2 Ultra-High Yield Dividend Stocks to Buy in October

When economic growth is uncertain, investors often turn to the reliability of dividend stocks to resolve them. With the Federal Reserve entering a new cycle of rate easing, it indicates that the economy is not as healthy as we have been told. So buying dividend stocks is a great way to help insulate your portfolio if things go south quickly.

A few years ago, analysts from JPMorgan Chaseasset management unit (NYSE:JPM) found stocks that initiated and then raised their payouts over the 40-year period between 1972 and 2012 returned an average of 9.5% annually, compared to just 1.6% for non-dividend-paying stocks.

Similarly, The Hartford Funds watched his performance S&P 500 from 1960 onwards and discovered dividends represented 85% of the total return of the index. A $10,000 investment in the S&P benchmark since then would have resulted in earnings equal to $796,432, but dividend reinvestment accelerated those returns, turning that same $10,000 into $5.1 million.

While you might be tempted to buy high-yielding stocks to further increase your profits, simply following the yield is a risky pursuit because many stocks with higher returns often have higher risks. But this does not apply to all high-yielding stocks, so an investor must pick and choose carefully in which to invest.

The following two dividend stocks are not only solid high-yielding income stocks, but in the new era of the not-so-easy-money Fed, they offer significant upside potential and the 2 excellent dividend stocks to own buy in october

Key points about this article:

• Interest rates are starting to fall, which could be hugely beneficial for these ultra-high-yielding dividend stocks, which have been weighed down by previous “higher for longer” monetary policy.
• However, don’t chase yield for yield’s sake, as ultra-high yield stocks often come with a number of problems. Being highly selective is the key to investing success, and these two stocks are primed for greatness.
• Sit back and let dividends do the hard work for a simple and steady path to serious wealth creation over time. Grab your free copy of “2 Legendary High-Yield Dividend Stocks” now.

Ares Capital (ARCC)

Business Development Company (BDC) The capital city of Ares (NASDAQ:ARCC) is the largest publicly traded stock of its kind. It owns 525 mid-market businesses worth $25 billion.

Ares is looking for companies with experienced management teams that have a proven track record of delivering stable cash flows while holding identifiable growth opportunities. Almost a quarter of its investments are in technology companies, while another 13% are healthcare businesses.

Because BDCs are highly leveraged and must borrow money to lend to companies at higher rates, the Fed’s “higher for longer” interest rate policies hurt Ares’ performance. ARCC stock is up 4% in 2024 and only 6% higher over the last 12 months. A lower rate environment will detail directly to the bottom line.

Similar to real estate investment trusts (REITs), BDCs must pay at least 90% of their taxable income as dividends to shareholders. Ares offers investors a solid decade of core dividend growth exceeding 26%. It has also generated an unbroken streak of cumulative underlying earnings and realized net earnings well in excess of dividends paid since 2007. Its dividend yield is 9.2% annually.

With the improvement of credit market conditions, Ares Capital is ready for a new step of growth.

Industrial Design (MDV)

Workers in hard hats repairing a car

Industrial style (NYSE:MDV) is a REIT that focuses on single-tenant properties, primarily in the industrial manufacturing market. It is also public REITs only focused exclusively on the industrial market. Its largest tenant is a farm and heavy equipment manufacturer Lindsay (NYSE:LNN), which accounts for nearly 15% of rental income. Overall, Modiv has 43 properties in 15 states, representing 29 tenants.

The REIT only went public in 2022, but it’s already showing signs of greatness. Unlike most REITs, Modiv pays a dividend every month (“Modiv” means “monthly dividend”), which yields 6.9%. The dividend coverage ratio, or the number of times a company can pay dividends to shareholders using net income, is 110%. While management has said it won’t raise the payout anytime soon, it has made nearly 100 consecutive distributions.

Like Ares Capital, REITs require capital to invest in properties, making the high-rate environment of recent years a difficult time to navigate. However, MDV shares are up 22% year-to-date, and with rates set to drop in the future, we expect Modiv Industrial to be a surefire winner.

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