As we approach the final month of the year, it's natural that investors look to formulate their game plans for 2025 (while also selling off positions for tax purposes). Of course, it’s unsurprising that others prefer to hunt for high-growth stocks to bolster their returns next year.
That said, supplementing your portfolio with reliable, high-yield stocks can potentially improve your returns. These companies (hopefully) serve as a source of income if the stocks lose value.
So, today, let’s look at the top high-yield dividend stocks and see what they can offer you.
How I Came Up With The Following Stocks
To get my list, I screened the broader market using the following criteria:
- Number of Analysts: 8 and above. To get a better, more rounded idea of what Wall Street analysts really think, I elected to limit the screen to stocks covered by at least eight analysts.
- Current Analyst Rating: 4.5 to 5 (Strong Buy). To further strengthen the thesis that these stocks are at the top, I limited the results to only those with the highest analyst rating.
- Annual Dividend Yield: 8% or more. And finally, the last filter weeds out stocks with less than 8% yield. While there can be dozens of Strong Buy-rated stocks at any given time, only a handful of companies have both high ratings and high yields.
With these stringent selection criteria, I got only four results. Here they are, arranged from the highest trailing twelve-month (TTM) yields to the lowest.
Exclusion: Civitas Resources
For this analysis, I'm afraid I have to exclude Civitas Resources (CIVI) from this list despite its numerous appearances in my previous dividend stock coverage. The stock appeared on the screen because it measures TTM yields, not forward, which underlines the critical need for doing your due diligence, even when trading with the help of a stock screener.
In any case, the primary reason for removing CIVI is that the company has shifted from paying extra dividends as part of its quarterly payouts to initiating share buybacks to improve shareholder value.
While that’s not necessarily bad, that’s not what an income investor would want. For reference, CIVI was paying upwards of 12% yields before this policy change. Now, with extra dividends off the table (which was usually around twice the amount of the regular dividend), its yield is at a paltry 3.91% based on a $2.00 annual payout. Yes, it’s higher than what most companies offer, but it’s not what I’m looking for today.
With that out of the way, let’s discuss the other three that actually offer high yields, starting with the one with the top one:
Trinity Capital Inc (TRIN)
Trinity Capital is a business development company (BDC) that provides debt to growth-stage companies, including loans and equipment financings, primarily in technology and other high-growth industries. If you’re unfamiliar with BDCs, you can consider them like REITS, but they invest in other companies instead of real estate.
With over $3.8 billion in funding and $2.0 billion under management for more than 370 investments, Trinity Capital is one of the largest BDCs around.
The company started paying dividends in 2021 and has maintained high yields throughout. TRIN stock pays 51 cents per share quarterly, translating to a $2.04 annual rate and an impressive 14.37% forward yield.
Meanwhile, its latest quarterly filing indicates that the company’s income is enough to cover its dividend payments: in Q3 2024, Trinity Capital reported a record net investment income of 54 cents per share.
Sixth Street Specialty Lending (TSLX)
Previously TPG, Sixth Street Specialty Lending is another BDC that provides customized financing solutions to middle-market companies in the United States. The company offers first-lien senior secured loans, second-lien loans, unitranche loans, mezzanine debt, and equity investments. It services various sectors, including software and tech, healthcare, energy, manufacturing, royalty-related businesses, industrials, and more.
The company is known to pay quarterly and variable dividends, depending on its earnings. Its recent quarterly payout amounts to 51 cents per share, bringing its forward annual rate to $2.04. This reflects a 10% forward yield based on current prices.
Rithm Capital Corp (RITM)
Rithm Capital Corp is a real estate investment trust (REIT) that focuses on mortgage servicing rights (MSRs), residential and commercial mortgage loans, mortgage-backed securities (MBS), real estate equity, and consumer loans.
Since 2021, Rithm Capital has consistently paid 25 cents a quarter, which reflects a 9.33% yield based on RITM stock's current trading price. It also has a solid 4.50 score based on ten analysts.
Final Thoughts
Complementing your growth portfolio with high-yield dividend stocks ensures you’ll still have income and cash flow even if your bets don’t work out for you. However, you must be particular when picking your dividend stocks and mindful of any significant policy changes affecting your bottom line.
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