Investing is one of the best ways to build wealth. But having no income from your stock portfolio while you wait years for it to grow can be a drag. Of course, that is the very issue high-yield dividend stocks can help with. They pay you a steady stream of passive income which is perfect if you need cash flow sooner than later.

But not all dividend stocks are created equal. While there are many that pay a consistent dividend, some of them are quite low. And a difference of a few percentage points in your dividend payout can have a huge impact on how much you receive over the years.

Knob turning up high-yield stocks.

To be sure you are maximizing your returns, let’s take a closer look…

The Best High-Yield Dividend Stocks to Buy

  • AGNC Investment Corp. (Nasdaq: AGNC)
  • Dynex Capital, Inc. (NYSE: DX)
  • Prospect Capital Corporation (Nasdaq: PSEC)
  • American Finance Trust, Inc. (Nasdaq: AFIN)
  • Oxford Square Capital Corp. (Nasdaq: OXSQ)

All of these stocks have exceptional dividends. That alone certainly sounds enticing. However, before we take a closer look at each of them, let’s consider whether high-yield dividend stocks are a good investment.

Are High-Yield Dividend Stocks a Good Investment?

As a whole, dividend stocks have plenty of advantages. As mentioned above, the most obvious one is that you earn regular income from these stocks. And during a bear market when share prices are falling, that’s a nice benefit to have.

However, there are a couple of things to keep in mind about high dividends in particular. For one, if a company’s share price is falling, it may decide to pump up the dividend to attract investors. But if the company’s business model is not a sound one, that dividend is not a sound one. Thus, you may find the share price starts to tank — if it hasn’t already.

Plus, money paid out in dividends is not reinvested in the business. In some sectors, such as real estate, there may not be much need for heavy research and development. But in others, R&D is not something that can simply be neglected. Thus, it’s important to know what you are investing in to assess whether a high dividend is sustainable.

Now, let’s take a look at some of the best high-yield dividend stocks to add to your portfolio.

AGNC Investment Corp.

Dividend yield: 8.89%

AGNC Investment Corp is an internally-managed real estate investment trust (REIT). It invests mainly in agency residential mortgage-backed securities (MBS) on a leveraged basis. It uses collateralized borrowing to finance its projects. And it aims to provide high returns via dividends as well as share price appreciation.

Currently, AGNC’s market cap is over $8 billion. And analyst are fairly bullish on this stock. Eight CNN Business analysts rate it a buy, six say to hold, and none say to sell. Its median price target is just over 4%. The company did take a hit last quarter, though. Revenue was -$389 million for a year-over-year decrease of 144%. Net income was -$411 million, a decrease of 167%. And diluted EPS was -0.83. But it appears that AGNC has weathers the storm. And its steady payouts to investors make this one of the exceptional high-yield dividend stocks investors should consider.

Dynex Capital, Inc.

Dividend yield: 8.72%

Similar to AGNC, Dynex Capital is an internally-managed mortgage REIT that invests on a leveraged basis. It invest in both agency and non-agency MBS consisting of residential, commercial, and interest-only investments. It also aims to provide returns through dividends and long-term growth.

Dynex is a small-cap stock with a market capitalization just over $600 million at the moment. As such, there are not as many analyst ratings on it. CNN Business has three buy ratings and two sell. Its price target is just under 6% on the median. Dynex, too, took a hit last quarter. Revenue was -$37.73 million. That made for a year-over-year decrease of 119%. And net income was -43.76 million, a decrease of 122%. Diluted EPS was -1.43. On the plus side, its profit margin was 116% for an increase of 19%. While it has struggled short-term, long-term, Dynex is still one of the strong high-yield dividend stocks to consider investing in.

Prospect Capital Corporation

Prospect Capital Corporation is a business development company (BDC). It makes debt and equity investments in middle market businesses in various industries in the U.S. Some of the industries where it invests include manufacturing, industrials, energy, business services, financial services, food, and healthcare. It also invests in income-producing operations such as collateralized loan obligations (CLOs).

PSEC is mid-cap stock with a capitalization of just over $3 billion. At the moment, not many mainstream analysts are bullish on this stock. In fact, most are recommending to sell. However, Yahoo! Finance says it is undervalued and has a bullish outlook. This means PSEC might be trading at a discount right now. But those who are risk-adverse might be more comfortable adding it to their watchlist for the time being. Nonetheless, that 8.72% payout makes this one of the high-yield dividend stocks worth keeping an eye on.

American Finance Trust, Inc.

Dividend yield: 9.90%

American Finance Trust is another publicly-traded REIT. It focuses on acquiring and managing high-quality single- and multi-tenant properties in the retail space. If you visit its homepage, you will see properties occupied by well-known business such as Walgreens, AutoZone, and Chili’s. It was founded in 2013 and is based in New York.

The company’s market cap is just over $1 billion. And price targets look strong at the moment. CNN sets a median price target of nearly 28% higher. There are only two ratings with one buy and one hold. Its net income was negative last quarter at -$1.48 million. But that was still a YoY increase of 92%. Likewise, its EPS was only 0.07. But it was up 65%. The same can be said for its profit margin at -1.81% for an increase of 93%. By most measures, it appears this ship is being righted by its leadership. And that’s why this is one of the best high-yield dividend stocks on the market right now.

Oxford Square Capital Corp.

Dividend yield: 10.05%

Oxford Square Capital Corp. is another publicly-traded BDC. Like many of these companies, its objective is simply to maximize returns. It does that by investing in corporate debt securities and CLOs. Its CLOs also include warehouse facilities, which are financing structures that aggregate loans. It also uses leveraged loans to increase its access to financing.

At the moment, Oxford is a small company with a market cap just over $200 million. Thus, analyst ratings are sparse. Only one hold rating can be found online. Still, CNN Business had a median price target of an almost 14% increase. Its most recent earnings per share was reported at $0.06. But perhaps the most compelling argument for this high-yield dividend stock is that five hedge funds hold Oxford Capital in their portfolios. And it’s almost never a bad idea to follow the insider money.

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