The goal of the High Yield Portfolio is simple:

1. Deliver a sustainable dividend yield of around 8%

2. Preserve capital (no long-term value erosion)

3. Provide predictable cash flow

Why 8% yield?

Because the amount of capital we would need to retire is cut in half. (based on the 4% rule).

Members of Dividendology will be able to view all the holdings of the High Yield Portfolio on Dividendology.com.

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🏆 Our High Yield Portfolio

Before today’s purchase, here is how our portfolio stands:

Before today, we had added 5 positions to the High Yield Portfolio.

Today, we’re adding a position that has an indicated annual yield of over 11%, while also growing their distributions over time.

After today’s addition, our portfolio looks like this:

Our High Yield Portfolio now yields over 9.2%!

We are still in the early stages of building out this High Yield portfolio-

And today, we will be taking a deep dive into the newest addition.

If you’d like to get access to the High Yield Portfolio, as well as everything mentioned below, you can do so here:

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Now, let’s dive in.

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All of the MAG7 stocks have seen a serious pullback so far in 2026.

But there’s a more interesting story going on behind the scenes that isn’t currently getting any attention.

The REIT market has seen a massive shift in the last month-

And no one seems to be talking about it.

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🏢 REITs Are Outperforming

REITs were an asset class I had been bullish on over the last few months, primarily due to two reasons:

• Historically low valuations

• Declining interest rate environment

It was a perfect scenario for investors who had been accumulating shares of this out of favor asset class.

And so far, REITs have outperformed in 2026.

In fact, at the beginning of March, Vanguard’s Real Estate ETF (VNQ) was up 8.5%, while the S&P 500 was up only 0.5%.

But everything changed in March for REITs.

So much so, that we saw a significant sell off for many higher quality REITs.

In fact, most REITs were down this month anywhere from 7% to 10%!

That’s a large sell off in just one single month.

A sell off of this degree that occurs across an entire sector typically means something bigger has changed beneath the surface.

Not just sentiment changing, but the underlying macro environment that drives the entire asset class.

What has actually happened is the result of a chain reaction of events.

🔗 The Chain Reaction

It all started with oil.

Oil is the lifeblood of the global economy.

And when oil prices rise, it doesn’t just impact energy companies, it ripples through everything.

• Transportation costs go up

• Manufacturing costs go up

• Food production becomes more expensive

And ultimately… prices rise across the entire economy.

So, what’s happened to oil prices in the last month?

Crude oil is up 46% in just the last month, and is easily sitting at a 52 week high.

The key question is this:

How does this impact overall inflation?

In 2023, the Federal Reserve released research on how oil prices impact inflation.

The end result was this formula:

Let me translate what this actually means in English.

According to the Federal Reserve, a 10 percent increase in the price of oil raises the energy CPI by about 1.5 percent almost immediately.

On the surface, a rise in energy prices might not seem like a big deal.

After all, energy only makes up about 6.3% of the CPI basket, meaning even a 1.5% increase would directly add just ~0.1% to inflation.

Now let’s start to do some math.

With crude oil up 46% in just the last month, the direct impact alone would suggest a noticeable bump in inflation.

If a 10% increase in oil prices adds roughly 0.4 percentage points to headline CPI when accounting for both direct and indirect effects, then a move of this magnitude could hypothetically push inflation higher by well over 1% over time.

For reference, CPI has just recently started to get close to the FED’s target of around 2%.

And importantly, this wouldn’t happen all at once.

The initial spike would show up quickly through energy prices, but the larger impact would come gradually, as higher transportation, production, and food costs work their way through the economy.

Essentially, this has the potential to reignite sustained inflationary pressure in the months ahead.

🏦 The FED’s Response

The Federal Reserve has two goals:

1. Keep inflation tame

2. Support the job market

There is one lever they can pull to impact both of these:

Interest rates.

When inflation is rising, the Federal Reserve raises interest rates to slow the economy down.

Higher rates make borrowing more expensive, reduce spending, and ultimately bring inflation back under control.

On the flip side, when the economy weakens, the Fed lowers interest rates to stimulate growth.

In October of last year, Jerome Powell stated this about the market:

“In this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen” - Jerome Powell

Powell and the FED indicated through the end of 2025 that two to three rate cuts were likely in 2026.

But due to the significant rise in oil prices and the chain reaction that occurred as a result, we’ve seen a significant shift in rate projections for 2026.

The market is now projecting a 68.7% chance we don’t see any rate cuts by December of 2026.

⚖️ The Opportunity Cost

As an example, Agree Realty (and most REITs in general) are heavily impacted by interest rates from an opportunity cost perspective.

Every investment must be viewed through the lens of opportunity cost.

For the risk-averse investor seeking yield, Treasury rates play a massive role in shaping behavior.

When the Federal Reserve keeps rates elevated, or even considers hiking, Treasury yields remain high, allowing investors to earn 4–5%+ on “risk-free” assets with virtually no volatility.

And that’s where the problem begins for REITs.

ADC currently yields 4.2%.

But if investors can earn 4.3%+ risk-free…

Why take on additional risk for a similar yield?

📈 Reality For REITs & AI

The reality for higher quality REITs is that their fund from operations continues to grow year after year.

In other words, intrinsic value continues to grow.

When share price doesn’t immediately follow intrinsic value, it creates valuation gaps.

On top of this AI is rapidly expanding across industries, but it’s also lowering barriers to entry, leading to more competition, weaker pricing power, and margin pressure across many businesses.

This creates a growing risk for passive investing, which allocates capital without considering durability or competitive advantage.

At the same time, tech giants like Meta Platforms, Microsoft, and Alphabet are being forced into massive, uncertain CapEx spending to stay competitive in AI.

In contrast, REITs offer something fundamentally different, scarcity, predictable cash flow, and inflation protection.

Real estate can’t be replicated by AI, and many REITs have built-in inflation-linked rent escalators, making them structurally more resilient.

As AI increases competition in digital industries, capital may increasingly shift over the long term toward real assets that are durable and cash-flowing, and that’s exactly where REITs stand out.

📊 REIT Database

Members of Dividendology have access to the Dividendology REIT Database at anytime.

Today, I’m sharing a portion of it with you.

As of right now, 25 of the 33 REITs tracked in the database are trading well below their historic average multiples.

20 of the REITs are projected to grow AFFO per share at a CAGR of above 5% through 2029.

While REIT valuations might remain temporarily compressed due to potentially no interest rate cuts in 2026, the reality is that this sector still appears to be one of the better risk adjusted return opportunities.

And keep in mind the reality that REITs have done exceptionally well over full market cycles.

🎯 …Something Big is Coming…

I’ve been conducting extensive interview with fund managers over the last 6 months, in an effort to identify the best income ETF opportunities.

I’m compiling these interviews into a massive database, which will be available to members of Dividendology soon.

If you want to get access to it, as well as all other features mentioned below, then you can join here:

Subscribe now

Stay tuned!

Dividendology

Check out these resources:

Tickerdata 🚀 (My automated spreadsheets and instant stock data for Google Sheets!)

Interactive Brokers 💰 (My favorite place to buy and sell stocks all around the world!)

Seeking Alpha 🔥 (Research stocks $30 off! + 7 day free trial)

HYSA 📊 (Get Access to the Best High Yield Savings Accounts!)

Disclaimer: As a reader of Dividendology, you agree to our disclaimer. You can read the full disclaimer here.

And there is a good reason for this.

Investors are increasingly demanding income generation across a well-diversified portfolio.

The issue with this?

Historically it has been quite hard to generate income from a portfolio that seeks to have exposure to asset classes like:

• Gold

• Oil/Energy

• Small Caps

That isn’t the case anymore.

Let’s look at 3 covered call ETFs that provide ways to generate income from these historically ‘low or non-yielding’ segments of the market.

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1. 🥇 NEOS Gold High Income ETF (IAUI)

Gold is typically viewed as one of the most defensive assets in the world.

It’s a hedge against:

• Inflation

• Currency debasement

• Economic uncertainty

And historically, it’s significantly outperformed the S&P 500 during market pullbacks.

However, this of course is a ‘non-productive asset’, meaning it doesn’t produce earnings and thus doesn’t produce income for the investor.

IAUI from NEOS addresses this problem.

