In this article, we will analyze 7 best dividend stocks with over 10% yield.
Dividend stocks have kept their appeal among investors due to the steady yields and income they provide. However, in the past year or so, all eyes have been on anything related to artificial intelligence. These stocks have not only surged but have also lifted the overall market much higher compared to dividend-paying stocks. Nevertheless, tech stocks have also joined the dividend game, unable to resist the trend as several major companies began distributing dividends starting in 2024. This highlights the financial strength of these companies, as they generate more cash than they currently need to reinvest.
Despite the lower yields on these tech stocks, their dividend payouts are punching above their weight contributing to the overall payments made by companies in the broader market. According to a report by S&P Dow Jones Indices, in the second quarter of 2024, companies listed in the index collectively paid out $153.4 billion in dividends, marking an increase from $151.6 billion in the previous quarter and up from $143.2 billion in the same period last year. The report highlighted that Alphabet’s dividend initiation contributed $9.3 billion to the Q2 2024 increase, while initiations from Brookings, Meta Platforms, and Salesforce in Q1 2024 accounted for $7.2 billion, collectively making up 53% of the S&P 500’s year-to-date dividend gain. Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, said that although the gains without the new initiations are expected to achieve a record dividend payment for 2024, their ongoing commitment to dividend payouts will notably boost the total payout, prompting investors and boards that do not currently pay dividends to reassess their strategies.
Dividend investors often debate between dividend yields and dividend growth, not fully realizing that dividend yield is crucial for sustained dividend growth. For instance, in the case of the Dividend Aristocrats Index, which has raised dividends for 25 consecutive years, maintaining a high yield hasn’t been at the expense of growth. Over the past 26 years ending in 2023, the index consistently outperformed its benchmark with higher yields, typically ranging between 2% and 2.9%. On average, the index boasted a yield of 2.5%, significantly higher than the market average of 1.8%, according to a report by S&P Dow Jones Indices. To learn more about high-yield stocks, read Very High Yield Dividend Stocks With Upside Potential.
However, it’s worth noting that high dividend yields aren’t always the most practical choice. Analysts generally suggest targeting dividend yields in the range of 3% to 6%, as this range typically offers potential for both dividend growth and appreciation in stock value. In one of its reports, an Illinois-based financial planning company, Nuveen, highlighted that global companies with moderate dividend yields (between 0% and 3%) tend to demonstrate stronger earnings growth, profitability, and profit margins compared to those with higher yields or those that don’t pay dividends at all. These factors also contribute to reducing risk, particularly during periods of market volatility.
The debate between these two strategies appears endless. We believe that combining growth and yields can present better results for investors. How investors navigate yield traps ultimately depends on their caution and strategy. With that, let’s take a look at some of the best dividend stocks with over 10% yield.
Photo by Viacheslav Bublyk on Unsplash
Our Methodology:
For this list, we used a stock screener and selected dividend stocks with yields above 10%, as of July 16. 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. They either stopped or reduced their dividend payments in 2020 due to the pandemic or because they were facing financial difficulties. We’ve also mentioned the hedge fund sentiment for each stock using Insider Monkey’s Q1 2024 database. The stocks are ranked in ascending order of their dividend yields, as of July 16.
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).
7 Dividend Stocks with 10%+ Yield
7. Barings BDC, Inc. (NYSE:BBDC)
Dividend Yield as of July 16: 10.28%
Barings BDC, Inc. (NYSE:BBDC) is a North Carolina-based business development company (BDC) that specializes in debt investments in middle-market companies. The BDC industry is growing rapidly, with assets under management reaching a record high of $315 billion as of March 2024. In addition, capital continued to pour into BDCs throughout 2022 and early 2023 as investors adjusted their portfolios.
Barings BDC, Inc. (NYSE:BBDC) stands out as one of the top business development companies in the industry, thanks to its ability to seize growth opportunities and deliver substantial value to shareholders. Over the past twelve months, it has outperformed many of its peers and a broader market index, achieving a remarkable total shareholder return of over 28%. This performance is particularly impressive given its low-risk profile. Typically, investors take on significant risk with high-beta stocks to achieve substantial returns. However, the company offers a lower risk due to its stable end markets, high dividends, and increasing net asset value. Its 5-year monthly beta of around 0.70 indicates its low volatility compared to the broader market.
As mentioned before, Barings BDC, Inc. (NYSE:BBDC) has been focusing on growth opportunities to enhance its portfolio value and boost net investment income. In the first quarter of 2024, the company allocated $143 million to both new and existing companies. Its net investment income for the quarter came in at roughly $30 million. The company generated nearly $70 million in revenues, up 4% from the same period last year.
