By American government yields have risen recently as odds of a more hawkish Federal Reserve rose. The 10-year government yield has jumped to 4.11%, while the 30-year and 2-year have moved to 4.41% and 3.90%, respectively.
Still, these yields remain substantially below where they were a few months ago as interest rates remained at the highest point in over 20 years. Rate cuts will continue in the coming months as the Fed works to engineer a soft landing for the economy.
This article looks at three companies with a dividend yield of over 8% to consider. A 8% yield means that, assuming the stock goes nowhere in the next twelve months, a $10,000 investment will yield $800, and $8,000 over a decade.
Many high-yielding companies tend to have some key challenges, which explains why safe firms like Microsoft, Oracle, and Apple have a small yield. The goal, therefore, is to invest in undervalued high-yielding companies with strong fundamentals.
Brandywine Realty Trust | BDN
Brandywine Realty Trust is one of the best-performing companies in the REITs industry. Its stock has jumped by almost 50% in the last twelve months and by 19% this year. Its total return this year was 33.4%.
Despite its strong performance, the stock has a dividend yield of 9.6%, making it the highest yielder in this list.
BDN also has strong technicals. On the weekly chart, the stock has moved from a low of $2.84 in 2023 to almost $6.5 today. It has also moved above the 38.2% Fibonacci Retracement point, and is slowly approaching the 50% level.
Most notably, the stock has risen above the 200-day moving average, meaning that bulls are in control for now. Therefore, it will likely continue rising as bulls target the next key resistance level at $7.65, the 61.8% retracement.
Brandywine Realty Trust is a REIT that invests in properties in Philadelphia and Austin. It focuses on office buildings, which explains why its stock has rebounded since many companies have emphasized the need for workers to go back to offices.
The most recent financial results shows that Brandywine’s core portfolio is 87.3% occupied and 88.5% leased. Its net income was $29.9 million, a big increase from a net loss of $12.9 million in the same period last year.
Brandywine has challenges, as evidenced by its decision to lower its forward guidance. However, in the long-term, the stock will likely continue doing well.
Main Street Capital | MAIN
Main Street Capital is another 8% yielding company to consider. It is a Business Development Corporation (BDC) that focuses on providing financing to companies.
Demand for credit, especially among small and medium companies, has continued rising in the past few years as many big banks have focused on large firms.
MAIN targets companies with between $10 million and $150 million in revenue and EBITDA of between $3 million and $20 million.
Most importantly, the company focuses on first lien, senior secured debt, which is typically safer than other forms of debt.
Main Street Capital’s has constantly increased its dividends since it was founded in 2007, with its monthly payouts rising by 123%.
The company’s stock has done well over time. For example, the stock has risen by almost 30% in the last 12 months, while the Vanguard S&P 500 ETF has risen by 33%. With dividends included, the fund has risen by 41% compared to VOO’s 35%.
The same trend has happened in the past three years as the MAIN’s total return stood at 54.25% compared to VOO’s 36%. As shown below, MAIN’s total return this year was 28% compared to VOO’s 23%.
Read more: Main Street Capital stock: beating BDCs and S&P 500, but there’s a catch
Ares Capital | ARCC
The other company to consider is Ares Capital (ARCC) is another high-yielding company to consider. It is partly owned by Ares Management, one of the biggest companies in the private credit industry. It has a dividend yield of 8.90% and a strong coverage ratio.
Ares Capital, like MAIN, is a company in the private credit industry that provides cash to small and medium size companies. It has a portfolio of $25 billion and has provided financing to 525 portfolio companies.
ARCC’s revenue has been in a growth trajectory, rising from $1.52 billion in 2019 to over $2.8 billion in the trailing twelve months. Its profits have also jumped to over $1.68 billion.
Ares Capital stock has done well over the years. Its total return in the past five years was 88.5%, while the S&P 500 has returned 110%. In the last three years, it has returned 37% compared to S&P 500 index’s 36%.
The company will likely continue doing well in the long term, making it an ideal firm for dividend investors.
Read more: Ares Management stock has soared, but there’s 1 key risk
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