Instead of simply holding gold, it layers on an income strategy:

• Maintains exposure to gold (via ETFs and synthetic positions)

• Sells call options to generate premium income

• Holds collateral (like Treasuries) to enhance returns

While the ETF was only launched in June of last year, this methodology has been so effective that IAUI was recently awarded the ‘Best New Options Income ETF’ award from ETF.com!

What is so interesting about IAUI is that gold is actually an ideal candidate for covered calls.

Why?

Because over long periods, gold tends to:

• Trade sideways

• Experience moderate volatility

That’s exactly the environment where covered call strategies have the capability to thrive.

Since inception, the fund has managed to grow net asset value, despite also offering a 12.2% distribution rate.

In fact, because of the growth of their NAV, the fund has also increased the amount they payout in dividends since inception.

The dividend has gone from $0.52 per share to $0.61.

It’s important to remember that a growing NAV indicates sustainable distributions for covered call ETFs, and a declining NAV indicates the opposite-

Declining distributions.

As the fund’s fact sheet states:

“IAUI may be considered as an alternative income stream that’s less correlated to traditional income oriented investments.”

For the investor looking for exposure to an asset class that is less correlated to the market while also producing income, IAUI is an interesting option.

2. 🛢️ NEOS MLP & Energy Infrastructure High Income ETF (MLPI)

That’s right, another NEOS fund on the list.

It’s pretty incredible how popular this ETF issuer has become in just a few short years.

Their AUM is now second only to JP Morgan.

Energy has always been one of the most cash-flow-rich sectors in the market-

Especially when it comes to midstream companies.

As of I’ve stated before, I’m not typically a big fan of energy stocks due to their reliance on commodity prices-

But midstream companies are different.

These businesses often generate stable, fee-based revenue (not reliant on commodities), with attractive starting yields.

MLPI capitalizes on this, while also seeking to enhance this sector in a few critical ways.

Instead of holding a single MLP, MLPI:

• Owns a diversified basket of midstream and energy infrastructure companies

• Focuses on “toll road”-like businesses with volume-based cash flows

• Layers on a covered call strategy to generate additional income

The result is a fund that combines high underlying yields + option income into a single vehicle, giving MLPI a starting yield of 14.92%.

While this is also a new fund, the performance has been astounding since inception.

The NAV has grown by 15% in just around three months!

Of course, there is an obvious reason for this.

The energy sector has grown 37.6% year to date, while the S&P 500 is down by over 6%.

And perhaps one of the mist underrated benefits of MLPI:

No K-1 forms.

This ETF is even more tax friendly than simply owning the underlying holdings.

Of course, like most covered call ETFs, there are risks as well, such as the fact that MLPI:

• Caps upside during strong energy rallies

• Is heavily exposed to one sector

• Relies on NAV stability to sustain distributions

But for someone looking to get exposure to the energy sector with an enhanced yield in a more tax efficient manner, MLPI is worth keeping on the watchlist.

3. 🚀 Infrastructure Capital Small Cap Income ETF (SCAP)

Did you know that since 1964, small cap stocks have actually been one of the best performing asset classes in the United States?

From 19664 to 2025-

• Small cap total returns: 549,240%

• S&P 500 returns: 51,520%

That’s pretty astounding returns.

Naturally, it might make sense to have some exposure to small cap stocks.

Most small caps are known for higher growth potential and greater volatility-

But typically don’t provide income.

SCAP flips that dynamic.

Instead of choosing between growth OR income, it combines both:

The goal is to deliver both capital appreciation + above-average income from small caps.

What’s most exciting about this fund in my opinion, it the fact it’s able to generate an over 7.25% trailing twelve month yield while only writing options of 5%-20% of the entire portfolio.

This leaves substantial room for SCAP to take part in the upside of their underlying holdings.

As a result of low portfolio options coverage, this ETF has been able to actually grow their distributions over time.

In fact, the dividend payments have grown nearly every quarter over the past few years!

💸 Covered Call ETFs

It’s important to be able to accurately assess what your goals are as an investor, and make decisions that reflect those goals.

Each of the funds mentioned today are designed to serve a very specific purpose.

As a reminder, members of Dividendology can access the Dividendology Covered Call ETF database at anytime over on https://www.Dividendology.com/.

Here is a preview:

🎯 Something Big is Coming…

I’ve been conducting extensive interview with fund managers over the last 6 months, in an effort to identify the best income ETF opportunities.

I’m compiling these interviews into a massive database, which will be available to members of Dividendology soon.

If you want to get access to it, as well as all other features mentioned below, then you can join here:

Subscribe now

Stay tuned!

Dividendology

Check out these resources:

Tickerdata 🚀 (My automated spreadsheets and instant stock data for Google Sheets!)

Interactive Brokers 💰 (My favorite place to buy and sell stocks all around the world!)

Seeking Alpha 🔥 (Research stocks $30 off! + 7 day free trial)

HYSA 📊 (Get Access to the Best High Yield Savings Accounts!)

Disclaimer: As a reader of Dividendology, you agree to our disclaimer. You can read the full disclaimer here.

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Rebound Capital has identified 10 AI-proof SaaS companies with deep moats in steep drawdowns.

Dividendology readers can now unlock their exclusive 24-page AI-proof stock report for free!

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Thanks to Rebound Capital for sponsoring.

🚨 SCHD Just Changed

Every year in March, the dividend ETF SCHD undergoes reconstitution.

This is the one time per year where:

• Stocks get added and removed

• Sector allocations shift

• Dividend characteristics change

And in 2026…

The changes were significant.

Today, we will be reviewing everything you need to know about the 2026 SCHD reconstitution.

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⚠️ Dangerous Territory

In December of 2025, I posted an in-depth analysis of SCHD, and why abandoning the popular ETF would likely be a massive mistake in 2026.

If you missed it, you can read that here.

While there was a multitude of topics discussed in that article, one of the most important topics was the U.S. equity risk premium, which is essentially the S&P 500 earnings yield minus the 10-year Treasury yield.

In simple terms, it answers one critical question:

How much extra return are investors being paid to own stocks instead of “risk-free” government bonds?

According to this chart, the answer is:

Almost nothing or even negative.

Basically, investors were taking on more risk for less potential return.

So why was SCHD positioned to perform so well in light of this?

Because SCHD isn’t just ‘a dividend ETF’-

It’s actually a systematic valuation strategy on top of being a dividend fund.

Let’s break down what this means.

⚙️ Methodology

SCHD’s annual reconstitution is not determined by fund managers.

It is completely determined by their methodology, which you can see below.

In short, the methodology is:

• Applying quality filters

• Ranking stocks by dividend yield

• Rebalancing annually

The key is ranking stocks by yield.

Why?

Because dividend yield is heavily influenced by price.

Dividend yield isn’t just about income, it’s also a function of price.

• When a stock’s price declines, its yield rises

• When a stock’s price increases, its yield falls

It’s obvious, but think about what that does in terms of valuation for SCHD.

Stocks that have sold off, but still maintain strong fundamentals, naturally rise to the top of the rankings.

In fact, we can see that after the recent reconstitution, the top 20 holdings in SCHD have an average forward P/E multiple of 15.33!

So during a time where valuation multiples were stretched and risk was increasing, SCHD was naturally rotating capital to keep its holdings at a reasonable valuation.

This ‘derisked’ SCHD from the fact that the US equity risk premiums were in negative territory.

Naturally, the results were amazing.

SCHD has now outperformed the S&P 500 by around 16% year to date!

But it hasn’t just outperformed the S&P 500, it outperformed its close dividend ETF peers, like DGRO, VYM, and VIG.

🎯 What Changed in 2026?

This year, SCHD:

• Added 25 stocks

• Removed 22 stocks

Here are the 25 stocks that were added:

And here are the 22 stocks that were removed:

There’s a multitude of major moves that we could point out, such as the addition of UnitedHealth Group, or the removal of Abbvie and Cisco-

But the biggest takeaway is the sector rotation.

2025 was different for SCHD, in a sense that historically speaking, SCHD has typically had a large allocation to financials and a small allocation to energy.

2025 was the complete opposite.

SCHD went from a 5.7% allocation to energy in 2020, to over 20% before the 2026 reconstitution.

And while financials were 24.8% of the fund in 2020, it dropped to just 9.7% in 2025.

However, SCHD has a new look after the recent reconstitution:

After a strong run, many energy stocks saw their yields compress, which pushed them down in SCHD’s rankings and led to several removals.