On May 7, Barings BDC, Inc. (NYSE:BBDC) declared a quarterly dividend of $0.26 per share, which was in line with its previous dividend. The company has raised its payouts for five straight years, which makes BBDC one of the best dividend stocks with over 10% yield. The stock supports a dividend yield of 10.28%, as of July 16.
At the end of Q1 2024, 12 hedge funds tracked by Insider Monkey reported having stakes in Barings BDC, Inc. (NYSE:BBDC), the same as in the previous quarter. These stakes are collectively valued at over $35.5 million. With nearly 2 million shares, Callodine Capital Management was the company’s leading stakeholder in Q1.
6. Nordic American Tankers Limited (NYSE:NAT)
Dividend Yield as of July 16: 11.32%
Nordic American Tankers Limited (NYSE:NAT) is an international tanker company that owns and operates Suezmax tankers. The stock is generating negative returns this year so far because of growing geopolitical tensions across the Red Sea. Since the start of 2024, the stock has declined by nearly 12%. However, these continued disruptions could work in the company’s favor, as it has one of the largest fleets of Suezmax tankers, which are currently reported to be in high demand.
Nordic American Tankers Limited (NYSE:NAT)’s business model positions the company for long-term advantages. The company stands to benefit from the historically low supply of Suezmax tankers over the next two to three years. New environmental regulations, increasing steel and production costs, and higher interest rates are making investments in new ships challenging. The company’s recent earnings report indicated that only six new vessels are expected to join the global Suezmax fleet in 2024. Moreover, the rise in U.S. exports and Chinese imports is driving up demand for transportation services.
Shipping companies are not always immune to ongoing macroeconomic factors. Companies like Nordic American Tankers Limited (NYSE:NAT) face similar struggles amid global challenges. Fluctuating oil prices, geopolitical tensions, and high operating costs, approximately $9,000 per ship daily, could significantly impact the company. Despite these challenges, it remains optimistic about the strong demand for its vessels. Favorable supply-demand dynamics in the market support this positive outlook. In addition, the company has one of the lowest debt levels among publicly traded tanker companies. As of March 31, 2024, Nordic American Tankers Limited’s (NYSE:NAT) net debt stood at $228 million. With a fleet of 20 vessels, this equates to $11.4 million of debt per ship and a low debt-to-equity ratio of 0.5.
Nordic American Tankers Limited (NYSE:NAT) is one of the best dividend stocks on our list as the company has paid uninterrupted dividends to shareholders for 107 quarters in a row. The company’s current quarterly dividend comes in at $0.12 per share for a dividend yield of 11.32%, as of July 16.
The number of hedge funds tracked by Insider Monkey owning stakes in Nordic American Tankers Limited (NYSE:NAT) grew to 18 in Q1 2024, from 16 in the preceding quarter. These stakes are collectively valued at more than $20.2 million. Among these hedge funds, Two Sigma Advisors was the company’s leading stakeholder in Q1.
5. Capital Southwest Corporation (NASDAQ:CSWC)
Dividend Yield as of July 16: 11.45%
Capital Southwest Corporation (NASDAQ:CSWC) is a Texas-based capital market company that provides capital to lower middle market companies across the capital structure. The company may not be widely recognized in the investment arena but it has exhibited significant financial growth, with its trailing twelve-month revenue reaching $178.14 million. In fiscal Q4 2024, the company reported a total investment income of $46.4 million, up significantly by 25% from the same period last year. Its total investment portfolio also grew by $270.2 million during FY24 to $1.5 billion, up from $1.2 billion in the prior-year period.
Capital Southwest Corporation (NASDAQ:CSWC)’s growing popularity among investors is evident from recent insider purchases, highlighting confidence in its trajectory and stability. Despite relying on higher-risk external borrowing, the firm’s strong internal expectations and strategic foresight, as demonstrated in investor conferences and consistent dividend affirmations, reinforce this confidence.
Dividends are important for business development companies because they typically constitute the primary source of long-term total return for investors. Capital Southwest Corporation (NASDAQ:CSWC) is particularly notable in this regard as the company, along with its regular dividends, also holds a history of paying supplemental dividends to shareholders. It has paid special dividends to shareholders in every quarter since 2022, which makes CSWC one of the best dividend stocks with over 10% yield. Currently, it offers a quarterly dividend of $0.57 per share with a dividend yield of 11.45%, as of July 16.
As of the close of Q1 2024, 6 hedge funds in Insider Monkey’s database held stakes in Capital Southwest Corporation (NASDAQ:CSWC), down from 12 in the previous quarter. These stakes have a collective value of more than $21 million. Ken Griffin’s Citadel Investment Group was one of the company’s leading stakeholders in Q1.
