2 Extraordinary Ultra-High Yield Stocks to Buy Hand Over Fist

Investing in high-yield stocks offers an enticing opportunity for income-focused investors as they deliver substantial dividend payouts that can enhance cash flow and support long-term wealth creation. 

Often yielding 5% or more, these stocks provide immediate income, ideal for retirees or those seeking passive revenue, and can outpace inflation when reinvested. Their appeal grows in volatile 2025 markets, with inflation at 2.3% — slightly above the Federal Reserve’s target rate — and tariff uncertainties, as dividends cushion price swings.

However, chasing yield carries risks: high yields may signal declining stock prices, unsustainable payouts, or financial distress, leading to dividend cuts and capital losses. Investors must prioritize quality, focusing on companies with strong fundamentals, low payout ratios, and stable cash flows to avoid “dividend traps.”

While high-yield stocks can be rewarding, due diligence is critical to balance income potential against volatility. Below are two ultra-high-yield stocks possessing robust fundamentals and sustainable dividends that offer compelling opportunities for investors seeking reliable income in a challenging market environment.

Altria (MO)

Tobacco giant Altria (NYSE:MO) offers an ultra-high 6.8% dividend yield, making it a top pick for income investors in 2025. Best known for the Marlboro brand of cigarettes, which holds a 43% share of the U.S. cigarette market, Altria commands what is admittedly an industry in a secular decline with steadily falling rates of smoking. 

First-quarter revenue net of excise taxes fell 4.2% from last year, but profits continue to climb with adjusted earnings rising 6% to $1.23 per share. Altria is a Dividend King with 55 years of annual increases. The dividend of $4.08 per share is backed by a 79% payout ratio and $8.5 billion in free cash flow. While the payout may seem high, Altria is a mature business and management has committed to returning around 80% of profits to shareholders as dividends.

The tobacco stock’s pivot to smoke-free products, like NJOY vapes and on! oral nicotine pouches, is intended to drive diversification. However, it ran into a big speed bump with the vapes and a trade court ruling it violated patents and needed to be withdrawn. Shipment volume for on!, however, was up 18% in Q1.

MO stock trades at just 10 times earnings and estimates, and goes for a discounted 12 times free cash flow. Although Wall Street has a hold rating on the stock and a $56 per share one-year price target, implying 7% downside, Altria’s pricing power and 61% operating margins protect against the headwinds. 

The tobacco company is a defensive stock — people won’t quit smoking in a recession — making Altria’s high yield, growth in alternatives, and valuation a strong buy.

Ares Capital (ARCC)

Ares Capital (NASDAQ:ARCC) is the largest publicly traded business development company (BDC) that provides financing to middle-market firms. It boasts a $27.1 billion portfolio across 566 companies, focusing on first-lien loans, which account for 58.6% of its investments. That puts it at the front of the line to collect should any of its investments go under.

The BDC sports a mouth-watering 8.7% dividend yield, nearly double the 10-year Treasury yield of 4.4%, positioning it as a premier high-yield stock for 2025. 

Core earnings of $0.50 per share missed estimates of $0.54, with net asset value per share at $19.82, a 0.3% decline. NAV per share has grown at 17.8% annual rate for the past decade. The recent earnings miss can be attributed to declining interest rates, as Ares earns higher interest income as rates rise. However, lower rates improve the prospects for the businesses it invests in, so the BDC thrives when an equilibrium between the two extremes exists.

Ares $1.92 per share annual dividend,has grown at an annual rate of 26.3% for the last 10 years, helping its stock deliver total returns of 11.7% over that period.  

ARCC’s scale and ties to Ares Management’s $450 billion platform drive deal flow, with 2024 loan originations up 12%. While borrower defaults in a recession are a risk, the BDC’s diversified portfolio and low 0.98 debt-to-equity ratio net of cash help mitigate these. With ARCC stock’s high yield, prudent underwriting, and market leadership, it is a must-buy stock for income seekers.

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