Revealed on October 17, 2025, by Nathan Parsh
Excessive-yield shares pay out dividends which are considerably increased than the market common. For instance, the S&P 500’s present yield is barely ~1.2%, a product of document highs for the market.
Excessive-yield shares might be significantly useful in shoring up earnings after retirement. A $120,000 funding in shares with a median dividend yield of 5% creates a median of $500 a month in dividends.
We now have created a spreadsheet of shares (and carefully associated REITs and MLPs, and so on.) with dividend yields of 5% or extra…
You possibly can obtain your free full listing of all excessive dividend shares with 5%+ yields (together with necessary monetary metrics similar to dividend yield and payout ratio) by clicking on the hyperlink under:
You possibly can obtain your free full listing of all excessive dividend shares with 5%+ yields (together with necessary monetary metrics similar to dividend yield and payout ratio) by clicking on the hyperlink under:
The subsequent article on this collection will evaluation Stellus Capital Funding Corp. (SCM).
Enterprise Overview
Stellus is a Enterprise Improvement Firm, or BDC, that views itself as a versatile supply of capital for the center market. The corporate invests in small, predominantly personal firms which are normally at an early stage of their development cycles.
Stellus is a middle-market funding agency that makes fairness and debt investments in personal middle-market firms. The corporate supplies capital options to firms with $5 million to $50 million of EBITDA and does so with varied devices, the vast majority of that are debt.
Stellus supplies first lien, second lien, mezzanine, convertible debt, and fairness investments to a various group of shoppers, usually at excessive yields, within the US and Canada.
Supply: Investor Presentation
Stellus has a extremely diversified funding portfolio, each by way of trade and geography focus. The corporate provides a wide range of debt investments, together with first lien, second lien, uni-tranche, and mezzanine financing.
Invested capital is used for a variety of functions, together with acquisitions, development investments, and extra. The investments are positioned in varied industries, together with enterprise providers, industrial, healthcare, know-how, power, client merchandise, and finance. Stellus is externally managed by Stellus Capital Administration LLC, a registered funding advisor.
The corporate follows a disciplined funding technique. For instance, it closed solely about 2% of offers reviewed over the previous few years. Its relative selectiveness permits the corporate to concentrate on the highest-quality investments.
It additionally means the corporate has way more funding alternatives than it wants, enhancing its skill to pick out solely the perfect investments. Stellus generates significantly excessive yields from its first lien, second lien, and unsecured debt investments. The weighted common yield as of the newest quarterly report was 10.3%.
Progress Prospects
A robust catalyst for Stellus is its rising funding portfolio. Over the previous 5 years, Stellus has seen its portfolio rise quickly, permitting the corporate to earn increased funding earnings.
Nonetheless, this all stopped in 2020 because the coronavirus pandemic despatched the U.S. financial system right into a deep recession, negatively impacting a lot of Stellus’ investments.
Stellus reported second-quarter outcomes on August seventh, 2025, with outcomes near the market’s expectations. Internet funding earnings was $0.34, whereas core internet funding earnings of was $0.35. This was down in comparison with the prior yr, nonetheless. Whole funding earnings of $25.7 million decreased from $26.6 million final yr.
Gross bills climbed $600K, or 3.6%, from final yr, whereas charges and bills associated to borrowings elevated from $3.9 million to $4.3 million.
The corporate funded $15 million of latest investments, ending the quarter with a complete portfolio truthful worth of $986 million.
We count on that internet funding earnings will decline 20.7% to $1.30 in 2025.
Aggressive Benefits & Recession Efficiency
Like many BDCs, Stellus doesn’t profit from vital aggressive benefits. The corporate provides the identical kinds of merchandise that different BDCs do to an identical set of shoppers. We really feel that makes it exhausting for BDCs to tell apart themselves an excessive amount of from the trade. Moreover, BDCs typically undergo throughout recessions as a result of debtors have a harder time assembly reimbursement timelines.
Stellus was not round in the course of the 2007 to 2009 interval, because it was not shaped till 2012. That stated, internet funding earnings dipped from $1.23 to $1.13 in 2020, earlier than making a brand new excessive in 2022. This was an honest outcome in comparison with many BDCs throughout that interval.
One space of concern is that Stellus continues to dilute its share rely. The share rely greater than doubled between 2015 and 2024. We mission that the share rely will greater than triple from 2015 to 2030, which can probably act as a headwind to internet funding earnings and will put the dividend in danger.
Dividend Evaluation
Stellus, like most BDCs, provides a really excessive yield, which is 13.4% at the moment.
Supply: Investor Presentation
Stellus at the moment pays a month-to-month dividend of $0.1333 per share, equating to an annualized payout of $1.5996. The corporate reduce its dividend in mid-2020 as a result of pandemic, which was probably a prudent transfer throughout that interval.
Stellus has paid out particular distributions up to now to complement its engaging month-to-month dividend additional, however this final occurred in 2022.
The principle motive traders are interested in BDCs is that they typically present excessive charges of earnings, and Stellus isn’t any completely different. These excessive yields typically include dangers. Stellus is predicted to see a sizeable decline in NII in 2025, with the projected payout ratio at 123% for this yr. The payout ratio has sometimes been elevated with Stellus, however this may be the best charge in additional than a decade and the primary time since 2019 that it exceeded the 100% threshold.
Subsequently, it’s fairly potential that Stellus could be pressured to chop its dividend if internet funding earnings doesn’t return to development.
Ultimate Ideas
Stellus has a reasonably diversified enterprise mannequin and survived the worst of the Covid-19 pandemic significantly better than a lot of its fellow BDCs.
The 13%+ yield may very well be engaging for earnings traders, however the yield may not be secure from a possible reduce on condition that Stellus is projected to payout extra in dividends than it generates in internet funding earnings.
We recommend that solely probably the most risk-tolerant traders think about proudly owning shares of Stellus.
Excessive-Yield Particular person Safety Analysis
Different Positive Dividend Assets
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