In 2025, Wall Street proved, yet again, why it's the premier wealth creator. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all rallied by double digits, with each index notching several record-closing highs.
However, not all stocks are created equally. According to an analysis from Hartford Funds, buying and holding high-quality dividend stocks gives investors a high probability of generating outsize returns on Wall Street.
In "The Power of Dividends: Past, Present, and Future," Hartford Funds, in collaboration with Ned Davis Research, compared the performance and volatility of income stocks to non-payers over 51 years (1973-2024). They found that dividend stocks more than doubled the average annual return of non-payers (9.2% vs. 4.31%) and were notably less volatile than both the benchmark S&P 500 and companies that didn't pay a dividend.
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Ideally, income seekers want to collect the highest annual yield possible with the least amount of risk to their principal. But previous studies have shown that yield and risk correlate with ultra-high-yield dividend stocks -- i.e., those with yields four or more times greater than the yield of the S&P 500. In other words, ultra-high-yield dividend stocks require a lot of extra vetting by income seekers.
The good news is that amazing deals can be found. What follows are three ultra-high-yield dividend stocks -- sporting an average yield of 8.51% -- that make for screaming buys in 2026.
Sirius XM Holdings: 5.24% yield
The first supercharged income stock that makes for a no-brainer buy in the new year is a company the now-retired Warren Buffett had been buying regularly for years: satellite-radio operator Sirius XM Holdings (SIRI 0.56%). Sirius XM is currently doling out a yield topping 5%.
The beauty of Sirius XM's operating model is that it's one of Wall Street's few legal monopolies. Although Sirius XM is still competing with traditional radio operators for listeners, it's the only company that holds satellite radio licenses. This affords Sirius XM relatively strong subscription pricing power that most online radio providers can't match.
NASDAQ: SIRI
Key Data Points
Another reason Sirius XM Holdings is positioned to outperform over the long run is its revenue mix. Terrestrial and online radio providers generate the bulk of their sales from advertising. While ad-driven operating models benefit from the disproportionately long nature of economic expansions, things can get dicey during recessions when businesses pare back their marketing budgets.
Meanwhile, Sirius XM generates only around 20% of its net sales from advertising, with more than three-quarters of its net revenue derived from subscriptions. Subscribers to its satellite-radio services are less likely to cancel during economic downturns than businesses are to reduce their advertising budgets. In short, Sirius XM should endure minimal ebbs and flows to its cash flow, relative to traditional radio operators.
Investors should also appreciate the predictability of some of Sirius XM's expenses. While royalty and talent acquisition costs will vary from one year to the next, the company's transmission and equipment costs tend to be stable, regardless of the number of subscribers it has. If subs rise over the long run, this would be a recipe for operating margin expansion.
The icing on the cake is Sirius XM's historically cheap valuation. The company's forward price-to-earnings ratio of 6.7 is a stone's throw from its all-time low as a public company.
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Enterprise Products Partners: 6.84% yield
The second high-octane dividend stock that's begging to be bought in 2026 is midstream energy company Enterprise Products Partners (EPD 1.64%). Enterprise has increased its base annual payout for 27 consecutive years, has a yield that's approaching 7%, and has returned $61 billion, including share buybacks, since its initial public offering in July 1998.
Considering the wild ride the spot price of oil endured during the COVID-19 pandemic, it's understandable that some investors might be leery about putting their money to work in energy stocks. However, Enterprise Products Partners is built different than the drillers that are commonly whipsawed in lockstep with the spot price of energy commodities.
Enterprise oversees more than 50,000 miles of transportation pipeline and can store more than 300 million barrels of liquids. It's essentially a middleman for drillers and refiners, with the lion's share of its services operating on fixed-fee contracts. A fixed fee ensures that spot-price volatility for oil and inflation are taken out of the equation, resulting in highly predictable operating cash flow year after year.
Cash flow predictability is especially important for Enterprise Products Partners' long-term growth ambitions. Being able to accurately forecast cash flow one or more years in advance gives management the confidence to undertake major capital projects and/or make bolt-on acquisitions. As of the company's mid-November update, over $5 billion in major capital projects were under construction, with many of these endeavors focused on expanding its exposure to natural gas liquids.
NYSE: EPD
Key Data Points
At the same time, spending on major projects is expected to diminish in 2026. This combination of accretive income from new projects and bolt-on acquisitions, coupled with reduced capital expenditures, should lead to a disproportionate increase in cash flow and earnings per share over the next couple of years.
With its cash flow expected to grow by double digits in 2026, Enterprise has all the hallmarks of a bargain at an estimated 7.7 times forward-year cash flow.
PennantPark Floating Rate Capital: 13.44% yield
A third ultra-high-yield dividend stock that makes for a screaming buy in 2026 is little-known business development company (BDC) PennantPark Floating Rate Capital (PFLT 1.23%). This off-the-radar juggernaut pays its dividend monthly and is parsing out a sustainable 13.4% yield.
BDCs are companies that invest in the equity (common and preferred stock) or debt of unproven, small companies. While PennantPark closed out fiscal 2025 (ended Sept. 30, 2025) with approximately $241 million in common and preferred stock, the bulk of its investment portfolio ($2.53 billion) is tied up in debt securities.
NYSE: PFLT
Key Data Points
The overwhelming majority of companies that PennantPark provides financing for have little or no access to traditional financial services, such as loans and lines of credit. Thus, providing loans to these unproven companies generates superior yields. At the end of fiscal 2025, it was raking in a weighted-average yield on its debt investments of 10.2%.
What's made PennantPark Floating Rate Capital such an intriguing investment this decade is its variable-rate structure. Approximately 99% of its $2.53 billion loan portfolio sports variable rates. When the Federal Reserve rapidly increased interest rates from March 2022 to July 2023 to curb inflation, it sent the weighted-average yield on PennantPark's debt investments soaring. Even though the Fed is currently in a rate-easing cycle, PennantPark is still able to generate meaningful yields on its financing.
Credit also goes out to the company's management team, who've done a superb job of protecting invested principal. Only three companies are currently delinquent on their payments, representing just 0.4% of PennantPark's overall portfolio, on a cost basis. Furthermore, the $2.77 billion investment portfolio is spread across 164 companies, representing an average investment size of $16.9 million per company. No single investment is essential for profitability.
To round things out, PennantPark is trading at a 16% discount to its book value. BDCs typically trade in close proximity to their book value, making this stock quite the bargain.
