For retirees looking to generate income without regularly selling investments, high-yield dividend stocks can be an attractive option. Five established companies currently offer indicated dividend yields ranging from approximately 8% to nearly 17%, although the risks behind those payouts vary considerably.
With Treasury yields elevated, income-focused investors have more choices than they have had in years. However, certain dividend stocks continue to offer yields that are two or three times higher than government bonds, making them worth a closer look for investors seeking additional retirement income.
Two investment categories stand out: business development companies (BDCs), which provide financing to businesses, and real estate investment trusts (REITs), which invest in mortgages, mortgage-backed securities, and other real estate-related assets. Both can generate substantial income for shareholders, but their dividends depend on earnings, financing costs, credit conditions, and interest rates.
Here are five high-yield dividend stocks worth examining, starting with those that currently appear to have stronger dividend coverage.
1. Main Street Capital (MAIN): Approximately 8% Yield
Main Street Capital (NYSE: MAIN) is one of the more established monthly dividend payers in the business development company industry. The company provides financing to smaller and middle-market businesses, generating income from loans and equity investments that it distributes to shareholders.
Main Street pays a regular monthly dividend of $0.265 per share, equivalent to $3.18 annually. At a share price of $53.89, that represents a regular dividend yield of approximately 5.9%. However, the company also pays supplemental dividends when earnings and investment gains support additional distributions, bringing its trailing 12-month payout to approximately $4.33 per share, or an 8% trailing yield.
What makes Main Street particularly attractive is its dividend coverage. During the second quarter, distributable net investment income before taxes reached $1.08 per share, comfortably exceeding the $0.795 in regular dividends paid over three months. The company also reported approximately $1.2 billion in cash and unused credit capacity, providing additional financial flexibility.
Main Street has never reduced its regular monthly dividend since going public in 2007, and its September supplemental payment marked its 20th consecutive quarterly supplemental dividend. Management has also indicated that another significant supplemental payment could be proposed for December 2026.
The biggest concern is valuation. Shares trade at approximately 1.54 times book value, meaning investors are paying a significant premium for the company’s strong operating record and consistent dividend history. Any deterioration in earnings could put pressure on that premium.
For retirees prioritizing dividend consistency over the highest possible yield, Main Street offers one of the more attractive income profiles in this group. Investors should remember, however, that supplemental distributions are variable and should not be treated as guaranteed retirement income.
2. Ares Capital (ARCC): Approximately 10.3% Yield
Ares Capital (NASDAQ: ARCC) offers a higher regular dividend yield while maintaining a long history of consistent payments. As one of the largest publicly traded BDCs, the company provides financing to hundreds of businesses across a broad range of industries, helping diversify its income sources.
Ares pays a quarterly dividend of $0.48 per share, or $1.92 annually. At a share price of $18.63, that translates into a dividend yield of approximately 10.3%. The company has maintained stable or increasing regular quarterly dividends for 68 consecutive quarters, giving income-focused investors an established record to evaluate.
One of Ares Capital’s biggest advantages is the financial cushion supporting its dividend. At the end of the second quarter, management expected to carry forward approximately $988 million in excess taxable income, equivalent to $1.38 per share. That reserve provides some protection if investment income weakens temporarily.
However, there are signs that credit conditions are becoming more challenging. Second-quarter core earnings of $0.47 per share were slightly below the $0.48 quarterly dividend, while nonperforming investments increased as some borrowers faced financial pressure. Net asset value also declined to $19.35 per share from $19.94 at the end of 2025.
Still, Ares has a diversified portfolio covering 619 companies, and shares trade near reported book value. That makes its valuation less demanding than Main Street’s, even though Ares carries its own credit and economic risks.
For investors seeking double-digit dividend income, Ares offers a combination of diversification, an established payout history, and a relatively reasonable valuation. The company’s ability to maintain earnings coverage as credit conditions change will be important in determining whether its dividend remains sustainable.
3. Annaly Capital Management (NLY): Approximately 16.6% Yield
Annaly Capital Management (NYSE: NLY) moves into considerably higher-yield territory. The mortgage REIT invests primarily in mortgage-backed securities and other residential housing finance assets, generating income from the difference between the returns on its investments and its financing costs.
Annaly recently increased its quarterly dividend from $0.70 to $0.75 per share, bringing its annualized payout to $3. At a share price of $18.06, that represents a dividend yield of approximately 16.6%, making it one of the highest-yielding investments on this list.