At the same time, financials had a much weaker year.

That decline in price pushed yields higher, making them far more attractive within SCHD’s model.

The end result was a near 8% reduction in the energy allocation.

That capital went into:

• Financials

• Communication services

• Consumer staples

• Health care

• Technology

This is a very different look from 2025.

📊 The Hidden Dividend Growth

SCHD recently announced their Q1 2026 dividend, and it’s around 3.3% higher than 2025’s Q1 dividend.

But it is important to remember that SCHD’s high dividend growth isn’t just from the underlying holding growing payouts-

But from the annual reconstitution dropping the low yielders and adding the high yielders.

This essentially causes ‘artificial dividend growth’.

What’s even more exciting, is the fact the holdings added during the reconstitution have higher historical dividend growth, with lower payout ratios.

⚡ Reality

The reality for SCHD is this:

Sentiment around this fund changes rapidly.

Everyone loves the fund right now, but that wasn’t the case just a few months ago.

But over full market cycles, that discipline is exactly what has driven:

• Strong total returns

• Exceptional dividend metrics

• Lower volatility than the broader market

And over time, that’s how you build a portfolio that compounds without needing to time or predict the market.

If you to get access to all Dividendology features mentioned below, then consider becoming a member here:

Subscribe now

Check out these resources:

Tickerdata 🚀 (My automated spreadsheets and instant stock data for Google Sheets!)

Interactive Brokers 💰 (My favorite place to buy and sell stocks all around the world!)

Seeking Alpha 🔥 (Research stocks $30 off! + 7 day free trial)

HYSA 📊 (Get Access to the Best High Yield Savings Accounts!)

Disclaimer: As a reader of Dividendology, you agree to our disclaimer. You can read the full disclaimer here.

The only way to make it even better?

When that dividend income hits your account every single month.

And right now, not including funds or ETFs-

There are only 94 stocks that currently pay monthly dividends.

Today, we will be reviewing the top monthly dividend stocks.

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💸 Creating Monthly Dividends

There’s no doubt, the easiest way to generate monthly dividends is to buy stocks that pay monthly.

But did you know you can create your own stream of monthly dividends?

Most stocks pay quarterly dividends, meaning there are three main payout schedules:

1. Schedule 1: Jan / Apr / Jul / Oct

2. Schedule 2: Feb / May / Aug / Nov

3. Schedule 3: Mar / Jun / Sep / Dec

By picking stocks with staggered payout schedules, you can create your own monthly stream of income.

However, I certainly wouldn’t select stocks solely based on this alone.

📊 Sector Breakdown

There are 94 stocks that pay monthly.

48 of them are REITs-

Meaning 51% of all monthly dividend payers are REITs, with financials and energy also making up a meaningful portion.

REITs being the majority actually makes a lot of sense when you consider the business model.

Most REITs own income-producing real estate and collect rent every single month.

And because their income comes in monthly, they’re able to pass that income through to investors in the form of stable, recurring monthly dividends.

⚠️ The Truth

Many monthly dividend stocks are underperformers.

In fact, around 35 of the 94 monthly have seen negative returns in the last year.

The reality for monthly dividend stocks is the same for any stock:

We should be looking for stocks that are growing their dividend payments.

These are the exact type of stocks that historically have outperformed.

Why?

Because in order to grow dividends over long periods of time, the dividend growth must be backed by growing earnings.

📋 The Full List

Below you can see the full list of monthly dividend payers for 2026.

As a reminder, no ETFs or funds were included on the list.

You can always access the list of monthly dividend stocks and other features by going to the Dividendology Database.

You can also download the above sheet here:

Monthly Dividend Stocks List

Now let’s review just a few of the top monthly dividend payers.

4. 💰 Capital Southwest (CSWC)

In the last 5 years, Capital Southwest is up only 1%.

However, that is a bit misleading, as Capital Southwest is a BDC, meaning the majority of their returns come in the form of dividends.

In fact, this BDC has actually outperformed the S&P 500 over the past 5 years!

Capital Southwest is one of the higher-quality income BDCs focused on the lower middle market, lending to businesses that are often overlooked by large banks.

This is where one of their advantages comes from:

• Less competition leads to higher lending spreads (~6%+)

• Higher lending spreads leads to more stable net investment income (NII)

• Consistent NII leads to high and more stable dividends

The company currently yields 11.61%.

Unlike many high-yield BDCs, CSWC is internally managed, which helps keep costs lower, margins high, and means incentives are aligned with management and shareholders.

CSWC’s portfolio continued to expand in Q4 2025, growing from 126 to 132 companies and surpassing $2.0B in total fair value, while maintaining a conservative structure with ~90% first-lien investments-

Which means most of its loans are first in line to be repaid if a borrower runs into trouble, reducing risk.

While much of the BDC market has pulled back due to over exposure to software companies and declining interest rates-

CSWC has continued to hold value, and still even trades at a slight premium due to its quality.

It currently trades slightly below its 3 year average P/TBVPS.

3. 🏢 Realty Income (O)

A list of top monthly dividend stocks would be incomplete without Realty Income.

Especially considering they call themselves ‘The Monthly Dividend Company’.

Realty Income is a triple-net lease REIT focused primarily on retail and industrial properties, where tenants cover taxes, insurance, and maintenance, creating highly predictable cash flow.

Portfolio occupancy remains extremely high at 98.9%, highlighting the stability of its tenant base.

The dividend remains one of the safest for REITs:

• Yield 5.18%+

• ~75% AFFO payout ratio

• Consistent annual dividend growth

With AFFO per share continually growing, it’s easy to see why the dividend will continue to grow in the future.

The biggest headwind going forward is interest rates.

With the FED holding rates steady this past week, the market now has a high degree of uncertainty as to where rates will end the year.

Lower rates would reduce its cost of capital and make its dividend more attractive relative to bonds.

On the flip side, higher rates make Realty Income’s dividend less attractive.

Either way, Realty Income continues to provide stable, predictable income with modest upside.

Now, let’s look at the top 2:

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Members will get access to the full list every month, as well as all other Dividendology features.

This month, only 48 stocks made the list.

To make the list, each stock must:

• Pay a dividend

• Have a PEG ratio of below 2

• Have 20%+ upside based on Wall Street analysts ratings

Let’s dive in.

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1. 🖥️ Meta Platforms (Meta)

Wall St. Price Target: $858 | Upside: 39.95%

Despite being one of the most dominant technology companies in the world, the stock has been relatively flat recently.

Every Mag7 stock is currently down year to date, with Meta currently down slightly over 5%.

The company’s core business remains extremely straightforward:

Digital advertising.

Roughly 99% of Meta’s revenue comes from advertising across platforms like:

• Facebook

• Instagram

• WhatsApp

Historically, this business has compounded at extraordinary rates.

Over the past decade, Meta grew revenue from roughly $17.9 billion in 2015 to more than $200 billion in 2025, representing a 10-year revenue CAGR of about 27%.

The company also operates an extremely efficient business model, with relatively low leverage and consistently strong returns on invested capital, often approaching or exceeding 20%.

What makes Meta particularly interesting today is its valuation.

The stock currently trades at a forward P/E ratio of about 20.3, which is actually slightly cheaper than the S&P 500, which recently traded at roughly 22x forward earnings.

In other words, investors can buy Meta, a company expected to grow far faster than the overall market, at a valuation below the market average.

According to analyst estimates, Meta’s projected EPS growth over the next 3–5 years is around 22.4% annually.

This combination of strong expected earnings growth and a market-level valuation is one of the main reasons analysts remain highly bullish.

The average Wall Street price target currently sits around $858, implying roughly 34% upside from current prices.

It isn’t just analysts who are paying attention either.

Hedge fund manager Bill Ackman recently initiated a position in Meta, making it over 11% of his portfolio.

More broadly, Meta is also the 6th most widely owned stock among “super investors” (investors managing over $100 million in assets).

Looking ahead, Meta still has several powerful growth drivers.

Revenue growth is largely determined by three factors:

1. Daily active users

2. Ad impressions

3. Average price per ad

In Meta’s most recent results, all three metrics moved in the right direction. Daily active users grew 7% year-over-year, ad impressions increased 18%, and the average price per ad rose between 6% and 9%.

The main concern investors have today is Meta’s rising capital expenditures, largely driven by the company’s aggressive investment in AI infrastructure.

However, the path to monetizing this capex spending is more clear than some of their big tech peers.

