Traders who want to see their stocks make big gains in a short period of time have been disappointed a lot more than they've been rewarded this year. The benchmark S&P 500 index has lost around 17% of its value this year.
At times like these, it's important to remember that stocks don't necessarily need to rise to provide market-beating gains. Scooping up shares of high-yield dividend stocks and reinvesting the steady payouts they provide can lead to market-beating gains over time.
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These three stocks offer high yields and relatively reliable dividend payments. Buying them now and reinvesting those payments could double your money before the end of the decade. Here's how.
Medical Properties Trust: An 8.6% yield
Right now, you can receive a juicy 8.6% yield on shares of Medical Properties Trust (MPW -0.45%). Reinvesting the dividends this stock delivers every three months could double your money by 2030 even if the payout and stock price don't move at all.
Medical Properties Trust is a real estate investment trust (REIT) that buys, develops, and leases hundreds of hospitals in the U.S. and abroad. This REIT and its shareholders enjoy reliable cash flows because it makes hospital operators sign long-term net leases. These agreements transfer all the variable costs of building ownership, such as taxes and maintenance, onto hospital operators. The company's cash flows are so reliable that it has been able to steadily raise its dividend payout by 45% since 2012.
Investors can look forward to more payout bumps ahead. Medical Properties Trust expects funds from operations (FFO) to reach a range between $1.81 and $1.85 per share this year. This is more than enough to cover a dividend currently set at an annualized $1.16 per share.
PennantPark Floating Rate Capital: A 9.7% yield
At the moment, Investors can get a whopping 9.7% yield from shares of PennantPark Floating Rate Capital (PFLT -0.43%). This is a business development company that specifically works with privately held middle-market companies in the U.S.
PennantPark makes some equity investments, but most of its portfolio consists of debt instruments that are first in line for principal repayment in the event of bankruptcy. Steady repayment has allowed it to distribute $0.095 per share every month without interruption since 2019.
Reinvesting monthly payouts from PennantPark could double your original investment by 2029 if it can maintain its dividend payout. Given its performance so far, maintaining its payout over the long run seems like a strong possibility. At the end of June, just two of the 123 companies it had lent to were behind on payments. Investors will be glad to learn these non-performing assets made up just 0.1% of the total portfolio on a fair value basis.
This is a great dividend stock for investors who are worried about runaway inflation and the Federal Reserve's attempts to stop inflation by raising interest rates. All the loans on its books pay interest at variable rates that rise along with the Fed's target rate. If rates continue to rise, PennantPark's main revenue stream will swell further.
Annaly Capital Management: A giant 14.3% yield
If you don't feel like waiting around until 2030 for your principal to double, and you don't mind significant risk, consider Annaly Capital Management (NLY -0.83%). At recent prices, this REIT offers an enormous 14.3% yield. Reinvesting these payouts could double your money in about five short years if the company can maintain its payout at its present rate.
Of course, Annaly shares offer a mouth-watering yield because its cash flows are highly sensitive to short-term interest rate fluctuations. That's because Annaly is a specialized REIT that buys mortgage-backed securities.
Mortgage REITs or mREITs make a living in the gap between long-term mortgage rates and the short-term rates they borrow at. Annaly focuses exclusively on mortgages that are guaranteed by U.S. government agencies, so incoming revenue is super predictable. Rapidly rising interest rates, though, could temporarily erase its profit margin.
To hedge against rapidly rising rates, Annaly has been investing in mortgage servicing rights (MSR) that earn a fixed percentage of every mortgage payment made by individual borrowers. Since mortgage payments are highly sensitive to changing interest rates, the MSR portfolio could help the company hold its dividend payout steady even if the Fed raises rates again this year.
