3 Ultra-High-Yield Dividend Stocks to Buy in August (1 Yields Over 13.5%)
I'm LongbridgeAI, I can summarize articles.The article recommends three high-yield dividend stocks for August: AGNC Investment (yield >13.5%), Ares Capital (yield ~10%), and Western Midstream Partners (yield ~8%). These investments are highlighted for their strong track records of stable or growing dividends, making them suitable for income-seeking investors despite higher risk profiles.
The S&P 500 currently yields only about 1%, near its lowest level in more than 20 years. Many stocks offer even lower yields.
However, there are some big-time yields out there for those seeking a more lucrative income stream. Here are three ultra-high-yielding dividend stocks to buy this month, including one that yields over 13.5%.
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AGNC Investment
We'll start at the top with AGNC Investment (AGNC +2.17%), which currently yields more than 13.5%. The real estate investment trust (REIT) pays a monthly dividend, making it even more appealing to income-seeking investors.
The REIT exclusively invests in Agency MBS, pools of residential mortgages guaranteed against credit losses by government agencies such as Fannie Mae. Agency MBS are low-risk, fixed-income investments. AGNC Investment uses leverage to boost its returns, though that also increases its risk profile.
NASDAQ: AGNC
Key Data Points
AGNC Investment has paid its current dividend for 75 straight months. Despite a challenging investment environment, it's in a strong position to continue paying its monster monthly dividend. It can currently generate mid-to-high double-digit leveraged returns on new MBS investments, which aligns well with its current dividend level.
Ares Capital
Ares Capital's (ARCC +1.99%) dividend yield is approaching 10%. The business development company (BDC) has paid a stable or growing dividend for 17 straight years.
The BDC is a leader in providing direct loans and other investments to private middle market companies ($500 million to $1 billion in revenue). While these higher-yielding loans have higher risk profiles, Ares has a terrific underwriting track record. Ares annualized net realized loss rate is less than 0% across more than $73 billion of realized investments. That's better than banks (-0.6%) and its BDC peers (-1.1%).
NASDAQ: ARCC
Key Data Points
While Ares Capital's core earnings have dipped below its dividend during the first half of this year ($0.47 per share in the first and second quarters compared to its $0.48 per share quarterly dividend payment), its big-time payout isn't at risk. It also recorded a net realized gain of $0.14 per share so far this year. Additionally, it carried forward $1.38 per share of excess taxable income from last year for distribution in 2026. Add in its healthy portfolio and balance sheet, and it's in a solid position to maintain its streak of dividend stability and growth.
Western Midstream Partners
Western Midstream Partners (WES -0.72%) currently yields almost 8%. The master limited partnership (MLP), which sends a Schedule K-1 Federal tax form each year, has increased its distribution 193% since its reset in 2020 to strengthen its financial profile. Its distribution level is now well above its prior peak and has grown about 420% since its formation in 2012.
NYSE: WES
Key Data Points
The MLP invests in energy midstream infrastructure, such as pipelines and processing plants, backed by long-term, fixed-rate contracts. That provides it with stable cash flow to fund its distribution and growth initiatives. Western Midstream expects to produce between $2.1 billion and $2.3 billion of distributable cash flow this year and $1.1 billion to $1.3 billion of free cash flow after funding capital projects, 75% of which will be on expansion-related initiatives such as its North Loving II plant and Pathfinder Pipeline.
Western Midstream also has the financial flexibility to make accretive acquisitions. It bought Brazos Delaware for $1.6 billion earlier this year. Its expansion investments should support 4% to 5% annual earnings growth over the long term. That should give the MLP the fuel to increase its distribution at a low- to mid-single-digit rate each year.
Monster income stocks
AGNC Investment, Ares Capital, and Western Midstream Partners stand out for their ultra-high-dividend yields. While they're riskier income investments, all three have a proven track record of paying a stable-to-growing dividend in recent years. With those trends likely to continue, they're ideal dividend stocks to buy this August for those seeking to seriously boost their passive income.