The recent dividend increase was supported by improving earnings. During the second quarter, Annaly generated earnings available for distribution of $0.79 per share, exceeding its $0.75 quarterly payment. It was the ninth consecutive quarter in which earnings available for distribution exceeded the dividend.
The company also reported book value of $20.15 per share, meaning the stock traded below the value of its reported net assets at the referenced price. Improving net interest spreads have provided additional support, with the company’s spread expanding to 1.16% from 0.66%.
However, Annaly’s substantial leverage creates additional risk. The company reported GAAP leverage of 7.4 times, which can magnify both gains and losses when interest rates or mortgage market conditions change. Its shares also experienced significant selling pressure as Treasury yields rose.
Annaly has reduced its dividend during previous market cycles. Its quarterly payout stood at $0.88 in late 2022 before falling to $0.65 during 2023 and 2024, demonstrating that even an established mortgage REIT can adjust distributions when financial conditions deteriorate.
For retirees, Annaly offers the potential for substantial quarterly income, but its 16.6% yield comes with meaningful interest-rate and market risks. Investors considering the stock should be prepared for share-price volatility and the possibility that future dividend payments could change.
4. AGNC Investment (AGNC): Approximately 16.7% Yield
AGNC Investment (NASDAQ: AGNC) offers one of the largest monthly dividend yields among established mortgage REITs. The company primarily owns agency mortgage-backed securities, which benefit from government-sponsored guarantees against certain credit losses, although their market values remain sensitive to interest rates.
AGNC pays a monthly dividend of $0.12 per share, equivalent to $1.44 annually. At a share price of $8.61, the indicated dividend yield is approximately 16.7%. Unlike several other stocks on this list, AGNC distributes its regular dividend monthly rather than quarterly.
For someone investing $10,000 at the referenced share price, that yield would translate into approximately $1,672 in annual dividend income before taxes, assuming the payout remains unchanged. That works out to roughly $139 per month, making the stock particularly appealing to investors looking for a predictable payment schedule.
Recent earnings have provided some support for the dividend. AGNC reported second-quarter earnings of $0.40 per share, compared with $0.36 in dividends paid during the quarter. The company also reported a sequential increase in tangible net book value to $8.58 per share.
Nevertheless, AGNC has a history of reducing distributions when conditions deteriorate. Its monthly dividend stood at $0.18 several years ago before being lowered to $0.12 in 2020, where it has remained for the past several years.
Interest-rate changes and widening mortgage spreads can also cause significant fluctuations in AGNC’s share price and book value. The company reported a 5.6% decline in tangible book value during the first quarter when mortgage spreads expanded, highlighting how quickly market conditions can affect its underlying assets.
For retirees seeking substantial monthly income, AGNC offers an unusually high payout. However, the potential for capital losses and future dividend reductions means investors should evaluate the stock based on total return and financial stability rather than yield alone.
5. Starwood Property Trust (STWD): Approximately 15.2% Yield
Starwood Property Trust (NYSE: STWD) offers another double-digit dividend yield, although recent earnings raise questions about the payout’s sustainability. The company operates across commercial real estate lending, residential lending, infrastructure financing, and other property-related investments.
Starwood pays a quarterly dividend of $0.48 per share, equivalent to $1.92 annually. At a share price of $12.62, that translates into a yield of approximately 15.2%. The company has maintained the same quarterly dividend since 2014, giving it one of the longest records of unchanged payments among the five stocks.
However, that consistency is now facing a test. During the first quarter of 2026, Starwood reported distributable earnings of $0.39 per share, followed by $0.40 in the second quarter. Both figures fell below the $0.48 quarterly dividend, meaning current earnings were insufficient to fully cover the distribution in those periods.
A temporary earnings shortfall does not automatically lead to a dividend reduction. Companies can sometimes maintain payments through periods of weaker results, particularly when they have sufficient liquidity and expect earnings to recover. However, sustained shortfalls can eventually force management to reconsider the payout.
There are some encouraging developments. Starwood invested approximately $6.7 billion through July, and total assets reached a record $31.8 billion. The company also repurchased $30 million in shares during the first half of the year, while its stock traded substantially below reported book value of $17.54 per share.
Still, commercial real estate credit problems and underperforming loans remain important risks. Management has been working to resolve nearly $900 million in underperforming assets, and continued weakness in commercial property markets could weigh on future earnings.
For retirees considering Starwood, the biggest question is whether distributable earnings can recover enough to fully support its long-standing dividend. Until that happens, the stock’s unusually high yield may reflect legitimate concerns about the sustainability of future payments.