AI could ultimately strengthen Meta’s advertising engine by improving ad targeting, increasing engagement, and raising the price advertisers are willing to pay.

Meta also recently introduced a dividend, though the yield remains small at roughly 0.3%. With a payout ratio of only about 11% of free cash flow, the company has substantial room for dividend growth in the years ahead.

Even using conservative assumptions, Meta appears capable of delivering market-beating returns, which is why many analysts continue to view the stock as one of the most attractive opportunities among large-cap tech today.

2. 💼 Accenture (ACN)

Wall St. Price Target: $278 | Upside: 41.79%

Accenture is one of the largest consulting and technology services firms in the world.

The company helps businesses adopt new technologies, improve efficiency, and modernize their operations.

Its services span strategy consulting, technology implementation, operations outsourcing, engineering solutions, and digital marketing.

Its revenue base is also diversified geographically:

• 50% coming from the Americas

• 35% from Europe, the Middle East, and Africa

• 14% from Asia Pacific

Historically, this company has been a phenomenal dividend grower.

Their current yield is above 3.2%, with an over 12% dividend compounded annual growth rate.

Importantly, this dividend growth has been backed by free cash flow, keeping the free cash flow ratio below 35%.

In the last year, ACN is now down by over 38%.

Much of the concern centers around the rise of generative AI.

However, Accenture is already seeing strong momentum in AI-related services.

In the company’s most recent quarter, AI revenue increased 120% year-over-year to $1.1 billion, while AI bookings rose 76% to $2.2 billion.

While still a relatively small portion of overall revenue, these numbers do highlight the potential opportunity ahead.

Right now, their 3-5 EPS growth projections sit at around 7% annually.

Despite this, they’re currently trading at their lowest P/E multiple in the last five years, sitting at 14.25.

Let’s value ACN with a dividend discount model.

If we assume 6% dividend growth, which should be sustainable moving forward with a low payout ratio and 7% EPS growth projected-

Then we come to a fair value of $257.37.

Accenture clearly faces real risks as AI reshapes the consulting industry.

However, its global brand, deep enterprise relationships, and leadership in digital transformation suggest it is far more likely to benefit from AI adoption than be displaced by it.

3. 🛡️ Brown and Brown (BRO)

Wall St. Price Target: $82 | Upside: 19.82%

Brown & Brown operates a very different type of business than traditional insurance companies.

Rather than underwriting insurance policies and taking on risk themselves, Brown & Brown acts as an insurance broker.

The company connects businesses and individuals with insurance carriers and earns commissions and service fees in the process.

This model is attractive because it is highly capital-light.

In fact, this model is so capital light that BRO has a dividend and Capex coverage ratio of 6.78!

They can cover the company’s capital expenditures and dividend nearly 7 times over.

Since Brown & Brown does not underwrite policies, it avoids the balance sheet risk that traditional insurers face while still benefiting from long-term growth in insurance premiums.

There are two primary sources of revenue for the company.

1. Commissions (70% of revenue)

   BRO earns a commission (typically 10–15% of the annual premium) every time they place a customer with an insurance carrier.

2. Fees (30% of revenue)

   BRO charges fees directly to customers for specialized services like risk management, employee benefits consulting or claims administration.

This combination creates a highly scalable business model that generates strong margins and consistent cash flow.

Today, more than 90% of Brown & Brown’s revenue is generated in the United States, and the business is organized into four primary operating segments:

1. Retail (58%) – Directly serving businesses and individuals with insurance solutions

2. National Programs (24%) – Specialized insurance programs tailored to specific industries

3. Wholesale Brokerage (13%) – Connecting retail brokers with insurance carriers for hard-to-place risks

4. Services (5%) – Administrative and consulting services related to insurance

One of the key drivers of Brown & Brown’s long-term growth has been acquisitions.

The company has a long history of acquiring smaller insurance brokers and integrating them into its platform.

Recently, Brown & Brown completed its largest acquisition ever, purchasing Accession Risk Management Group in a $9.8 billion cash-and-stock transaction.

The deal is expected to add approximately $1.7 billion in annual revenue and significantly expand Brown & Brown’s specialty distribution business, which tends to generate higher margins than traditional brokerage operations.

Over time, this acquisition strategy has allowed Brown & Brown to steadily expand its market share while maintaining strong profitability.

Looking ahead, management expects insurance pricing trends in 2026 to be somewhat mixed. According to CEO J. Powell Brown, casualty insurance rates (the largest segment of the market) are expected to continue rising, while property insurance rates may soften slightly due to the lack of major hurricane losses in 2025 and an increase in available capital.

For Brown & Brown, this matters because brokerage revenue is often tied directly to insurance premium levels.

When premiums rise, brokers typically earn higher commissions.

Conversely, softer pricing environments can create modest pressure on organic growth.

However, the company continues to see steady demand from its customer base, with most clients still investing in their businesses and hiring at a modest pace.

BRO currently trades at a significant discount to its historical valuation multiples.

Now, let’s dive into the full list of dividend stocks with the most upside according to Wall Street.

As a reminder, this list is updated monthly, and is always available on Dividendology.com by visiting our database.

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The goal of the High Yield Portfolio is simple:

1. Deliver a sustainable dividend yield of around 8%

2. Preserve capital (no long-term value erosion)

3. Provide predictable cash flow

Why 8% yield?

Because the amount of capital we would need to retire is cut in half. (based on the 4% rule).

Members of Dividendology will be able to view all the holdings of the High Yield Portfolio on Dividendology.com.

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🏆 Our High Yield Portfolio

Before today’s purchase, here is how our portfolio stands:

Before today, we had added 4 positions to the High Yield Portfolio:

1. We added a fund with an over 9%+ yield, paying out monthly, that grows dividends over time WITHOUT selling options

2. We added an 8%+ yielding REIT with the potential for significant upside

3. We added an 8%+ yielding stock growing their distributions by double digits

4. We added a near 9%+ yielding stock growing earnings in mid single digits

But the position we’re adding today is yielding over 10%, and has the highest dividend coverage out of any stock in our portfolio yet.

After today’s addition, our portfolio looks like this:

Our portfolio’s yield climbed substantially, while our payout ratio declined significantly.

This is an opportunity that has been completely overlooked by Wall Street and large financial media publications.

💰 The High Yield Advantage

The stock we are buying today has extremely limited analyst coverage, leading to what I believe is a major mispricing of the stock, which simultaneously creates a High Yield opportunity.

This is what makes me so excited about High Yield Investing.

While there are many newer funds out there yielding well over 10% in many instances, we must buy stocks that meet all three of our portfolio criteria.

Buying high yield stocks is easy, buying high yield stocks that can preserve capital, provide predictable cash flow, and still provide the yield is much more difficult.

We want to build a portfolio we can live off of and still sleep well at night.

We are still in the early stages of building out this High Yield portfolio-

And today, we will be taking a deep dive into the newest addition.

If you’d like to get access to the High Yield Portfolio, as well as everything mentioned below, you can do so here:

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Now, let’s dive in.

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This is the end result of 100’s of hours of research every month.

It’s time to dive in.

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1. 🏢 AH REALTY TRUST (AHRT)

*NOTE: This REIT was previously under the name Armada Hoffler Properties (AHH)

I highlighted the REIT sector as a major opportunity heading into 2026, and so far that thesis has played out very well.

REITs had underperformed over the last few years, but are currently outperforming the S&P 500 by over 5% in 2026.

AH Realty Trust (formerly Armada Hoffler Properties) has become one of the more controversial names in the REIT sector.

Today, the REIT is:

• Yielding around 9% and

• Trading at roughly a 50% discount to estimated net asset value

• Seeing heavy insider buying/ownership

Insiders currently own over 10% of the business.

Much of that discount stems from the major strategic transformation currently underway.

Historically, AHRT (formerly AHH) had a development-first model.

For decades, Armada Hoffler leaned heavily on its identity as a developer, earning a meaningful portion of income from construction contracts, development fees, and one-off transactions.

That model worked well in boom times but created volatility and left the company more exposed when credit tightened and rates spiked.

This ultimately led to some major issues.

Most notably, it led to AFFO not covering their dividend payments, which led to a dividend cut.

Under CEO Shawn Tibbetts, the company is fundamentally reshaping the business.