4. British American Tobacco p.l.c. (NYSE:BTI)
Dividend Yield as of July 16: 11.48%
British American Tobacco p.l.c. (NYSE:BTI) ranks fourth on our list of the best dividend stocks with over 10% yield. The company specializes in the manufacturing of cigarettes, tobacco, and various other nicotine products. Tobacco companies are transforming their strategies amidst declining smoking rates in the US. BTI has diversified its product lineup by introducing new offerings in its New Categories segment, which includes alternative tobacco and nicotine products beyond traditional cigarettes. This shift aims to cater to evolving consumer preferences and regulatory changes by providing innovative and potentially less harmful smoking alternatives. By 2023, the New Categories segment not only achieved profitability but also demonstrated ongoing revenue growth driven by increased volume, especially from brands like Vuse and Velo. This success has allowed the segment to reach profitability two years earlier than initially expected.
British American Tobacco p.l.c. (NYSE:BTI) benefits a lot from the stability of the nicotine market, particularly during periods of market downturns. For example, despite the market experiencing one of its worst declines in 2022, BAT managed to deliver over a 20% return to shareholders. Though the market might be facing problems due to dropping smoking rates, the shift toward vaping has somewhat stabilized the industry, which is good news for companies dealing with these products. The use of vaping among US adults increased by nearly 40% between 2019 and 2023, as reported by YouGov. These companies also enjoy substantial profit margins and require minimal capital expenditures. Moreover, they are spared from extensive research and development costs, allowing them to distribute a significant portion of their earnings to investors.
British American Tobacco p.l.c. (NYSE:BTI) is a strong dividend payer as evident from its cash flow. The company expects to generate £40 billion ($50.57 billion) in free cash flow before dividends over the next five years. It also outperforms on metrics like dividend yield and valuation when compared to its competitor, Philip Morris International Inc. (PM). BTI boasts an impressive dividend yield of 11.48% and trades at a forward price-to-earnings ratio of only 7.23. In contrast, PM offers a dividend yield of 4.9% with a higher forward price-to-earnings ratio of 16.75. This stark comparison highlights that BTI is significantly cheaper and provides more than double the dividend yield compared to PM. British American Tobacco p.l.c. (NYSE:BTI) currently offers a quarterly dividend of $0.743 per share and has a dividend yield of 11.48%, as of July 16.
At the end of March 2024, 19 hedge funds tracked by Insider Monkey reported having stakes in British American Tobacco p.l.c. (NYSE:BTI), down from 22 in the previous quarter. These stakes are collectively valued at over $588.6 million.
3. Saratoga Investment Corp. (NYSE:SAR)
Dividend Yield as of July 16: 12.73%
Saratoga Investment Corp. (NYSE:SAR) is a New York-based capital market company that provides debt financing and equity capital to middle-market companies. Though the company has underperformed its peers over time, this year might be a turning point. Interest rates have remained stable and market expectations suggest minimal changes for the rest of the year. This stability has led to higher recurring net interest margins for the company’s portfolio in fiscal Q1 2025, compared to the previous year. The company’s strong reputation and unique market position, along with the continued development of sponsor relationships, are generating attractive investment opportunities from high-quality sponsors. In addition, there are early signs of a potential rise in mergers and acquisitions (M&A) in the lower middle market, as evidenced by multiple repayments in recent months. The company reported a total investment income of $38.7 million in fiscal Q1 2025, up 11.7% from the same period last year.
Saratoga Investment Corp. (NYSE:SAR)’s strong operating performance is built on the high quality, resilience, and balance of its $1.096 billion portfolio, even in the current environment. Despite significant challenges with two portfolio companies, Pepper Palace and Zollege, the company has taken decisive actions. This quarter, both investments were further marked down by $1.2 million, leaving a total combined remaining fair value of $4.4 million. The company has taken full control of these investments through consensual restructurings with the previous sponsors. The Zollege restructuring was completed in the first quarter, and the Pepper Palace restructuring is imminent. The company is actively implementing management changes, capital structure improvements, and business plan adjustments, which have the potential to increase future recovery value.
In addition to its growing portfolio, Saratoga Investment Corp. (NYSE:SAR) is also a strong dividend payer. On May 23, the company announced a 1.4% hike in its quarterly dividend to $0.74 per share. This marks the seventeenth consecutive quarterly dividend increase. This was the company’s first dividends for FY25, following a total of $2.85 per share in dividends for fiscal year 2024, which represented a 16.8% increase from the previous year. With a dividend yield of 12.73% as of July 16, SAR is one of the best dividend stocks on our list.
