5 Red-Hot Ultra-High-Yield Stocks Run by Famous Wall Street Investment Giants

Investors love dividend stocks, especially the high-yield variety because they offer a significant income stream and have massive total return potential. Total return includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or a portfolio consists of income and stock appreciation. At 24/7 Wall St., we consistently emphasize the potential of total return to our readers. It is one of the most effective ways to enhance the prospects of overall investing success. Once again, total return is the collective increase in a stock’s value plus dividends.

When investors look for double-digit yields, they also look for investment managers and the top Wall Street firms that excel in researching and putting together portfolios that generate massive passive income and can stay reasonably nimble while moving in and out of the fund holdings. We screened our 24/7 Wall St. ultra-high-yield research database and found five top stocks run by some of the most prestigious firms on Wall Street. All pay 10% dividends and higher.

Why do we cover ultra-high-yield dividend stocks?

While not suited for everybody, those trying to build strong passive income streams can do exceptionally well with some of these top companies in their portfolios. Paired with more conservative blue-chip dividend giants, investors can use a barbell equity approach to create significant passive income streams.

Barings BDC

This business development company (BDC) is an industry leader and pays a rich 10.31% dividend. Barings BDC Inc. (NYSE: BBDC) is a publicly traded, externally managed investment company elected to be treated as a BDC under the Investment Company Act 1940.

It seeks to invest primarily in:

• Senior secured loans
• First lien debt
• Unitranche
• Second lien debt
• Subordinated debt
• Equity co-investments
• Senior secured private debt investments in private middle-market companies operating across various industries

The company specializes in:

• Mezzanine
• Leveraged buyouts
• Management buyouts
• ESOPs
• Change of control transactions
• Acquisition financings
• Growth financing
• Recapitalizations in lower-middle market, mature, and later-stage companies

Barings BDC invests in manufacturing and distribution, business services and technology, transportation and logistics, and consumer products and services. It invests in the United States and companies with EBITDA of $10 million to $75 million, typically in private equity sponsor-backed investments.

Blackrock TCP Capital

Run by one of the most prominent money managers in the world, this company pays a giant 15.01% dividend. Blackrock TCP Capital Corp. (NASDAQ: TCPC)  is a BDC specializing in direct equity and debt investments in:

• Middle-market, small businesses
• Debt securities
• Senior secured loans, junior loans, originated loans
• Mezzanine
• Senior debt instruments
• Bonds and secondary-market investments

It typically invests in:

• Communication services
• Public relations services
• Television
• Wireless telecommunication services
• Apparel
• Textile mills
• Restaurants retailing
• Energy, oil, and gas extraction

The company also prefers to invest in:

• Patent owners and lessors
• Federal and federally-sponsored credit agencies
• Insurance, hospital, and healthcare centers
• Biotechnology
• Engineering services
• Heavy electrical equipment
• Tax accounting,
• Scientific and related consulting services
• Charter freight air transportation

Blackrock TCP Capital also focuses on:

• Information technology consulting
• Application hosting services
• Software diagram and design
• Computer-aided design
• Communication equipment
• Electronics manufacturing equipment
• Computer components
• Chemicals

It seeks to invest in the United States. The fund typically invests between $10 million and $35 million in companies with enterprise values between $100 million and $1500 million, including complex situations. It prefers to make equity investments in companies for an ownership stake.

FS KKR

This is a very well-known name on Wall Street. It offers a solid entry point at current levels and pays a massive 12.05 dividend. FS KKR Capital Corp. (NYSE: FSK) is a BDC specializing in investments in debt securities. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments.

The company also seeks to invest in:

• First-lien senior secured loans
• Second-lien secured loans
• Subordinated loans
• Mezzanine loans

The firm also receives equity interests, such as warrants or options, in connection with debt investments for additional consideration. It also seeks to purchase minority interests in common or preferred equity in our target companies, either in conjunction with one of the debt investments or through a co-investment with a financial sponsor. The firm may also invest opportunistically in corporate bonds and similar debt securities.

The fund does not seek to invest in start-ups, turnaround situations, or companies with speculative business plans. It aims to invest in small and middle-market companies in the United States.

FS KKR seeks to invest in firms with annual revenue between $10 million and $2.5 billion. It aims to exit from securities by selling them in a privately negotiated over-the-counter market.

Goldman Sachs BDC

With the backing of one of the top investment banks in the world, this is a stock that Baby Boomers with a higher risk tolerance should buy right now. Goldman Sachs BDC Inc. (NYSE: GSBD) is a BDC specializing in middle market and mezzanine investment in private companies.

It seeks capital appreciation through direct originations of secured debt, senior secured debt, junior secured debt, including first lien, first lien/last-out unitranche, and second lien debt, unsecured debt, including mezzanine debt, and, to a lesser extent, investments in equities.

The fund primarily invests in the United States. It seeks to invest between $10 million and $75 million in companies with EBITDA between $5 million and $75 million annually.

Morgan Stanley Direct Lending

Run by Wall Street giant Morgan Stanley, this stock has backed up in price and is in bargain territory. Morgan Stanley Direct Lending Fund (NYSE: MSDL) is a BDC that aims to achieve attractive risk-adjusted returns by investing primarily in directly originated senior secured term loans issued by U.S. middle market companies.

The portfolio manager aims to run an extremely defensive portfolio focusing on Senior Secured, First Lien & Floating Rate loans. The Morgan Stanley website for the fund notes this for investors:

Our primary investment strategy is to make privately negotiated senior secured credit investments in U.S. middle-market companies that have leading market positions, enjoy high barriers to entry, generate strong and stable free cash flow, and are led by a proven management team with solid financial sponsor backing. We invest primarily in companies backed by leading private equity sponsors with solid track records. Lending to sponsor-backed companies (versus non-sponsor-backed companies) has many distinct potential advantages.

We have created a defensive portfolio of investments, generally avoiding issuer or industry concentration to mitigate risk and achieve our investment objective. Our investment strategy is predicated on lending to companies in what we believe to be non-cyclical industry sectors.

Following an IPO in January of 2024, the shares have traded as high as $24.18. They are back near the $20 level, and with a 10% dividend, the stock is a no-brainer buy now.

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