Armada Hoffler recently rebranded to AH Realty Trust (AHRT) and announced plans to simplify its structure by selling its multifamily portfolio, exiting its construction and lending operations, and using the proceeds to reduce leverage while focusing the company around its core retail and mixed-use office properties.

This shift has created near-term uncertainty, pushing the REIT to a 52-week low.

However, the strategy directly addresses two of the biggest issues that historically caused Armada Hoffler to trade at such a large valuation discount.

The first issue was leverage.

The company carried more debt than many REIT peers, which increased investor concerns during the recent interest rate cycle.

By selling assets and using the proceeds to pay down debt, management is actively working to strengthen the balance sheet.

The second issue was complexity/unpredictability.

Unlike most REITs, Armada Hoffler generated a portion of its earnings through development, construction, and lending operations.

While these businesses could generate attractive returns in strong markets, they also created lumpy earnings and made the company harder for investors to value.

Most REIT investors prefer simple property platforms that generate stable rental income, leading to reliable dividend income.

By exiting these non-core businesses, AHRT is becoming a much cleaner and more focused real estate company.

Importantly, the underlying real estate portfolio remains strong. The company’s properties currently maintain occupancy levels of roughly 96%, demonstrating that its mixed-use office and service-oriented retail assets continue to perform well even in a challenging environment for commercial real estate.

There are still real risks.

The management team recently stated:

“While 2026 represents a transition year for the company, I want to underscore that throughout this period, we continue to maintain full dividend coverage from the cash flows generated by our operating properties, while also meaningfully reducing debt.”

The AFFO payout ratio is projected to be close to 86% in 2026.

If management successfully simplifies the business and reduces leverage, the current valuation could eventually prove far too pessimistic.

For investors willing to accept some short-term volatility, AHRT represents one of the more interesting deep value opportunities in the REIT market today.

2. 🌿 Innovative Industrial Properties (IIPR.PR.A)

Innovative Industrial Properties (IIPR) is a specialized REIT that owns cultivation and processing facilities leased to licensed cannabis operators across the United States.

The REIT is currently yielding close to 14%!

However, I’m not interested in the REIT itself.

I’m interested in their preferred shares.

The preferred shares currently trade at roughly $22.50, giving them a yield of 10%.

The reason this is so interesting, is because IIPR has one of the most conservative balance sheets in the REIT sector.

That combination of a near double-digit yield and discounted price is unusual for a preferred security backed by a REIT with such a conservative balance sheet.

Interestingly, this opportunity exists despite improving fundamentals in the cannabis REIT sector.

Earlier this year, President Trump signed an executive order initiating the process to reschedule cannabis as a Schedule III drug, which would eliminate the punitive 280E tax rule that currently prevents cannabis operators from deducting normal business expenses.

If implemented, this change could dramatically improve the profitability and cash flow of cannabis companies, strengthening their ability to pay rent and improving the financial outlook for landlords like IIPR.

Keep in mind, the preferred shares are relatively thinly traded, and the company has issued additional preferred equity recently, which has likely pressured prices in the short term.

But when looking at the underlying credit profile supporting the preferred dividend, the numbers are striking, especially when you compare them to peers.

Innovative Industrial Properties operates with an extremely conservative balance sheet, carrying with a roughly 1.4x debt-to-EBITDA ratio, which is among the lowest leverage levels in the entire REIT sector.

More importantly, the preferred dividend is covered nearly 50x by AFFO, providing an enormous margin of safety for income investors.

In other words, if IIPR’s rental income were cut in half, the preferred dividend would still remain well covered by cash flows.

While the cannabis sector will likely remain volatile, the risk-to-reward profile for the preferred shares looks unusually compelling.

Investors today are collecting nearly 10% annual income from a cumulative preferred security backed by one of the lowest-levered REIT balance sheets in the market.

These are the type of opportunities that get incredibly little coverage, and one of the reasons the high yield space is so interesting for those who do deep research.

3. ⚡ Broadcom (AVGO)

This wouldn’t be a complete list without covering at least one dividend growth opportunity.

I’ve been bullish on AVGO for years, and it has continued to perform exceptionally.

The temptation of every investor is to look at a stock that has performed this well and simply assume the opportunity has passed.

But the reality is that share price alone tells us very little about how the valuation of the company has actually changed.

We must account for changes in the earnings power of the business.

Despite the fact the stock is up over 86% in the last year, the P/E valuation multiple has actually declined.

In other words, earnings grew even faster than the share price in 2025-

And earnings are projected to grow at simply amazing rates.

Not only that, but the visibility/predictability of those earnings have improved as well.

Broadcom CEO Hock Tan made this comment during the recent earnings call:

“Our visibility in 2027 has dramatically improved. Today, in fact, we have line of sight to achieve AI revenue from chips, just chips, in excess of $100 billion in 2027. We have also secured the supply chain required to achieve this.”

Valuation multiples are determined primarily by future earnings growth rate (which is already quite high for AVGO), but the predictability of those future earnings plays a major role as well, and this is where AVGO is seeing improvement.

If AVGO achieves the average analyst EPS estimate over the next few years AND even sees the trailing 12 month P/E multiple fall back significantly-

Forward looking returns still look incredibly attractive, with compounded returns through 2030 sitting at 17.35%.

Now, let’s review the full list for March.

Read more

In fact, even the VanEck BDC Income ETF is down 23% in the last year!

Not only that, but their recent distributions were the lowest the ETF has paid since early 2022.

For an asset class designed to distribute large dividends, those numbers are obviously quite concerning.

But the story behind why this has happened will ultimately reveal the truth behind which BDCs now present high yield opportunities.

Many BDCs are now trading at large discounts to net asset value while still producing strong net investment income.

We need to find out:

• Are BDCs becoming structurally riskier?

• Are investors being handed one of the best entry points in years?

• Which BDCs are currently the best opportunity for high yield dividends?

Let’s dive in.

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💰 Why BDCs?

For investors searching for high yield, the BDC landscape makes quite a bit of sense.

For example, members of Dividendology get access to the Dividendology BDC Database.

The average yields for the BDCs in the database are:

• 13.79% Base Yield

• 14.56% Total Yield

Remember, the total yield accounts for special dividends the BDC has paid out.

The base yield represents the yield without accounting for special dividends, which are not guaranteed moving forward.

The common example of this is Main Street Capital.

Their base dividend payments have grown every year since 2008-

But their special dividends fluctuate often depending on a multitude of variables.

A BDC is almost always going to be valued entirely based upon their ability to pay dividends.

This is in part due to the fact that they are required by law to payout 90% of their earnings in the form of a dividend.

Thus to value and analyze a BDC, we must make sure we have a basic understanding of their structure.

📚 BDCs Explained

A Business Development Company (BDC) is a publicly traded investment company that primarily lends money to middle-market businesses.

These are typically companies that generate between $10 million and $250 million in annual cash flow.

They are:

• Too small to issue bonds in public markets

• Too large or too complex for traditional bank lending

This creates a financing gap that BDCs step in to fill.

Instead of issuing mortgages or credit cards like a bank, BDCs primarily make private loans to businesses.

So in the same way that you could argue that REITs are simply a portfolio of leases-

BDCs are a portfolio of loans.

This means the BDC business model is fairly simple.

They borrow money at one rate and lend it out at a higher rate, and the difference between those two rates is the net investment spread.

Here is a simplified example:

This business model has had periods of time where returns have been exceptional, especially for high yielding investments.

In fact, if we review the returns of BIZD (BDC ETF) from the market bottom in 2022 up until the 2025 tariff scare, BIZD actually outperformed the S&P 500.

This is quite mind boggling when put into perspective.

In the midst of one of the greatest tech stock rallies that was powered by AI, an ETF holding both high quality and low quality BDCs outperformed the tech heavy S&P 500, while providing double digit yields.

In an optimal environment, this is what BDCs have the ability to do.

⚠️ What Changed?

Over the past three years, BDCs benefited from a nearly perfect environment.

The vast majority of loans issued by BDCs are floating rate.

But BDCs are now facing two major issues:

1. Declining Rates

2. Software Lending Concerns

Both of these issues have massive implications for the BDC market as a whole, especially as it relates to their ability to pay dividends.

Let’s start by discussing the rate environment.

🏦 Rate Cuts

As the Federal Reserve raised interest rates aggressively, floating-rate loans immediately began paying higher interest.

This caused BDCs to collect far more interest income.

