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3 Top Stocks With Dividend Yields Above 10%

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It’s common for investors to park their hard-earned cash into income-generating assets. After all, there are few sweeter feelings than getting paid.

And in a historically-volatile 2022, many investors have turned to dividend-paying stocks.  

It’s easy to understand why; dividends help alleviate drawdowns in other positions, and of course, it provides more than one way to reap a profit from your investment.

In addition, it’s common for companies to up their dividend payouts when business is fruitful, making them enticing investments for income-focused investors from a shorter-term perspective.

Three high-yield stocks – Capital Southwest (CSWC - Free Report) , Arbor Realty Trust (ABR - Free Report) , and Oaktree Specialty Lending (OCSL - Free Report) – could all be considerations for investors looking to build a cash pile quickly.

Below is a chart illustrating the year-to-date performance of all three stocks, with the S&P 500 blended in as a benchmark.

Zacks Investment Research
Image Source: Zacks Investment Research

Let’s take a closer look at each one.

Capital Southwest

Capital Southwest Corporation is a venture capital investment company focused on early-stage financings, expansion financings, management buyouts, and recapitalizations in a broad range of industry segments.

Analysts have raised their earnings outlook across the board as of late, landing CSWC into a favorable Zacks Rank #2 (Buy).

Zacks Investment Research
Image Source: Zacks Investment Research

CSWC’s annual dividend currently stands tall at 12.3%, nicely above its Zacks Finance sector average. Impressively, the company has upped its payout 13 times over the last five years, translating to a nearly 12% five-year annualized dividend growth rate.

Zacks Investment Research
Image Source: Zacks Investment Research

Further, valuation multiples don’t appear stretched; CSWC shares currently trade at a 7.8X forward earnings multiple, nowhere near the 12.8X five-year median and its Zacks sector average.

Zacks Investment Research
Image Source: Zacks Investment Research

Arbor Realty Trust

Arbor Realty Trust is a specialized real estate finance company investing in real estate-related bridge and mezzanine loans, preferred equity, mortgage-related securities, and other real estate-related assets. ABR currently sports a Zacks Rank #2 (Buy).

Zacks Investment Research
Image Source: Zacks Investment Research

Arbor Realty Trust’s annual dividend yield currently sits at a sizable 12.2%, notably higher than the Zacks Finance sector average. Undoubtedly worth highlighting, the company’s payout has grown by more than 13% over the last five years.

Zacks Investment Research
Image Source: Zacks Investment Research

ABR has been on an impressive earnings streak, exceeding the Zacks Consensus EPS Estimate by at least 20% in each of its last ten quarters. Just in its latest release, the company penciled in a 24% EPS beat and reported revenue 5% above expectations.

Zacks Investment Research
Image Source: Zacks Investment Research

Oaktree Specialty Lending

Oaktree Specialty Lending is a specialty finance company providing customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets.

Like the stocks above, OCSL’s earnings outlook has turned bright as of late, helping push the stock into a Zacks Rank #2 (Buy).

Zacks Investment Research
Image Source: Zacks Investment Research

OCSL rewards its shareholders handsomely; its annual dividend currently yields 10.5% paired with a 13.3% five-year annualized growth rate.

Zacks Investment Research
Image Source: Zacks Investment Research

Bottom Line

Investors should be aware that steep payouts can be unsustainable from a long-term perspective and typically get cut when business isn’t as fruitful, perhaps steering away income investors that prefer reliability.  

When looking for dividend reliability, Dividend Aristocrats are a great option. A few currently top-ranked Dividend Aristocrats include Caterpillar (CAT - Free Report) and Archer Daniels Midland (ADM - Free Report) .

Still, all three stocks above – Capital Southwest (CSWC - Free Report) , Arbor Realty Trust (ABR - Free Report) , and Oaktree Specialty Lending (OCSL - Free Report) – currently carry annual dividend yields greater than 10%, making them valid considerations for investors looking to stack cash quickly.

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