In this article, we will take a look at some of the best dividend stocks with extreme dividend yields.
In 2024, dividend stocks underperformed the broader market as attention shifted to high-flying tech stocks. The Dividend Aristocrat index, which tracks companies with a minimum of 25 consecutive years of dividend growth, rose only 6.3% compared to the broader market’s impressive 27% gain. Despite this, analysts remain positive about the long-term outlook for dividend stocks, as they have historically delivered stronger performance over extended periods.
Analysts believe dividend stocks could see a resurgence in 2025 due to increased market volatility. The last time these stocks outperformed the broader market was in 2022, as concerns over a potential recession pushed investors toward sectors like utilities, consumer goods, and others associated with value stocks and reliable earnings. While there’s no guarantee that recession fears or a bear market will emerge in 2025, the significant rallies of 2023 and 2024—which have contributed to dividend stocks lagging—often lead to heightened volatility, particularly if ambitious growth projections begin to falter. Moreover, as the new administration implements its economic policies, periods of uncertainty and market disruptions could arise. In such scenarios, dividend-paying stocks, seen as stable and dependable, might become more attractive to investors seeking steady returns during turbulent times.
Also read: 10 Best Halal Dividend Stocks To Invest In
Dividend yields play a crucial role in drawing investors to dividend stocks. While analysts often suggest prioritizing stocks with a strong track record of dividend growth, the allure of high yields remains significant. Experts caution against falling for yield traps, urging investors to focus on companies that steadily enhance shareholder returns. Still, proponents of high-yield investments emphasize the importance of dividend yields in an overall investment strategy.
In their study Income Illusions: Challenging the High Yield Stock Narrative, published in the March 2024 Journal of Asset Management, Yin Chen and Roni Israelov analyzed the impact of dividends on investment returns. They divided stocks into high-dividend and low-dividend categories based on the median dividend yield from the prior year. Their research, covering the top 1,500 US stocks from January 1964 to December 2021, revealed that high-dividend portfolios outperformed in both returns and risk. These portfolios achieved an average annual return of 13.8% with 15.6% volatility, compared to low-dividend portfolios, which returned 11.8% annually with a higher volatility of 21.9%. This performance gap resulted in a 3.6% difference in compound annual growth rate. In addition, high-dividend portfolios experienced smaller losses during market downturns. However, while high-dividend stocks generally performed better over the full study period, a long-short investment strategy in these stocks resulted in an annual loss of nearly 1% between 2003 and 2021, with the strongest returns recorded between 1983 and 2002.
Simply chasing high-yield stocks isn’t enough; investors should also examine a company’s balance sheet and overall financial health. Firms with solid financials are better positioned to increase their dividend payouts consistently. The best-case scenario is when a company combines high dividend yields with steady dividend growth—a goal that many businesses have successfully achieved. Given this, let’s take a look at some of the best dividend stocks with extreme dividend yields.
Photo by Vitaly Taranov on Unsplash
Our Methodology:
For this list, we used a stock screener and selected dividend stocks with yields ranging from 9% to 23%, as of January 23. Among those stocks, we chose companies that have relatively stable dividend histories, however, a lot of the companies on the list don’t have a consistent record of paying dividends due to their exceptionally high yields. The stocks are ranked in ascending order of their dividend yields, as recorded on January 23. We also mentioned hedge fund sentiment data for these stocks using Insider Monkey’s database of 900 hedge funds as of Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10. The Western Union Company (NYSE:WU)
Dividend Yield as of January 23: 9.17%
The Western Union Company (NYSE:WU) is a Colorado-based multinational financial services company that offers online payment services in over 200 countries and territories. The stock has declined by over 17% in the past 12 months. It was once a leader in its industry, but its dominance waned with the arrival of PayPal and similar competitors. These fintech firms brought faster, cheaper, and more convenient digital payment solutions to the market. In addition, the rise of blockchain technology and cryptocurrency-based transfer services has created a significant obstacle for traditional money transfer businesses.