As a result:

1. Net investment income rose sharply

2. Dividends increased across the sector

3. BDC stock prices rallied

For a while, it was the perfect income trade.

But now that dynamic has reversed.

Several factors have begun working against the sector.

The federal reserve began reducing interest rates again around September of 2025, and has cut rates three times in the last six months.

Because most BDC loans are floating rate, falling interest rates reduce loan income.

That directly reduces net investment income and can undoubtedly pressure dividend payouts.

Like mentioned earlier, BIZD has recently paid out their lowest distribution in over 3 years.

Some loans include rate floors, which help cushion the decline-

But overall, the tailwind from rising rates has turned into a headwind.

However, the other issue could potentially be just as detrimental to BDCs.

💻 Software Lending

Across the BDC universe, roughly 20% of loans are tied to software companies.

Private equity firms historically favored software businesses because of their recurring revenue models, asset-light operations, and high growth potential.

However, many of these loans were made during periods when technology valuations were extremely high.

Since then:

• Software valuations have declined (due to AI)

• Growth expectations have moderated (again, due to AI)

• Interest expenses have increased

This combination has created credit risk for many borrowers.

Many of these software companies took on significant debt during a period when valuations and growth expectations were much higher than they are today.

At the time, the assumption was that revenue and cash flow would continue growing rapidly, allowing these businesses to comfortably service their debt.

But the market is now afraid that won’t be the case for many software companies.

With many BDCs having significant exposure to these software companies, this creates a large risk.

⚖️ So What’s the Result?

We’ve already seen the result of these risks reflected in the share price of BDCs to some degree.

However, this isn’t purely due to a drop in net investment income for most BDCs.

In fact, some have been able to sustain their net asset value.

So if the share price is declining, while their net asset value stays the same-

This means valuations are becoming more attractive.

This becomes abundantly clear when viewing the Dividendology BDC Database:

Out of 42 BDCs actively tracked in the Database, only 5 are currently trading at a P/NAV above 1.

BDCs are currently trading at significant discounts to Net Asset Value (NAV).

Of course, for the weaker BDCs, this is likely justified.

Net investment income will drop with rates declining, and the BDCs that are over exposed to weak software companies will face real difficulty with maintaining their dividends.

But there is undoubtedly opportunity now for those willing to do the research and evaluate the quality of BDCs, their loan quality, their dividend quality, and their exposure to floating rate loans.

Let’s look at just a few of the top high yield opportunities in the high yield space.

1. 👑 Main Street Capital (MAIN)

Total Yield: 7.5% | Base Dividend Coverage: 134.6%

Main Street continues to be the most elite BDC in the space fundamentally speaking, and their recent earnings report proved it once again.

• 14th consecutive quarter of record NAV

• Distributable NII of $1.11/share which comfortably covers the $0.72 base quarterly dividend (134.6% coverage in the Dividendology BDC Database)

• 18th consecutive supplemental dividend ($0.30/share on top of the base, bringing total yield to ~7.5%)

• Non-accruals at just ~1% of fair value, which is among the lowest in the industry.

• 5 Year TBVPS CAGR of 5.76% which is the best book value growth track record of any BDC in the database.

Fundamentally, there is no debate that MAIN is the highest quality BDC.

While most BDCs struggle to simply maintain their NAV, MAIN grows NAV nearly every single quarter.

MAIN’s variable rate debt sits at just 53.8%, which is one of the lowest in the BDC space, which actually helps on the liability side as rates come down.

This BDC will be the LEAST negatively impacted BDC by rate cuts.

On the asset side, CEO Dwayne Hyzak noted software exposure is in the “mid-single digits” percentage of the portfolio.

MAIN has always been a value-oriented, lower middle market lender focused on basic industries, manufacturing, and services.

So MAIN has very low risk when it comes to declining rates and exposure to software companies.

Of course, the catch is the valuation.

At $57.63, MAIN trades at 1.77x NAV, which is the highest premium in the entire database.

But this is a BDC that has grown book value at 4.53% annually for 9 years while paying a massive dividend.

You’re paying up for the best management team in the business, internal management (no external fees eating into returns), and a 0.73x leverage ratio that gives them enormous dry powder.

Let’s review 2 BDCs that are more attractively valued, and analyze the entire Dividendology BDC Database.

Read more

The fact that under the right circumstances…

You could pay $0 in taxes on dividends.

To verify exactly how this is possible, I teamed up with my CPA friend, “The Money Cruncher”.

If you enjoy this breakdown, be sure to subscribe to his free newsletter!

Money Cruncher Newsletter

💰 Pay $0 in Dividend Taxes

Dividends are one of the most efficient investment returns.

Did you know that you can actually live off $131,100 of dividend income and pay $0 in federal taxes in 2026?

Here is a screenshot directly from a tax software:

Generating $131,100 of federal tax-free money is equivalent to generating a salary of $165,000.

In other words, you would need to earn $165,000 from your day job to have the exact same net pay of $131,100 with qualified dividends.

Remember, the tax code wasn’t designed for employees.

It was created for business owners and investors to help circulate the economy and get rewarded for the risk they take.

As such, once you invest your capital in dividend producing stocks or ETFs, you are rewarded with preferential tax rates.

Different tax rates than those applied to a regular 9–5 job.

💭 How Does This Work?

Qualified dividends get a preferential tax treatment.

According to the IRS, if your taxable income is less than $98,900 and you file jointly, you will pay $0 in long term capital gains tax.

These numbers are based on the taxable income, which means that it’s after the standard deduction is applied.

Because of the One Big Beautiful Bill Act (OBBBA) the standard deductions have been increased for 2026, and subsequently for future years.

For 2026, these are the standard deduction amounts:

The standard deduction is $32,200 for married individuals, or $16,100 for single individuals.

So here is how you can calculate the maximum amount you can generate in qualified dividends and pay $0 in federal taxes:

If you are filing as single, you can generate $65,550 of qualified dividends and pay $0 in federal taxes. That’s equivalent to almost an $85,000 salary!

The nice part about receiving dividends is that they are not subject to FICA taxes (Social security/medicare), unlike your W-2 wages are.

This is why they are also much more tax efficient than wages.

Because of the new OBBBA, a temporary senior deduction was introduced for 2026-2028.

Taxpayers age 65+ can deduct an extra $6,000 ($12,000 for married couples), on top of the existing standard deduction.

The deduction begins to phase out once gross income exceeds $75,000 ($150,000 for joint filers).

As a result, some seniors could end up paying $0 in taxes even if their dividends exceed $131,100!

Now, this applies only to federal taxes.

You might still need to pay state taxes, unless you live in one of the following states:

• Alaska

• Florida

• Nevada

• South Dakota

• Tennessee

• Texas

• Wyoming

These states don’t tax dividend income.

One concern many people have is “What about inflation? I can’t live off this amount forever!”

But, living off dividends can actually be quite sustainable even with inflation.

1. Tax brackets and deductions get adjusted with inflation

For example, the standard deduction in 2025 was $15,750 instead of 1$6,100.

The tax bracket went from $48,350 to $49,450.

So these numbers always get adjusted with inflation. However, it’s important to note that the future legislation might change the amounts/tax.

2. Selecting stocks/ETFs with a long record of annual dividend increases

The second way you can protect yourself against inflation is by selecting high quality stocks/ETFs.

For example, Visa’s average 5 year dividend growth rate is 14.96!

That’s a lot higher than the annual inflation.

Along with tax brackets inflation adjustment, you will outpace inflation easily and shouldn’t be too concerned about it.

⚠️ What if I have other income types?

Even if you have other income types, such as wages, Required Minimum Distributions (RMDs) from retirement accounts, or Social Security income/pension, as long as your taxable income is below the thresholds, your qualified dividends will be taxed at 0%.

This is why it’s important to plan around your other income items!

What if I earn even more dividends?

The nice part is that only the amount above the threshold is taxed at the next rate of 15%.

Say you generated $150,000 of qualified dividends, here’s how it would look:

So, if you are single, you would pay a 9.4% effective tax rate, or 2.4% if married.

You would’ve paid a 22-24% marginal tax rate + FICA taxes of 7.65% on a $150,000 salary!

The tax code heavily favors dividend investors.

Quick note: in order for your dividend to be qualified, it must be paid by a U.S. company (or qualified foreign company) and you must hold the stock/ETF for at least 61 days during the 121-day period.