How Much Retirement Income Could These Stocks Generate?
The appeal of high-yield dividend stocks becomes clear when looking at their potential cash distributions. Even a relatively modest investment can generate meaningful income when yields exceed 8%, although higher yields generally require investors to accept greater risks.
Based on the referenced share prices and dividend rates, here is approximately how much annual income a $100,000 investment in each stock could produce.
| Stock | Dividend Yield | Annual Income |
|---|---|---|
| Main Street Capital (MAIN) | 8.0%* | $8,000 |
| Ares Capital (ARCC) | 10.3% | $10,300 |
| Annaly Capital (NLY) | 16.6% | $16,600 |
| AGNC Investment (AGNC) | 16.7% | $16,700 |
| Starwood Property Trust (STWD) | 15.2% | $15,200 |
Main Street’s 8% yield includes trailing supplemental dividends, which can fluctuate. The other yields are based on annualized regular dividends at the referenced share prices.
For example, a retiree investing $100,000 equally across all five stocks would generate approximately $13,360 in annual dividends at these indicated rates, or about $1,113 per month on average.
That represents substantial potential income from a six-figure portfolio, but the calculation assumes dividends remain unchanged and does not account for taxes or changes in share prices. Actual payments would also arrive on different schedules, since some of these companies pay monthly while others distribute dividends quarterly.
The Biggest Risk Retirees Should Understand
A stock offering a 16% dividend yield can appear significantly more attractive than a Treasury bond yielding around 5%. However, the additional income comes with additional risk, particularly when companies rely on leverage or invest in assets sensitive to interest rates and economic conditions.
Dividend yields can also rise sharply when share prices fall. That means an unusually high yield sometimes reflects growing investor concerns about a company’s earnings, debt, or ability to maintain future payments.
For example, a stock yielding 16% that loses 25% of its market value can leave an investor with a negative total return, even after collecting a full year of dividends. For retirees who depend on their portfolios to support living expenses, preserving investment principal can be just as important as receiving regular cash distributions.
Investors should therefore focus on three factors when evaluating high-yield dividend stocks: whether earnings consistently cover the dividend, how much leverage the company uses, and whether its underlying assets are maintaining their value.
BDCs such as Main Street and Ares are particularly sensitive to business credit conditions. Mortgage REITs such as Annaly and AGNC are more directly affected by interest rates and mortgage market spreads, while Starwood carries additional exposure to commercial real estate loans.
Owning several high-yield stocks can provide multiple sources of income, but it does not eliminate the risks associated with a broader economic downturn. Retirees should also consider how these investments fit alongside more stable income sources, including Treasury securities, bonds, and Social Security.
What Retirees Should Watch Going Forward
For investors considering these five dividend stocks, future earnings reports will provide important clues about the sustainability of their payouts. Dividend coverage, credit losses, borrowing costs, and changes in book value will all help determine whether the companies can maintain their current distributions.
Interest rates will also remain an important factor, particularly for mortgage REITs. Changes in Treasury yields and mortgage spreads can directly affect investment values and financing costs, potentially creating opportunities or additional pressure for companies such as Annaly and AGNC.
For BDCs, the condition of the broader economy will be especially important. Slowing business activity, rising defaults, or weaker loan performance could reduce investment income and eventually affect dividend coverage.
Starwood faces a different challenge, with investors likely to focus on the resolution of underperforming commercial real estate loans and whether distributable earnings can return to levels that fully cover its quarterly dividend.
The Bottom Line
For retirees interested in generating income from their investments, these five stocks demonstrate how much dividend yields can vary across the market. Each offers the potential for substantial cash distributions, but the financial risks behind those payments are considerably different.
Main Street Capital and Ares Capital stand out for their established payout histories and comparatively stronger dividend support. Annaly Capital Management and AGNC Investment offer substantially higher yields, although leverage and interest-rate exposure make their dividends and share prices more vulnerable to changing market conditions.
Starwood Property Trust offers a long record of consistent payments, but its recent earnings shortfall deserves close attention. The company’s ability to improve earnings and resolve troubled loans will be important in determining whether its dividend can remain unchanged.
For investors hoping to fund retirement without frequently selling shares, the most important consideration is how reliably those dividends can continue over the next five, ten, or twenty years.
A sustainable 8% dividend can ultimately be more valuable than a 16% payout that gets reduced during a difficult market. Dividend coverage, financial strength, and capital preservation should remain just as important as the income itself.
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