That said, The Western Union Company (NYSE:WU) has drawn investor interest due to its consistent efforts to return value to shareholders. The company’s board recently approved a $1 billion stock repurchase program with no expiration date. It stated that the timing and amount of repurchases would depend on various factors, including market conditions and stock price. Western Union has a history of actively buying back its shares. In 2023, it allocated around $308 million for stock repurchases, with annual buybacks ranging between $240 million and $553 million from 2018 to 2023.
In addition, The Western Union Company (NYSE:WU) has been making regular dividend payments to shareholders since 2006. In December 2024, the company declared a quarterly dividend of $0.235 per share, which was in line with its previous dividend. With a dividend yield of 9.17% as of January 23, WU is one of the best dividend stocks on our list.
At the end of Q3 2024, 27 hedge funds tracked by Insider Monkey held stakes in The Western Union Company (NYSE:WU), compared with 32 in the previous quarter. The consolidated value of these stakes is nearly $400 million. With over 8 million shares, AQR Capital Management was the company’s leading stakeholder in Q3.
9. Alexander’s, Inc. (NYSE:ALX)
Dividend Yield as of January 23: 9.45%
Alexander’s, Inc. (NYSE:ALX) is an American real estate investment trust company that is engaged in leasing, managing, developing, and redeveloping properties. The company specializes in owning and managing premium retail and office properties, with a primary focus on the New York City metropolitan region. Its operations are managed by Vornado Realty Trust.
In the third quarter of 2024, Alexander’s, Inc. (NYSE:ALX) reported revenue of $55.6 million and its net income came in at $6.7 million. The company’s funds from operations (FFO) totaled $14.6 million, equating to $2.84 per diluted share. This represents a decline compared to the $18.6 million, or $3.63 per diluted share, reported for the same period in 2023.
Alexander’s, Inc. (NYSE:ALX) is one of the best dividend stocks on our list as the company has never missed a dividend since 2008. It currently offers a quarterly dividend of $4.50 per share and has a dividend yield of 9.45%, as of January 23.
As of the close of Q3 2024, 8 hedge funds tracked by Insider Monkey owned stakes in Alexander’s, Inc. (NYSE:ALX), up from 6 in the previous quarter. The consolidated value of these stakes is more than $32.5 million. Among these hedge funds, Renaissance Technologies was the company’s leading stakeholder in Q3.
8. Delek Logistics Partners, LP (NYSE:DKL)
Dividend Yield as of January 23: 9.70%
Delek Logistics Partners, LP (NYSE:DKL) is an American midstream and logistics company that primarily provides transportation and storage services for crude oil, refined products, and other liquid hydrocarbons. The company’s operations produce steady earnings, with 36% of its EBITDA coming from long-term contracts with Delek and the remaining 64% from third-party customers. Since the start of 2025, the stock has surged by over 5%.
Delek Logistics Partners, LP (NYSE:DKL) generates sufficient cash to support its high-yield distribution. In the third quarter of 2024, its coverage ratio stood at 1.1, slightly below the target of 1.3 due to the timing of its H2O Midstream acquisition, which was finalized late in the quarter. In addition, the company received distributions from its recent investment in the Wink-to-Webster pipeline after the quarter’s close. Over the past several years, the company’s coverage ratio has consistently averaged above 1.3.
Moreover, Delek Logistics Partners, LP (NYSE:DKL) has a strong cash generation and a decent balance sheet. At the end of the quarter, the company’s leverage ratio stood at 4.15, which is a healthy level for a master limited partnership. Its operating cash flow came in at $25 million and distributable free cash flow amounted to $62 million. Due to this cash position, the company was able to raise its dividends for 47 consecutive quarters, which makes DKL one of the best dividend stocks on our list. It offers a quarterly dividend of $1.10 per share and has a dividend yield of 9.7%, as of January 23.