If you to get access to all Dividendology features mentioned below, then consider becoming a member here:

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Check out these resources:

Tickerdata 🚀 (My automated spreadsheets and instant stock data for Google Sheets!)

Interactive Brokers 💰 (My favorite place to buy and sell stocks all around the world!)

Seeking Alpha 🔥 (Research stocks $30 off! + 7 day free trial)

HYSA 📊 (Get Access to the Best High Yield Savings Accounts!)

Disclaimer: As a reader of Dividendology, you agree to our disclaimer. You can read the full disclaimer here.

You can learn plenty from his writings, and his thoughts and beliefs on dividend investing closely align with mine!

I enjoy following his work on Substack and X.

Enjoy the below writing from Compounding Dividends!

- Dividendology

Argan SA is a specialized French property company that develops and leases out Premium logistics warehouses.

The investment case comes down to three simple things:

1. Necessary Assets: Companies like Amazon and Carrefour can’t easily move out of custom-built, robotic-heavy warehouses that produce their own renewable energy. That’s why Argan’s occupancy rate is above 99%.

2. Inflation Protection: Every lease is indexed to inflation, and their “AutOnom” warehouses protect tenants from rising energy costs.

3. Safe Yield: You are getting a starting yield of 4.7%, which is well above the historical average, backed by a family management team that owns nearly 38% of the company. With a payout ratio of just 57.5%, the dividend looks safe now, with plenty of room to grow

• Company name: Argan SA

• ✍️ ISIN: FR0010481960

• 🔎 Ticker: $ARG

• 📚 Type: High Yield Stock

• 📈 Stock Price: €69.80

• 💵 Market cap: €1.79 Billion

• 📊 Average daily volume: €1.5 million

Onepager

Don’t know Argan SA?

Here are the basics (click on the picture to expand):

Dividend Score

Argan receives a Dividend Score of 8.1/10.

Now let’s dive into the full investment case!

1. Do I understand the business model?

Argan is a developer-landlord.

Unlike many REITs that just buy existing buildings, Argan identifies strategic land in France, builds a high-tech warehouse (often custom-designed for a specific client), and then keeps it in their portfolio forever.

They focus on the Premium segment - warehouses that are large, modern, and in the best locations.

Revenue Split

Argan makes 100% of its money from renting its warehouses.

Most of Argan SA’s customers are in the food distribution sector.

Geographic Split

Argan is 100% concentrated in France.

80% of its warehouses are ambient temperature.

13% of their warehouses are refrigerated and 7% are fulfillment centers.

Who are the customers?

Argan leases to massive companies that need reliable, high-tech distribution hubs.

The tenant list is a “Who’s Who” of European business:

• Carrefour: Their largest tenant, making up 28% of rent.

• Blue Chips: Amazon, L’Oréal, DHL, Decathlon, and Coca-Cola.

Because these companies are so large and financially stable, Argan almost never has to worry about a tenant failing to pay rent.

What’s the moat?

Argan SA specializes in premium warehouses.

Their tenants aren’t just looking for four walls and a roof, they are looking for efficiency and ESG compliance.

Argan has pioneered warehouses that produce their own green energy via rooftop solar and heat pumps, that they have branded as AutOnom.

For a company like Amazon or L’Oréal that has strict “Net Zero” targets, an Argan warehouse helps them meet their corporate climate goals.

It also reduces the the energy costs for the warehouses, which the tenants typically pay.

Second, scarcity of land.

France has strict laws that make it very difficult to get permits for new large-scale buildings.

Argan already owns the best land in France, they have a land bank that competitors can’t easily replicate.

Third, Switching Costs.

When a tenant like Decathlon moves into a custom-built 100,000-square-meter facility, they spend millions on their own internal automation and robotics.

They sign long leases because the cost of moving their robots and staff is too high.

We can see evidence of Argan’s competitive advantages through their occupancy rates above 99%.

2. Is management capable?

Argan SA is a family-owned company.

The company was founded in 2000 by Jean-Claude Le Lan, who currently serves as the Chairman of the Supervisory Board.

The leadership is multi-generational, with family members roles across the organization:

• Ronan Le Lan (Son): Chairman of the Executive Board (effectively the CEO).

• Jean-Claude Le Lan Junior (Son): Member of the Supervisory Board and Head of Management Control and Treasury.

• Nicolas Le Lan (Son): Member of the Supervisory Board (until early 2025) and Head of Asset Disposals and Acquisitions.

Ronan Le Lan - Chairman of the Executive Board

Mr. Le Lan has been at Argan since 2001. He has overseen its growth into the leading French logistics REIT.

Under his leadership, Argan achieved its “Plan 2025” goals early, reaching a €4 billion portfolio value.

Francis Albertinelli - CFO

Mr. Albertinelli has Argan SA’s CFO since 2004.

He has managed to keep Argan’s average cost of debt incredibly low (~2.10%) despite rising market rates.

Insiders own more than 37% of the company. The La Lan family has a lot of skin in the game.

3. Has the company grown the dividend attractively?

We look for:

• At least 10 years of dividend growth

• 5-year dividend growth >5%

Argan has grown its dividend consistently for over 15 years.

• 5-year CAGR: 11.7% per year.

4. Is the company active in an attractive end market?

The French logistics market is very attractive because of two massive tailwinds:

• E-commerce: Online shopping requires much more warehouse space than traditional retail.

• Green Transition: Companies are moving out of old, gas-heated warehouses and into green Net Zero buildings like Argan’s AutOnom sites. With limited new land available to build on, the demand for Argan’s existing space remains incredibly high, keeping occupancy at 99%+.

The market is projected to grow at 7.8% per year until 2030.

It’s a very fragmented market.

Argan SA is the #1 player, but only has about 5% market share.

5. What are the main risks for the company?

Tenant Concentration

One tenant, Carrefour, makes up 29% of Argan’s rent. If Carrefour had major financial trouble, Argan would have a massive hole to fill.
Mitigation: Carrefour is a National Champion in France and highly solvent. Furthermore, Argan is diversifying by signing new deals with names like Amazon and L’Oréal to bring that percentage down over time.

Interest Rate Risk

REITs borrow a lot of money. When interest rates go up, the cost to refinance debt can eat into dividends.
Mitigation:Argan has 98% of its debt at fixed or hedged rates. They also have an investment-grade credit rating, which allows them to borrow money cheaper than smaller competitors.

6. Does the company have a healthy balance sheet?

We typically look at Debt/Equity, but that number can get skewed in a company that owns a lot of real estate.

Why? Depreciation.

Accounting rules make properties lose a lot of value on paper, even if they don’t in real life.

That can make equity look artificially low and Debt/Equity artificially high.

So what do we look at instead? Debt / EBITDA (leverage ratio)

The rule of thumb for REITs is that a Debt/EBITDA that’s 6x or lower is generally safe. Argan is currently higher than this at 9.4x, but they are actively paying down debt.

Also, don’t forget that Argan is a developer , which means they carry debt on buildings that aren’t yet producing earnings, making this number look high.

We also want to know how easily the REIT can pay its interest with its cash flow.

European companies typically report this as an Interest Coverage Ratio (ICR). We want to see at least 2.5x.

Argan’s is strong at 4.3x.

Other Debt Characteristics

Argan’s balance sheet is solid:

• Cost of debt: 2.10% (very low)

• LTV (Loan to Value): 41.1% (Target is <40%)

• Credit Rating: BBB- (Investment Grade)

7. Is the company a great capital allocator?

Key signs:

• Payout Ratio <80% (Recurring Net Income)

• Effective equity issuance or buybacks

Payout Ratio:

Argan is very conservative here. They paid out only 57.5% of their Recurring Net Income (€3.45 dividend / €6.00 earnings), leaving them plenty of cash to reinvest.

We should define Recurring Net Income here.

It measures the profit Argan makes strictly from its core business - renting out warehouses - after paying all operating bills and mortgage interest.

Argan SA excludes anything that doesn’t represent regular cash flow, like:

• Paper Value Changes. If the estimated market value of a building goes up on paper (fair value adjustment), it doesn’t generate cash, so it is ignored for this metric

• One-Time Sales. Profits from selling a building (disposal income) are excluded because you can only sell a specific building once

Recurring Net Income is very similar to Core FFO for a U.S. REIT.

Equity Issuance

Like any REIT, Argan SA issues shares to raise capital to grow.

