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2 Ultra-High-Yield Dividend Stocks to Buy Now for a Lifetime of Passive Income
A buoyant stock market that keeps reaching new heights is making it tougher to find high-yield dividend payers. The S&P 500 reached a new all-time high on Oct 18. At recent prices, the average dividend-paying stock in the benchmark index offers an uninspiring 1.3% dividend yield.
The average dividend payer in the S&P 500 index might be unappealing, but there are underappreciated businesses with ultra high dividend yields waiting for income-seeking investors to scoop them up. Ares Capital (NASDAQ: ARCC), and EPR Properties (NYSE: EPR) offer yields above 8% at recent prices.
1. Ares Capital
Ares Capital is the world’s largest publicly traded business development company, or BDC. These specialty financiers fill the gap left by U.S. banks that have been dialing back their direct lending operations for decades. They are also popular with income-seeking investors because they can legally avoid paying income taxes by distributing nearly all their profits to shareholders as dividends.
This BDC’s quarterly dividend payment hasn’t risen in a straight line, but it is up by 26% over the past 10 years. At recent prices, it offers an 8.9% yield and confidence that comes with plenty of diversification.
At the end of June, there were 525 companies in Ares Capital’s portfolio. The company it’s most exposed to is responsible for just 1.8% of the total portfolio. Diversification and an enviable track record earned the BDC an investment-grade credit rating that recently allowed it to sell $850 million worth of five-year notes with a low 5.95% coupon.
The midsize businesses Ares lends to are willing to borrow at higher rates than you might expect. The average yield it received from the debt securities in its portfolio was 12.2% in the second quarter. This is even more encouraging when you consider half of its assets are first-lien senior secured loans, which are first to be repaid if there’s a bankruptcy.
Ares Capital has so much room to grow that buying shares now and never letting go looks like the right move. Its portfolio has swelled to nearly $25 billion but management estimates the current demand for mid-market capital at about $5.4 trillion.
2. EPR Properties
EPR Properties is a real estate investment trust (REIT) that offers a big 9.3% dividend yield at recent prices. The stock has been under pressure because it looks like its recent recovery is losing steam.
This REIT specializes in properties that bring people together in large groups. The stock price has been under pressure because underperforming theaters made up 37% of its total portfolio at the end of June. Investors considering EPR Properties will be glad to know that the theater segment was responsible for just 0.3% of total investment spending during the first six months of 2024.
Increasingly popular eat-and-play facilities like Top Golf make up a large and growing share of EPR’s portfolio. While total revenue has declined slightly, a portfolio leaning further toward non-theater tenants is pushing up profits.
EPR Properties abruptly stopped paying dividends in the spring of 2020 while the COVID-19 pandemic kept us from joining together in large groups. It restarted its monthly dividend program at a reduced level in July 2021.
Since restarting payments in 2021, EPR Properties has raised its dividend by 14% and it’s in a position to raise it a lot further. Funds from operations (FFO) is a proxy for earnings used to evaluate REITs like EPR properties. This year, management expects adjusted FFO to land in a range between $4.76 and $4.96 per share, which is more than enough to support and raise a payout currently set at an annualized $3.42 per share.
The pandemic taught investors that nobody should put too many eggs in EPR’s basket, but its ability to survive the worst of the challenge suggests it can survive all kinds of unforeseen issues. Adding some beaten-down shares to a diverse portfolio now could be a great way to pump up your passive income stream over the long run.
Should you invest $1,000 in Ares Capital right now?
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Cory Renauer has positions in Ares Capital. The Motley Fool recommends EPR Properties. The Motley Fool has a disclosure policy.
2 Ultra-High-Yield Dividend Stocks to Buy Now for a Lifetime of Passive Income was originally published by The Motley Fool
The habits of millionaires are a topic of interest when it comes to financial advice. After all, unless they received a large chunk of money as an inheritance or gift, most millionaires had to be smart with their money to get where they are.
Learning how millionaires accumulate wealth — and where they keep it — can provide valuable insights for anyone focused on growing their money. One common question is whether or not millionaires keep money in checking accounts.
Studies show that in recent years, millionaires are keeping a significant portion of their wealth in cash. According to CNBC’s , that portion was about 24% in 2023. While this doesn’t necessarily mean a quarter of a millionaire’s wealth is sitting in a checking account, it does indicate the importance of maintaining liquid assets. And a checking account can be a helpful tool for doing so — whether or not you’re a millionaire.
Anyone, regardless of net worth, can find value in a checking account. Checking accounts allow unlimited deposits and withdrawals, check writing, bill pay, and other features to help you manage your money day-to-day.
While millionaires may keep large portions of their wealth in other deposit accounts and investments, some may use a checking account to manage daily spending. Millionaires also recognize the importance of having liquid assets, like funds in checking and savings accounts. Accessible cash lets you cover unexpected expenses without needing to sell off investments, borrow money, or pay a penalty for tapping your retirement savings early.
The amount of money a millionaire keeps in their checking account is highly personal and depends on preference. However, because checking accounts rarely earn competitive — if any — interest, some millionaires intentionally limit their checking account balance. Some may choose to keep the bare minimum, such as a couple of months’ worth of essential expenses, in their checking accounts, keeping the rest of their wealth in more lucrative assets.