According to Insider Monkey’s database of Q3 2024, 23 hedge funds owned stakes in Delek Logistics Partners, LP (NYSE:DKL), compared with 26 in the previous quarter. These stakes have a total value of over $196.3 million. Ken Griffin’s Citadel Investment Group was the company’s leading stakeholder in Q3.
7. Barings BDC, Inc. (NYSE:BBDC)
Dividend Yield as of January 23: 10.53%
Barings BDC, Inc. (NYSE:BBDC) is an American business development company, based in North Carolina. The company specializes in debt investments in middle-market companies. It has established itself as a leading business development company by capitalizing on growth opportunities and delivering significant value to its shareholders. Over the past year, the stock has delivered a nearly 10% return. This achievement is particularly notable given its low-risk nature. Unlike high-beta stocks, which typically involve greater risk for substantial returns, Barings BDC provides a more stable investment option. Its steady end markets, attractive dividends, and rising net asset value contribute to its lower risk profile.
Barings BDC, Inc. (NYSE:BBDC) continues to prioritize growth initiatives aimed at increasing portfolio value and driving net investment income. In the third quarter of 2024, the company completed 11 new investments amounting to $88.4 million, along with additional investments of $36.6 million in its existing portfolio companies. The company’s total investment income for the quarter came in at $70.9 million and its net investment income amounted to $30.2 million.
Barings BDC, Inc. (NYSE:BBDC) is one of the best dividend stocks on our list as the company has been making regular dividend payments to shareholders since 2007. It currently pays a quarterly dividend of $0.26 per share and has a dividend yield of 10.53%, as of January 23.
The number of hedge funds tracked by Insider Monkey owning stakes in Barings BDC, Inc. (NYSE:BBDC) grew to 11 in Q3 2024, from 9 in the previous quarter. These stakes have a total value of over $21.7 million. With over 1 million shares, Two Sigma Advisors was the company’s leading stakeholder in Q3.
6. Saratoga Investment Corp. (NYSE:SAR)
Dividend Yield as of January 23: 11.78%
Saratoga Investment Corp. (NYSE:SAR) is an American capital market company that provides debt financing and equity capital to middle-market companies. The company recently announced that it is seeing early signs of a potential uptick in mergers and acquisitions within the lower middle market, highlighted by several repayments during the quarter and significant new originations. Consistent with previous quarters, its strong reputation and unique market position, along with the ongoing cultivation of sponsor relationships, continue to generate appealing investment opportunities from top-tier sponsors. In the past 12 months, the stock has surged by nearly 9%.
In fiscal Q3 2025, Saratoga Investment Corp. (NYSE:SAR) demonstrated solid performance, as highlighted by its strong key metrics. The company reported a quarterly return on equity (ROE) of 9.5% and a trailing twelve-month ROE of 9.2%. Additionally, its net asset value (NAV) increased by $2.8 million, rising from $372.1 million to $374.9 million. The company reported a total investment income of $35.88 million, which, though, fell by 1.27% from the same period last year, beat analysts’ estimates by $977,920.
Saratoga Investment Corp. (NYSE:SAR) has been growing its dividends for five consecutive years, which makes it one of the best dividend stocks on our list. The company currently offers a quarterly dividend of $0.74 per share and has a dividend yield of 11.78%, as recorded on January 23.
As per Insider Monkey’s database of Q3 2024, 3 hedge funds held stakes in Saratoga Investment Corp. (NYSE:SAR), the same as in the previous quarter. These stakes have a collective value of over $6.5 million. Among these hedge funds, Two Sigma Advisors was the company’s leading stakeholder in Q3.
5. Arbor Realty Trust, Inc. (NYSE:ABR)
Dividend Yield as of January 23: 13.08%
Arbor Realty Trust, Inc. (NYSE:ABR) is an American real estate investment trust company that invests in a diversified portfolio of finance assets in the multifamily and commercial real estate markets. In 2024, the company encountered challenges when federal prosecutors and the FBI launched an investigation into its commercial mortgage REIT. The inquiry centered on its lending practices and the reliability of its statements about loan portfolio performance. In response, the company emphasized its commitment to fully cooperating with the investigation and expressed confidence in its compliance with established standards.
