Investing $50,000 in Ultra-High-Yield Dividend Stocks Could Earn You $5,200 Annually  

Dividends provide passive income for your portfolio. With so many opportunities, it's hard to find dividend-paying, high-performing companies. Business development businesses can provide concepts. BDCs must distribute 90% of their taxable income as dividends annually.

The three BDCs below may turn a $50,000 investment (divided equally) into $5,200 in passive income annually. Let's see what distinguishes these BDCs.

Hercules Capital: 10.5% dividend BDC Hercules Capital (NYSE: HTGC) invests in IT, life sciences, and sustainable energy. The company often helps venture capital or private equity-funded startups add debt to their balance sheets.

What distinguishes Hercules from other banks? Given their risk profile as money-burning firms, banks may not lend to startups. Hercules usually adds warrants that can convert into stock to its deal structures to limit this risk and give it some upside if the firm is purchased or goes public.

This strategy seems effective. Hercules stock returned 235% in the past decade. Allocating the first one-third of the $50,000 to Hercules might generate $1,750 in passive income this year. A 10.5% dividend yield may make Hercules stock a good buy now.

Horizon Technology Finance: 11.4% dividend. Hercules' closest technology-focused BDC competitor is Horizon Technology Finance (NASDAQ: HRZN). Horizon provides finance to firms seeking financial runway or acquisitions. Debt is a good fundraising option because it doesn't dilute shareholders.

This gives business owners more flexibility because financing suppliers, unlike equity investors, rarely sit on the board or influence strategic vision. These distinguishing elements have set Horizon apart in the BDC market. The stock has a price-to-book ratio of 1.2, slightly over its 10-year average of 1.

With a hot 11.4% yield, Horizon shares seem appealing. Dividend income from the $50,000 investment's second tranche might reach $1,900. My last BDC is Ares Capital (NASDAQ: ARCC). Ares differs from Horizon and Hercules. Ares targets lower middle-market companies rather than high-growth startups.

This novel approach has earned Ares a good reputation among businesses that large investment banks overlook. Ares can handle more complex transactions than other BDCs due to its scale. Hercules and Horizon offer term or revolving loans. Ares can handle more complex agreements, including leveraged buyouts. The final one-third of the $50,000 Ares investment would earn $1,540 in dividends, bringing your passive income to $5,200.

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