: O). Realty Income has increased its dividend for 110 consecutive quarters. What makes this company so special is the composition of its vast commercial real estate (CRE) portfolio. When 2024 came to a close, it owned north of 15,600 CRE properties, an estimated 91% of which were deemed to be "resilient to economic downturns and/or isolated from e-commerce pressures." Realty Income primarily focuses on leasing to brand-name, stand-alone businesses that draw foot traffic in any economic climate. According to the company's year-end breakdown, more than a quarter of its annualized contractual rent can be traced to convenience stores, grocery stores, and dollar stores, which sell basic necessities. The company's management team also deserves credit for the rock-solid vetting of its tenants and the lengthy leases it secures. Rental delinquencies tend to be low, and its historic median occupancy rate of 98.2% is 400 basis points above the historic median occupancy rate for S&P 500 REITs. In addition to dominating the retail REIT landscape, Realty Income has been expanding its horizons and moving into new verticals. It orchestrated two deals in the gaming industry, acquired Spirit Realty Capital in January 2024, and formed a joint venture with Digital Realty Trust for build-to-suit data centers to take advantage of the artificial intelligence revolution. The cherry on the sundae is that Realty Income is historically cheap, relative to its future cash flow. The third ultra-high-yield stock that can help you collect $300 in safe monthly dividend income with a beginning investment of $35,125 (split in thirds) is little-known business development company (BDC) PennantPark Floating Rate Capital (NYSE: PFLT). Based on its current monthly payout, PennantPark's yield is north of 11%. BDCs typically invest in the equity (common and preferred stock) and/or debt of middle-market companies -- i.e., small and often unproven businesses. Though PennantPark does hold nearly $227 million in common and preferred equity, its $1.96 billion debt portfolio points to it being a debt-focused BDC. The advantage of focusing on debt investments has to do with yield. Since most middle-market companies have limited access to basic financial services, they're usually going to pay a premium rate on their loans. As of the December-ended quarter, PennantPark was netting a 10.6% weighted average yield on its debt investments. However, the beauty of PennantPark Floating Rate Capital's operating model is in its name. The entirety of its $1.96 billion debt portfolio is variable rate. When the nation's central bank undertook its aggressive rate-hiking cycle between March 2022 and July 2023, it sent the company's weighted average yield on debt investments considerably higher. Even with the Fed now in a rate-easing cycle, it's taking its sweet time reducing rates and providing PennantPark with plenty of opportunity to pack its portfolio with higher-yielding loans. Furthermore, this is a company that's done an excellent job of protecting its principal. Despite putting its money to work in mostly unproven businesses, only two companies were delinquent, as of Dec. 31, equating to just 0.4% of the total portfolio on a cost basis. With PennantPark Floating Rate Capital stock trading at a 2% discount to its book value, now is the perfect time for income seekers to pounce. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $305,226!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $41,382!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $517,876!* Right now, we're issuing 'Double Down' alerts for three incredible companies, and there may not be another chance like this anytime soon.*Stock Advisor returns as of March 18, 2025 Sean Williams has positions in PennantPark Floating Rate Capital. The Motley Fool has positions in and recommends Digital Realty Trust and Realty Income. The Motley Fool has a disclosure policy. Want $300 in Safe Monthly Dividend Income? Invest $35,125 Into the Following 3 Ultra-High-Yield Stocks. was originally published by The Motley Fool Sign in to access your portfolio