Arbor Realty Trust, Inc. (NYSE:ABR) successfully reassured investors and restored their confidence with its statement. With a strong presence in the industry since 2003, the company has a proven track record of weathering significant economic challenges, including the Great Financial Crisis, the 2020 pandemic, and the inflation surge accompanied by Federal Reserve rate hikes in 2023. It is one of the best dividend stocks on our list as the company has been paying regular dividends to shareholders since 2012. It currently offers a quarterly dividend of $0.43 per share and has a dividend yield of 13.08%, as of January 23.
During the third quarter of 2024, Arbor Realty Trust, Inc. (NYSE:ABR) generated $88.8 million in revenue, reflecting a 17.2% drop from the same period in the previous year. However, the revenue surpassed analysts’ estimates by $3.10 million. By the quarter’s close, the company maintained a strong financial position, with approximately $600 million in cash and liquidity, supported by a trailing twelve-month operating cash flow of $492 million.
As of the close of Q3 2024, 16 hedge funds, up from 12 in the previous quarter, owned stakes in Arbor Realty Trust, Inc. (NYSE:ABR), according to IM’s database. These stakes have a total value of over $68.2 million.
4. Dynex Capital, Inc. (NYSE:DX)
Dividend Yield as of January 23: 14.22%
Dynex Capital, Inc. (NYSE:DX) ranks fourth on our list of extreme dividend stocks. The American real estate investment trust company mainly invests in mortgage-backed securities and other various real estate assets. In the past 12 months, the stock has surged modestly by 1.52% as it is still recovering from the challenges it faced during 2022-2023. The difficulties arose from elevated short-term interest rates, which increased interest expenses and put a strain on the trust’s book value. However, this dynamic is anticipated to change, as mortgage REITs are expected to gain appeal as sources of passive income in a lower interest rate climate.
In the third quarter of 2024, Dynex Capital, Inc. (NYSE:DX) reported an economic return of 7.1% for the third quarter of 2024, emphasizing the expertise and experience it considers essential for successfully navigating the current market conditions. The company ended the quarter with nearly $270 million available in cash and cash equivalents, up from $120 million at the end of December 2023. Its total assets amounted to over $7.8 billion.
Though Dynex Capital, Inc. (NYSE:DX) has a high dividend yield of 14.22%, as of January 23, the company’s dividend policy remained consistent over the years. It has been paying regular dividends to shareholders since 2008, which makes DX one of the best dividend stocks on our list.
Dynex Capital, Inc. (NYSE:DX) was included in 14 hedge fund portfolios at the end of Q3 2024, up from 13 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these funds are worth over $59 million. With over 1.7 million shares, Millennium Management was the company’s leading stakeholder in Q3.
3. AGNC Investment Corp. (NASDAQ:AGNC)
Dividend Yield as of January 23: 14.83%
An American real estate investment trust company, AGNC Investment Corp. (NASDAQ:AGNC) mainly invests in mortgage-backed securities, which function similarly to bonds. Unlike property-owning REITs, which are relatively straightforward and comparable to managing a rental property on a larger scale, AGNC deals in securities that are traded throughout the day. These investments are influenced by interest rate fluctuations and property market factors, such as housing demand and loan repayment rates.
Despite the associated risks, AGNC Investment Corp. (NASDAQ:AGNC) remains a strong investment option. Unlike traditional REITs that own and lease properties, this mortgage REIT focuses on investing in mortgage-backed securities, functioning somewhat like a mutual fund. The company’s value is directly linked to the performance of its mortgage securities portfolio. As of June 30, 2024, AGNC’s investment portfolio was valued at $66.0 billion, consisting of $59.7 billion in Agency MBS, $5.3 billion in net forward purchases or sales of Agency MBS in the “to-be-announced” market, and $1.0 billion in credit risk transfer (CRT) and non-Agency securities, along with other mortgage credit investments.
