Published on October 17, 2025, by Nathan Parsh
High-yield stocks are an attractive option for investors seeking dividends that significantly exceed the market average. Currently, the S&P 500 boasts a yield of approximately 1.2%, a reflection of the market’s record highs. In contrast, high-yield stocks can provide a much more lucrative income stream, especially beneficial for retirees looking to supplement their income.
For instance, a $120,000 investment in stocks with an average dividend yield of 5% can generate around $500 a month in dividends. This makes high-yield stocks a compelling choice for those aiming to secure their financial future.
To assist investors, we have compiled a comprehensive spreadsheet featuring stocks, along with closely related REITs and MLPs, that offer dividend yields of 5% or more. You can download your free full list of all high dividend stocks with 5%+ yields, complete with essential financial metrics such as dividend yield and payout ratio, by clicking the link below:
The next article in this series will focus on Stellus Capital Investment Corp. (SCM).
Business Overview
Stellus is a Business Development Company (BDC) that positions itself as a flexible source of capital for the middle market. The firm primarily invests in small, predominantly private companies that are often in the early stages of their growth cycles. Stellus specializes in making equity and debt investments in private middle-market companies, providing capital solutions to businesses with EBITDA ranging from $5 million to $50 million.
Utilizing various financial instruments, Stellus predominantly engages in debt investments, including first lien, second lien, mezzanine, convertible debt, and equity investments. This diverse approach allows the company to achieve high yields across the U.S. and Canada.
Source: Investor Presentation
Stellus boasts a highly diversified investment portfolio, both in terms of industry and geography. The company’s disciplined investment strategy is evident in its selectiveness; it has closed only about 2% of the deals reviewed in recent years, allowing it to focus on high-quality investments. As of the latest quarterly report, Stellus reported a weighted average yield of 10.3% from its debt investments.
Growth Prospects
Stellus has experienced significant growth in its investment portfolio over the past five years, leading to increased investment income. However, the onset of the coronavirus pandemic in 2020 halted this momentum, adversely affecting many of Stellus’ investments.
In its second-quarter results released on August 7, 2025, Stellus reported net investment income of $0.34 per share, with core net investment income at $0.35. While these figures align closely with market expectations, they represent a decline from the previous year. Total investment income decreased from $26.6 million to $25.7 million, and gross expenses rose by 3.6% year-over-year.
Despite these challenges, Stellus funded $15 million in new investments, concluding the quarter with a total portfolio fair value of $986 million. Projections indicate a 20.7% decline in net investment income for 2025.
Competitive Advantages & Recession Performance
Stellus, like many BDCs, faces challenges in establishing significant competitive advantages. The company offers similar products to other BDCs, making differentiation difficult. Additionally, BDCs often struggle during economic downturns, as borrowers may find it challenging to meet repayment schedules.
Although Stellus was not operational during the 2007-2009 recession, it did experience a dip in net investment income from $1.23 to $1.13 in 2020, before rebounding to a new high in 2022. However, the company has been diluting its share count, which has more than doubled from 2015 to 2024. Projections suggest that the share count may triple by 2030, potentially impacting net investment income and dividend sustainability.
Dividend Analysis
Stellus currently offers a high yield of 13.4%. The company pays a monthly dividend of $0.1333 per share, translating to an annualized payout of $1.5996. While Stellus cut its dividend in mid-2020 due to the pandemic, it has previously issued special distributions to enhance its monthly dividend, with the last occurrence in 2022.
Investors are often drawn to BDCs for their high income potential, but this comes with inherent risks. Stellus is projected to see a significant decline in net investment income in 2025, with a payout ratio expected to reach 123%. This would mark the highest payout ratio in over a decade, raising concerns about the sustainability of its dividend.
Given these factors, only the most risk-tolerant investors should consider acquiring shares of Stellus.
High-Yield Individual Security Research
Other Sure Dividend Resources
Thanks for reading this article. Please send any feedback, corrections, or questions to support@suredividend.com.
