High-quality, high-yield stocks offer sustainable, growing dividends ideal for retirees seeking dependable passive income. I share some 6-10% yields that are getting very attractively priced. Both stocks provide income investors with the chance to lock in quality yields and double-digit total return profiles by buying the recent dips.
The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price.
I prefer high-yield income stocks for recurring cash flow and low-stress investing. I highlight two such names that offer high yields and have large-scale businesses. Both are undervalued, giving investors both income and capital appreciation potential.
Ares Capital remains a solid BDC with strong fundamentals, but recent performance has lagged the S&P 500, prompting a downgrade from 'strong buy' to 'buy'. The company's diversified portfolio, focus on secured debt, and broad industry exposure help mitigate risk and support consistent shareholder returns. The firm's yield has dropped, but it is still quite hefty at this time.
Dividend investing is a proven successful stretgy for creating wealth, but there are significant risks associated with chasing high-yields.
High-yield stocks that trade at deep discounts to NAV often attract value-oriented income investors. However, most of the time, these investments are value traps. I share two popular stocks like this whose dividends I think are at risk and will likely deliver disappointing total returns to shareholders moving forward.
Zacks.com users have recently been watching Ares Capital (ARCC) quite a bit. Thus, it is worth knowing the facts that could determine the stock's prospects.
Buying right and holding tight can be a winning investment strategy over in-vogue short-term strategies. EPD has strong fee-based earnings, strong balance sheet, and growth projects coming online, offering a 6.8% yield and potential for double-digit total returns. CSWC excels in the lower middle market with an internally managed structure, low expenses, and an 11% yield, supporting regular and special dividends.
Ares Capital (ARCC) closed at $21.93 in the latest trading session, marking a -0.14% move from the prior day.
Weaker US M&A activity and declining net investment commitments signal subdued investment portfolio growth ahead. Investment yield spreads have been shrinking but latest management commentary and a lower-than-expected exposure to tariff-sensitive sectors are tailwinds going forward. ARCC trades at a 21% premium to BDC peers, far above its historical 5% average. So I think ARCC is relatively overvaluation and at risk of a mean reversion correction.
Recent Fed actions and economic data suggest a material risk of further interest rate cuts in the near to medium term. Lower rates threaten BDC dividend sustainability, even for solid names like ARCC and BXSL, as shown by recent NII declines. In this article, I discuss two high-quality BDCs (not ARCC and BXSL), which investors should consider divesting if they also assume an interest rate cut scenario as a base case.
High-yield stocks can provide substantial income and inflation protection, but unsustainable payouts risk dividend cuts and capital losses.