AGNC Investment Corp. (NASDAQ:AGNC), one of the best dividend stocks, pays monthly dividends to shareholders. The company has never missed a dividend since its IPO in 2008 and shifted to a monthly dividend policy in 2014. Since it went public, the company has distributed $13.4 billion to shareholders through dividends. Currently, it offers a monthly dividend of $0.12 per share and has a dividend yield of 14.83%, as of January 23.
The number of hedge funds tracked by Insider Monkey owning stakes in AGNC Investment Corp. (NASDAQ:AGNC) grew to 24 in Q3 2024, from 19 in the previous quarter. These stakes have a total value of more than $230.3 million.
2. Orchid Island Capital, Inc. (NYSE:ORC)
Dividend Yield as of January 23: 18.06%
Orchid Island Capital, Inc. (NYSE:ORC) is an American specialty finance company, headquartered in Florida. The company is confident about its future investments, expecting appealing opportunities to continue. It believes total returns could increase if the Federal Reserve begins to relax monetary policy, especially if banks become more active in the Agency RMBS market. However, even without such developments, the current investment environment remains favorable, with hedged net interest spreads providing strong support for maintaining existing dividend levels. Since the start of 2025, the stock has surged modestly by just a little over 1%.
Orchid Island Capital, Inc. (NYSE:ORC) holds a strong dividend history and rewards shareholders with monthly dividends. The company has reliably distributed monthly dividends to shareholders since it went public in 2013. Beginning with total dividend payments of over $4.6 million in its debut year, the company increased this figure to over $81 million by the close of 2023. Over the years, it has returned approximately $658 million to its shareholders through dividends.
Orchid Island Capital, Inc. (NYSE:ORC)’s monthly dividend comes in at $0.12 per share for a dividend yield of 18.06%, as of January 23.
Orchid Island Capital, Inc. (NYSE:ORC) was a part of 11 hedge fund portfolios at the end of Q3 2024, up from 10 in the previous quarter, according to Insider Monkey’s database. The stakes owned by these hedge funds are worth over $11.7 million collectively.
1. NextEra Energy Partners, LP (NYSE:NEP)
Dividend Yield as of January 23: 22.35%
NextEra Energy Partners, LP (NYSE:NEP) is a Florida-based master limited partnership (MLP) that mainly focuses on the acquisition of clean energy projects. The company recently revealed that it is rebranding as XPLR Infrastructure, LP, effective immediately. Starting Monday, February 3, 2025, it will trade on the New York Stock Exchange (NYSE) under the new ticker symbol, XIFR.
NextEra Energy Partners, LP (NYSE:NEP)’s outlook remains uncertain due to several factors. One major concern is the potential pause in Federal Reserve rate cuts, which poses a significant risk to NEP. In addition, the company’s market capitalization has dwindled to just 20% of its value from two years ago, while its heavily leveraged financial position continues to be a challenge.
However, some investors are questioning whether the negatives have already been fully factored into the stock’s price. Last month, J.P. Morgan released a report suggesting that NextEra Energy Partners, LP (NYSE:NEP)’s ongoing strategic review could yield favorable outcomes and that the market may have overreacted to its challenges.
Despite these difficulties, NextEra Energy Partners, LP (NYSE:NEP) has continued to deliver on its commitment to dividends, maintaining its appeal to investors. In the third quarter of 2024, the company’s cash available for distribution came in at $155 million. It currently offers a quarterly dividend of $0.9175 per share and has a dividend yield of 22.35%, as of January 23.
As per Insider Monkey’s database of Q3 2024, 18 hedge funds owned stakes in NextEra Energy Partners, LP (NYSE:NEP), worth nearly $99 million in total.
Overall NextEra Energy Partners, LP (NYSE:NEP) ranks first on our list of extreme dividend stocks. While we acknowledge the potential for NEP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NEP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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