Saratoga Investment Corp. (NYSE:SAR) was a part of 3 hedge fund portfolios at the end of Q1 2024, compared with 6 in the previous quarter, according to Insider Monkey’s database. The stakes held by these hedge funds have a collective value of over $7.5 million. Among these funds, Two Sigma Advisors was the company’s leading stakeholder in Q1.
2. Medical Properties Trust, Inc. (NYSE:MPW)
Dividend Yield as of July 16: 12.74%
Medical Properties Trust, Inc. (NYSE:MPW) is an American real estate investment trust company, headquartered in Alabama. The company mainly invests in healthcare facilities. The stock is down by over 5% since the start of 2024 due to issues surrounding high interest rates and its tenants. In early January, the REIT disclosed that its main tenant, Steward Health Care, was unable to resume full rental payments despite selling a noncore business in the fourth quarter. Steward was still struggling financially, leading the REIT to defer more rent and collaborate on a long-term solution. A few months later, Steward filed for bankruptcy protection, and the company agreed to provide $75 million in debtor-in-possession financing to help Steward continue its operations. This issue is causing problems for the company’s already sensitive dividend, which was slashed last year after a decade of consecutive growth.
Despite the challenges, analysts see potential in the stock. The bankruptcy of its tenant, although a current issue, presents a possible upside. Medical Properties Trust, Inc. (NYSE:MPW) plans to find new tenants for the hospitals Steward operates, which would allow the company to resume collecting full rental income from those properties. Additionally, they could sell these properties to new operators or financial investors. In addition, the company’s dividend is more stable than it seems. Its cash flow is strong, with trailing twelve-month operating cash flow and free cash flow of $444.4 million and $882.1 million, respectively. The company also reported a positive FFO of $0.24 in the first quarter of 2024.
Medical Properties Trust, Inc. (NYSE:MPW), one of the best dividend stocks, offers a quarterly dividend of $0.15 per share. The stock supports an impressive dividend yield of 12.74%, as of July 16.
Insider Monkey’s database of Q1 2024 indicated that 18 hedge funds held stakes in Medical Properties Trust, Inc. (NYSE:MPW), worth nearly $81 million in total. Silver Point Capital owned the largest stake in the company at the end of the quarter.
1. Arbor Realty Trust, Inc. (NYSE:ABR)
Dividend Yield as of July 16: 12.78%
Arbor Realty Trust, Inc. (NYSE:ABR) is a New York-based real estate investment trust company that invests in a diversified portfolio of finance assets in the multifamily and commercial real estate markets. On July 12, the stock experienced a sharp decline of 17% following reports that federal prosecutors and the FBI are investigating the commercial mortgage REIT. The investigation focuses on lending practices and the accuracy of claims regarding the performance of its loan portfolio. In response to the inquiries, the company stated that it regularly cooperates with regulatory investigations and maintains confidence in its adherence to proper conduct.
That said, analysts see an opportunity in Arbor Realty Trust, Inc. (NYSE:ABR) due to its highly secured dividend, supported by a near-impeccable payment history and strong liquidity position. In addition, the company’s extensive structured loan portfolio stands out as one of the largest among mortgage real estate investment trusts (mREITs), reaching a valuation of $12.25 billion by the close of its fiscal first quarter in 2024. During this period, the company originated $255.9 million in new structured loans, although it experienced a runoff of $640 million. This runoff has bolstered its balance sheet liquidity, resulting in cash and equivalents totaling $908 million by the end of the first quarter, marking its highest level in more than ten years.
Arbor Realty Trust, Inc. (NYSE:ABR) is not some newbie in the industry, in fact, it has been around since 2003 and has weathered significant economic challenges, including the Great Financial Crisis, the 2020 pandemic, and the post-inflation surge and Fed rate hikes in 2023. The company pays a quarterly dividend of $0.43 per share and has a dividend yield of 12.78%, as of July 16. It has been rewarding shareholders with growing dividends for the past 11 years, which makes ABR one of the best dividend stocks on our list.
The number of hedge funds tracked by Insider Monkey owning stakes in Arbor Realty Trust, Inc. (NYSE:ABR) jumped to 24 in Q1 2024, from 17 in the previous quarter. These stakes have a consolidated value of over $96.7 million. Among these hedge funds, Omega Advisors was the company’s largest stakeholder in Q1.
While we acknowledge the potential of ABR as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued dividend stock that is more promising than ABR but that trades at less than 7 times its earnings and yields nearly 10%, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.
