The major U.S. stock indexes have fallen by between 5.9% to 13.4% since the start of January. The Federal Reserve's plan to fight inflation through a series of interest rate hikes over the course of 2022 isn't sitting well with investors.
This market downturn has been particularly harsh toward narrative-driven growth stocks. By contrast, large-cap dividend stocks -- especially those with above-average yields -- have actually performed fairly well during the opening weeks of 2022.
Armed with this insight, investors would be wise to capitalize on this powerful trend by buying at least a couple of ultra-high-yield dividend-paying equities soon. And if you're looking for an attractive mix of safety and uber-high yields, Guggenheim Strategic Opportunities Fund (GOF +0.26%) and Icahn Enterprises (IEP +0.38%) ought to be at the top of your shopping list.
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Guggenheim Strategic Opportunities Fund: A top monthly distribution play
Guggenheim Strategic Opportunities is a leveraged closed-end mutual fund that pays out a monthly distribution of $0.1821 per share, which equates to an annualized yield of 11.8% at current share prices. Its assets consist of a broad mix of value stocks, call and put options, and fixed-income debt securities such as bonds, loan participations, and structured finance investments. Since its inception in 2007, the fund has delivered total returns to investors (assuming a dividend reinvestment plan) of 345%.
GOF Total Return Level data by YCharts.
The one downside to this high-yield mutual fund is that it isn't a short-term play. Because of the risks inherent with using financial leverage, Guggenheim Strategic Opportunities' shares can swing wildly in price in unstable economic climates. As evidence, consider that the fund's shares lost a third of their value during the 2008 financial crisis, despite its massive dividend yield. Over a five- to 10-year period, however, this leveraged closed-end mutual fund should deliver respectable returns for patient investors. So, if you're looking for a long-term place to park your capital, Guggenheim Strategic Opportunities is definitely worth a look.
Icahn Enterprises: A sky-high yield and a proven winner
Icahn Enterprises is a diversified holding company with positions in the automotive, financial, food packaging, energy, real estate, and pharmaceutical sectors, among others. At its current share price, the stock sports a yield of 15.2%. Icahn Enterprises' core strategy centers around buying outsized positions in companies in order to gain influence with their boards of directors. After doing so, it usually pressures the boards to make major changes to their operations. This frequently means selling off certain operating segments or even finding an acquirer for the whole company -- transactions that lead to quick profits for shareholders. This approach is generally known as activist investing. The founder and chairman of the board of Icahn Enterprises, billionaire Carl Icahn, is arguably the most successful activist investor of all time. And he still owns the vast majority of Icahn Enterprises stock.
Why is this company a particularly worthwhile buy during this ongoing market correction? In brief, Icahn has proven over the course of his six-decade investing career that he knows how to profit in any type of market. Moreover, activist investing isn't hugely dependent on overarching macroeconomic factors. Underscoring these two key points, Icahn Enterprises shares have generated more than 20-fold returns (when including dividends) for shareholders since the turn of the century, a result that far surpasses the returns on capital of every major U.S. stock index over this period. This diversified holding company is likely to keep delivering stellar returns this year and beyond -- regardless of how the broader economy performs.
