Investors love dividend stocks, especially those with ultra-high yields, because they offer a significant income stream and have substantial total return potential. Total return includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or a portfolio consists of income and stock appreciation. At 24/7 Wall St., we consistently emphasize the potential of total return to our readers. It is one of the most effective ways to enhance the prospects of overall investing success. Once again, total return refers to the collective increase in a stock’s value, including dividends.
At 24/7 Wall St., we have focused on dividend stocks for over 15 years because, despite the stock market’s ups and downs, many people need solid passive income streams to supplement their income from employment or other sources. According to the Internal Revenue Service (IRS), passive income generally includes earnings from rental activity or any trade, business, or investment in which the individual does not materially participate. It can also include income from limited partnerships, stocks, bonds, and other similar enterprises in which the investor is not actively involved.
We screened our 24/7 Wall St. ultra-high-yield passive income stock database, looking for companies trading under $10 that pay supercharged dividends. Five companies look like great ideas for investors with a higher risk tolerance, and all have Buy ratings from top Wall Street firms.
Why do we cover ultra-high-yield stocks?
While not suited for everybody, those trying to build strong passive income streams can do exceptionally well with some of these top companies in their portfolios. Paired with more conservative blue-chip dividend giants, investors can use a barbell approach to generate substantial passive income.
Arbor Realty Trust
Arbor Realty Trust (NYSE: ABR) offers nationwide solutions for multifamily finance. This stock trades at a ridiculous 7.6 times estimated 2026 earnings and comes with a massive 14.70% dividend. Arbor Realty Trust invests in a diversified portfolio of structured finance assets across U.S. multifamily, single-family rental, and commercial real estate markets.
The company operates in two segments:
- Structured Business
- Agency Business
Arbor Realty Trust primarily invests in:
- Bridge and mezzanine loans, including junior participating interests in first mortgages
- Preferred and direct equity and real estate-related joint ventures
- Real estate-related notes
- Various mortgage-related securities
The company offers:
- Bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property
- Financing by making preferred equity investments in entities that directly or indirectly own real property
- Mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction
- Junior participation financing in the form of a junior participating interest in the senior debt
- Financing products to borrowers seeking conventional, workforce, and affordable single-family housing.
Further, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs.
JMP Securities has a Market Outperform rating with a $13 target price.
Evolution Petroleum
This small-cap energy company develops, owns, and exploits onshore oil and gas properties, and it pays investors a massive 11.60% dividend. Evolution Petroleum Corp. (NYSE: EPM) could be a takeover target, and it offers a massive 11.79% dividend yield. Its oil and natural gas properties consist of non-operated interests in the following:
- SCOOP and STACK plays of the Anadarko Basin located in central Oklahoma
- Chaveroo oilfield in Chaves and Roosevelt Counties of New Mexico
- Jonah Field in Sublette County, Wyoming
- Williston Basin in North Dakota
- Barnett Shale, located in North Texas
- Hamilton Dome Field located in Hot Springs County, Wyoming
- Delhi Holt-Bryant Unit in the Delhi Field in Northeast Louisiana
The company also owns small overriding royalty interests in four onshore central Texas wells. Its non-operated interests in the SCOOP and STACK plays consist of oil and natural gas producing properties in the Anadarko basin, where it holds approximately 2.6% average net working interest.
Roth Capital has a Buy rating with a $5 target price.
Horizon Technology Finance
Horizon Technology Finance Corp. (NASDAQ: HRZN) is a venture lending platform that provides structured debt products to life sciences and technology companies. With a gigantic 19.7% dividend, this stock has tremendous upside potential. Horizon is a business development company that specializes in lending and investing in development-stage companies.
It focuses on making secured debt and venture capital-backed investments in these industries:
- Technology
- Life science
- Healthcare information and services
- Cleantech
- Sustainability
Horizon Technology Finance is a leading venture lending platform that offers structured debt products to life science and technology companies. Its experienced investment and operations team has provided debt capital to some of the most exciting companies for decades.
Maxim Group has a Buy rating and a $7.50 price target.
Runway Growth Finance
This business development company (BDC) pays a stunning 15.2% dividend and has a solid Wall Street following. Runway Growth Finance Corp. (NASDAQ: RWAY) specializes in senior secured loans to late-stage and growth companies.
It prefers to invest in companies engaged in:
- Technology
- Life sciences
- Healthcare
- Information services
- Business services
- Select consumer services and products sectors
Runway Growth Finance prefers investments in companies engaged in these business silos:
- Electronic equipment and instruments
- Systems software
- Hardware, storage, and peripherals
- Specialized consumer services
- Application software
- Healthcare technology
- Internet software and services
- Data processing and outsourced services
- Internet retail, human resources, and employment services
- Biotechnology, healthcare equipment, and education services
It invests between $10 million and $75 million in senior secured loans.
UBS has a Buy rating with a $12 price target.
Townsquare Media
This off-the-radar stock has huge total-return potential and a massive 16% dividend. Townsquare Media Inc. (NYSE: TSQ) is a community-focused digital and broadcast media and digital marketing solutions company. Its segments include:
- Subscription Digital Marketing Solutions
- Digital Advertising
- Broadcast Advertising
The Digital Advertising segment, marketed as Townsquare Ignite, encompasses digital advertising on its programmatic platform and its owned-and-operated digital properties.
The Subscription Digital Marketing Solutions segment includes Townsquare Interactive, its subscription digital marketing solutions business.
The Broadcast Advertising segment includes local, regional, and national advertising products and solutions delivered via terrestrial radio broadcast. Townsquare Interactive partners with small and medium-sized businesses to help manage their digital presence by providing a SAAS business management platform, website design, creation, and hosting, search engine optimization, and other digital services.
Barrington Research has an Outperform rating and a $12 target price.
J.P. Morgan Has Five Sizzling December Analyst Focus List High-Yield Dividend Picks