Regardless of preference, it would be surprising for a millionaire to keep more than $250,000 in a single checking account. That’s because the Federal Deposit Insurance Corp. (FDIC) only insures up to $250,000 in deposits per institution, per account holder.
While millionaires may use checking accounts for day-to-day financial transactions, they may also use some of the following accounts in addition to, or in place of, a checking account:
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Savings accounts: Like checking accounts, savings accounts provide a high degree of liquidity, allowing you to access your money as needed for regular or unexpected expenses. High-yield savings accounts, in particular, give millionaires an extra bang for their buck. Some of the best accounts currently offer rates upwards of 4% versus the national average savings account rate of 0.46%.
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Cash management accounts: Cash management accounts (CMAs) pay competitive interest rates while maintaining more accessibility than a savings account. Some CMAs come with a debit card and ATM access, and many provide extended FDIC coverage limits by “sweeping” additional deposits into partner banks. CMAs are available at brokerages, not banks, facilitating easy transfers between investment and cash accounts.
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Money market accounts: Similar to CMAs, money market accounts combine features of checking and savings accounts, often paying competitive interest rates and providing check writing and ATM access. Banks and credit unions offer these accounts, which are federally insured. Minimum opening deposit and minimum balance requirements are often higher than those for standard savings accounts.
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Retirement and tax-advantaged accounts: Millionaires understand the importance of investing for their later years, and retirement accounts such as 401(k)s and IRAs allow them to do so in a tax-advantaged way. Some retirement accounts, like 401(k)s, are offered by certain employers. Others, such as traditional and Roth IRAs, are available to anyone.
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Brokerage accounts: The IRS limits contributions to tax-advantaged accounts, and millionaires typically invest beyond these limits. They do so with taxable brokerage accounts, which can hold investments such as stocks, bonds, and mutual funds without contribution limits.
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Other investments, like real estate, commodities, and art: Some millionaires may decide to diversify their portfolio with other investment types. These could include real estate investments, such as investment properties or real estate investment trusts (REITs); commodities, such as metals or energy products; art; and more.
The amount of money millionaires keep in their checking accounts depends on personal preference. While some millionaires may keep six figures in their checking account to maintain a comfortable cash cushion, others may choose to keep the bare minimum in checking. You wouldn’t expect millionaires to keep more than $250,000 in a checking account, however, because balances over this threshold aren’t typically insured.
There’s no single bank that’s a favorite among millionaires; it’s another matter of preference. However, millionaires are likely to bank with institutions that offer private banking to those who meet specific financial requirements. Private banking may include wealth planning services, waived fees, dedicated bankers, and additional perks. J.P. Morgan Private Bank, Citi Private Bank, and Bank of America Private Bank are among some of the most popular banks for millionaires.
Billionaires may have checking accounts, but they likely use accounts that cater to ultra-high-net-worth individuals. These accounts may come with perks such as a dedicated banker, waived fees, and competitive interest rates. Alternatively, billionaires may opt for a cash management account with higher FDIC insurance coverage limits and checking account features.
No rule says you can’t have a million dollars in a checking account, but FDIC insurance typically only covers up to $250,000. Plus, you can get a bigger return on your investment by keeping $1 million elsewhere. One alternative is a cash management account, which acts like a checking account but generally earns higher interest. Plus, many cash management accounts insure more than the standard $250,000 by sweeping funds into multiple partner banks.
Lumen Technologies, Inc. (NYSE:LUMN) shares are trading higher on Monday after the company announced it is partnering with Meta Platforms, Inc. (NASDAQ:META) to significantly increase Meta’s network capacity and help drive its AI ambitions.
Lumen’s partnership offers Meta enhanced flexibility with secure, on-demand bandwidth, supporting its complex computing requirements and enabling it to serve billions daily.
Ashley Haynes-Gaspar, Lumen’s EVP and chief revenue officer, said, “We’ve transformed our company to meet this demand. As Meta’s customers use more AI services across its platforms, we’re helping provide Meta with a seamless, effortless, and flexible network that will meet its growing needs.”
Lumen Technologies said its Private Connectivity Fabric enables long-term network capacity for Meta’s AI.
Alex-Handrah Aimé, director of Meta’s Network Investments stated, “Our AI tools are performing increasingly more complex tasks including enabling conversations in a variety of languages and translating text to images in real time, while helping people interact with the world around them in new, immersive ways.”
Lumen will report third quarter 2024 results on November 5, 2024.
Investors can gain exposure to the stock via Invesco S&P SmallCap Utilities & Communication Services ETF (NASDAQ:PSCU) and First Trust Cloud Computing ETF (NASDAQ:SKYY).
Price Action: LUMN shares are up 9.50% at $7.38 at the last check Monday.
Image via Shutterstock
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This article Lumen And Meta Join Forces To Boost AI With Flexible, On-Demand Network Solutions originally appeared on Benzinga.com
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CoinShares said the United States and Bitcoin led crypto investment product dynamics last week amid growing optimism over a potential Republican election win in the US.
Bitcoin’s private keys won’t be breached any time soon, but the industry still needs to transition to “post-quantum cryptography.”
Despite record European inflows, Bitcoin has been unable to recover above the $70,000 psychological level since July.
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