While Most of Wall Street focuses on large and mega-cap stocks, as they provide a degree of safety and liquidity, many investors are limited in the number of shares they can buy. Many of the most significant public companies, especially the technology giants, trade at prices up to $1000 per share, while many are in the low to mid-hundreds. It’s hard to get decent share count leverage at those steep prices. Many growth and income investors, especially more aggressive traders, look at lower-priced stocks to make good money and get a higher share count. That can help the decision-making process, especially when you are on to a winner, as you can always sell and keep half.
24/7 Wall St. Key Points:
Ultra-high-yield stocks have been hit this year and are offering good price points to buy now
Low-priced stocks allow investors to buy more shares
Ultra-high-yield stocks are typically riskier than some other dividend stocks
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For low-price stock skeptics, many of the biggest companies in the world, including Apple, Amazon, Netflix, and NVIDIA, all traded in the single digits at one time. We identified five stocks trading around the $5 level, offering investors substantial ultra-high-yield dividends. The added value for investors is that if the stocks trade sideways, you are still paid a massive dividend for being patient.
Why do we cover Ultra-High-Yield stocks?
While only suited for some, those trying to build strong passive income streams can do exceptionally well by having some of these companies in their portfolios. Paired with more conservative blue-chip dividend giants, investors can use a barbell approach to get passive income streams that make a significant difference.
Evolution Petroleum
Evolution Petroleum is an energy company that develops, owns, and exploits onshore oil and gas properties. This small-cap energy stock pays investors a huge dividend and could be a takeover target. Evolution Petroleum Corporation (NYSE: EPM) is an energy company that develops, produces, owns, and exploits onshore oil and gas properties in the United States.
The company holds non-operated interests in:
The SCOOP and STACK plays in Central Oklahoma
The Chaveroo Field, situated in Chaves and Roosevelt Counties, New Mexico
The Jonah Field, located in Sublette County, Wyoming
The Williston Basin, situated in Williston, North Dakota
The Barnett Shale field in North Texas
The Hamilton Dome, situated in Hot Springs County, Wyoming
The Delhi Field, an onshore CO2-EOR project located in northeast Louisiana in Franklin, Madison, and Richland Parishes, as well as small overriding royalty interests in four onshore central Texas wells
Nuveen Credit Strategies
Run by one of the world’s biggest money managers, this exchange-traded fund, with a stunning 423 holdings and a 12.76% dividend, offers the kind of diversity ultra-high-yield investors look for. Nuveen Credit Strategies Income Fund (NYSE: JQC) is a diversified closed-end management investment company. The Fund’s investment objective is to achieve a high level of current income, and the secondary investment objective is total return.
At the time of purchase, the Fund invests at least 80% of its assets in instruments that are senior to common equity in an issuer’s capital structure, including loans, debt securities, and preferred securities.
Nuveen Credit Strategies invests up to 20% of its Managed Assets in instruments of non-U.S. issuers that are U.S. dollar or non-U.S. dollar denominated, including instruments of issuers located in or conducting their business in emerging market countries. It also invests up to 25% of its managed assets in collateralized loan obligations (CLO) debt securities.
It serves various industries, such as:
Software
Hotels
Restaurants
Leisure
Media
Insurance
PermRock Royalty Trust
PermRock Royalty Trust acquires, develops, and operates oil and natural gas properties in the Permian Basin. With a huge dividend, this energy trust makes sense as spot oil prices look to rebound. PermRock Royalty Property Trust (NYSE: PRT) is a statutory trust. The Trust owns a net profits interest representing the right to receive 80% of the net profits from the sale of oil and natural gas production from the underlying properties. T2S Permian Acquisition II LLC owns and operates the underlying properties.
The underlying properties comprise about 31,354 gross (22,394 net) acres in the Permian Basin, which extends over 75,000 square miles in West Texas and Southeastern New Mexico.
The underlying properties consist of four operating areas.
The Permian Clearfork area consists of about 2,434 net acres on the Central Basin Platform of the Permian Basin in Hockley and Terry Counties, Texas
Permian Abo area consists of about 1,667 net acres on the Central Basin Platform of the Permian Basin in Terry and Cochran Counties, Texas
The Permian Shelf area consists of 14,390 net acres on the Eastern Shelf of the Permian Basin
The Permian Platform area consists of 3,903 net acres
Prospect Capital
Prospect Capital Corporation is a leading flexible private debt and equity capital provider. Hedge Funds love this top Business development company, and the gigantic 13.77% dividend makes it a potential total return home run. Prospect Capital Corporation (NASDAQ: PSEC) specializes in:
Middle market, mature, mezzanine finance,
Later stage, emerging growth, leveraged buyouts, refinancing, acquisitions, recapitalizations, turnaround, growth capital, development
Capital expenditures and subordinated debt tranches of collateralized loan obligations
Cash flow term loans, marketplace lending, and bridge transactions.
It also invests in the multi-family residential real estate asset class. The fund invests in secured debt, senior debt, senior and secured term loans, unitranche debt, first-lien and second-lien debt, private debt, private equity, mezzanine debt, and equity investments in private and microcap public companies.
Prospect Capital focuses on both primary origination and secondary loans/portfolios. It invests in debt financing for private equity sponsors, acquisitions, dividend recapitalizations, growth financings, bridge loans, cash flow term loans, and real estate financing and investments.
The company invests in the following sectors and business silos:
Aerospace and defense
Chemicals
Conglomerate and consumer services
Ecological
Electronics
Financial services
Machinery and Manufacturing
Media
Pharmaceuticals
Retail
Software
Specialty Minerals
Textiles and leather
Transportation
Oil, gas, and coal production
In addition to favoring materials, industrials, consumer discretionary, information technology, utilities, pipeline, storage, power generation and distribution, renewable and clean energy, oilfield services, healthcare, food and beverage, education, and business services.
Oxford Square Capital
Oxford Square Capital Corp. (NASDAQ: OXSQ) is a closed-end, non-diversified management investment company. The firm’s investment objective is to maximize the total return of its portfolio. It seeks an attractive risk-adjusted total return by investing primarily in corporate debt securities and collateralized loan obligations (CLOs) that own corporate debt securities.
CLO investments may also include warehouse facilities, which are early-stage CLO vehicles designed to aggregate loans that can serve as the basis for a traditional CLO vehicle.
The Company may also invest in publicly traded debt and/or equity securities.
Its portfolio of investments spans various industries, including:
Aerospace and defense
Business services
Food and beverage
Healthcare
Industrials
Materials
Software
Telecommunications services
Structured Finance
Information technology (IT) consulting
The Company’s investment adviser is Oxford Square Management, LLC.
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