But remember that insiders own nearly 38% of the company.

Management focuses heavily on growing Recurring Net Income per Share.

In 2025, this grew by more than 8%, showing that the growth is actually reaching the shareholders.

8. How does the past and future growth of the company look?

5-year revenue growth: 14.5% per year

5-year Recurring Net Income per Share growth: 5.5% per year

Future Growth

In 2025, Argan SA made €55 million in investments, with a yield of 7.2%.

In 2026 they aim to make €165 million in investments.

The goal is to stop borrowing by the end of 2026, so these investments will be funded by selling mature properties.

Argan SA also indexes its leases to inflation.

9. Can the company grow dividends into the future?

Let’s check:

• Current yield: 4.7%

• Payout ratio: 57.5%

With a payout ratio of only 58%, Argan has lots of room to continue raising dividends even if growth slows down.

But with their focus on reducing debt, and growing Recurring Net Income per Share, I don’t see a reason that Argan SA can’t keep sustainably raising the dividend.

An increase of nearly 6% will be proposed in March.

10. Does the company trade at a fair valuation level?

We value every company 3 different ways:

1. Dividend Yield vs History

• Historical average dividend yield: 3.2%

• Current yield: 4.7%

Using this metric, Argan looks undervalued.

2. Earnings Growth Model

This shows us the yearly return we can expect from a company.

We’ll take into account Recurring Net Income per Share growth, the dividend yield, and multiple contraction or expansion.

The formula looks like this:

Expected return = Recurring Net Income/Share Growth + Dividend Yield + Multiple Expansion (or contraction).

Here are the numbers for Argan:

• RNI/Share Growth: 5.3%

• Dividend Yield: 4.7%

• Change in P/RNI: Argan is currently trading at 11.6x Recurring Net Income per Share, let’s be conservative and assume this remains flat.

Expected return = 5.3% + 4.7% + 0% = 10% return per year

3. Reverse Dividend Discount Model

As Charlie Munger says, “Invert, always invert!”

Solving complex problems is often easier backward. That’s exactly what we do with the Reverse DDM.

Solving the DDM for growth tells us how much dividend growth is priced in by the market.

Here’s the formula:

Expected growth = Required return – (DPS next year / Current share price)

Let’s put some numbers in for Argan:

• Required return: 10%

• DPS next year: €3.65

• Current share price: €69.80

Expected growth = 10% - (3.65/69.80) = 4.8%

This tells us that the market is pricing in a 4.8% growth in Argan’s dividend.

• 5-year DPS CAGR: 11.7%

Dividend Score

Argan SA receives a Dividend Score of 8.5/10. This is another very high quality company in my opinion. It offers a rare combination of a healthy 4%+ yield and high single-digit growth, all backed by the most stable tenants in Europe.

Conclusion

Argan SA is a boring business with exciting profits and dividends.

Their focus on developing high-end French warehouses has built a moat around their portfolio.

The investment case comes down to three simple things:

1. Necessary Assets: Companies like Amazon and Carrefour can’t easily move out of custom-built, robotic-heavy warehouses that produce their own renewable energy. That’s why Argan’s occupancy rate is above 99%.

2. Inflation Protection: Every lease is indexed to inflation, and their “AutOnom” warehouses protect tenants from rising energy costs.

3. Safe Yield: You are getting a starting yield of 4.7%, which is well above the historical average, backed by a family management team that owns nearly 38% of the company. With a payout ratio of just 57.5%, the dividend looks safe now, with plenty of room to grow.

Argan is a high-yield stock that still offers double-digit total return potential.

One Dividend At A Time,
-TJ

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🎯 Stealing From Supers

One of my favorite ways to find investment ideas?

Stealing from Super Investors.

Super investors are investors with over $100M in assets under management.

Every quarter, they are required by law to reveal all of the moves they’ve been making in their portfolio.

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🔍 Dividendology Database

Last year, we launched the Dividendology Database.

While we primarily use this database for alternative income asset classes, like:

• REITs

• BDCs

• Covered Call ETFs

One of the things we also track in this database is the buying history of dividend stocks for Super Investors.

To my knowledge, this is the only resource for tracking these types of purchases on the internet.

While each quarter gives us insight into where capital is moving-

More importantly, it reveals the underlying trends of where the smart money has been moving over longer periods of time.

This is where the real insights come from.

📊 Grow The Dividends

I compiled insights on the top 50 most bought dividend stocks by Super Investors.

The trend we see nearly every quarter?

Super Investors have a huge bias towards dividend growth stocks.

Stocks that grow free cash flow at a high rate, and as a result, typically grow dividends at a high rate.

The average total dividend growth over the last 5 years from these stocks was above 50%, while the average payout ratio was just 34%.

💰 Super Investors: Top 10 Buys

You can see the top 10 list of Super Investors buys here:

1. 🪟 MSFT — Microsoft Corporation

2. 📱 META — Meta Platforms, Inc.

3. 💳 V — Visa Inc.

4. 🔬 TSM — Taiwan Semiconductor Manufacturing Company Limited

5. 🔎 GOOG — Alphabet Inc.

6. 🔎 GOOGL — Alphabet Inc.

7. ⚡ TXN — Texas Instruments Incorporated

8. 🏗️ FERG — Ferguson plc

9. 🚂 UNP — Union Pacific Corporation

10. 🧪 TMO — Thermo Fisher Scientific Inc.

The full top 50 list is below:

You can download this sheet here.

📚 Follow The Smart Money

I would never recommend copying any other investors’ trades.

Everyone has different risk profiles, goals, and time horizons.

However, I’m a big believer in stealing ideas.

And with the Dividendology Database, you can easily track valuation ranges that Super Investors find attractive for certain stocks.

Texas Instruments is a great example.

Texas Instruments was:

• The 7th most frequently bought stock in Q4 2025

• The 12th most frequently bought stock in Q2 2025

• The 6th most frequently bought stock in Q1 2025

However, it didn’t make the list in Q3.

This information becomes quite interesting when we look at the price movement of TXN over the duration of 2025.

Super Investors was heavily adding TXN in the $150 to $170 range, and then backed off as it climbed above $200.

Ironically enough, this was the same sentiment I expressed around TXN over the last year.

I covered TXN in my monthly list of undervalued dividend stocks in October, and the stock has climbed well over 20% in just the last 5 months since.

TXN has been a very misunderstood and out of favor business over the last 3 years, but sentiment has shifted.

They serve a wide variety of customers, but operate in 2 main business segments:

1. Analog – chips that convert real-world signals (like sound, temperature, or pressure) into digital data. This is TXN’s largest and most profitable segment, representing roughly three-quarters of revenue.

2. Embedded Processing – microcontrollers and processors that provide intelligence and control for systems in industries such as automotive and industrial applications.

The stock was out of favor for primarily one reason:

By shifting production from 200mm to 300mm wafer fabs, TXN radically increased capex spending in the short term, but now expects to structurally reduce chip costs and lift gross margins over time.

Texas Instruments is now nearing the end of a 6-year, capex-heavy reinvestment cycle to build out 300mm chip capacity.

Management says this will:

• Cut chip costs by ~40%

• Boost gross margins

• Set up long-term FCF growth starting in 2026+

This investment is nearing completion (about 75% of the way through)-

With free cash flow per share projected to rebound to $8–$9 in 2026 on the low end, and as high as $11–$12 if revenue grows faster.

For reference, the previous high of FCF per share was in 2021 when they generated $6.82 per share.

The market has started to recognize the value.

🗂️ Use The Database!

By using the Dividendology Super Investor Database, we were essentially able to fund the valuation range for TXN that Super Investors found attractive.

As you go through the database, look for trends that may answer questions, like:

• What software stocks were previously being heavily added, but no longer are (potentially due to AI)?

• What tech stocks do Super Investors continue to add to in light of declining valuations?

• Which sectors are seeing capital rotation?

• Which stocks can we identify clear valuation ranges for?

The real advantage truly isn’t just analysing the recent quarters buys-

It’s in identifying the trends.

If you want to get access to the Dividendology Database, as well as all the features mentioned below, you can do so here:

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Tickerdata 🚀 (My automated spreadsheets and instant stock data for Google Sheets!)

Interactive Brokers 💰 (My favorite place to buy and sell stocks all around the world!)

Seeking Alpha 🔥 (Research stocks $30 off! + 7 day free trial)

HYSA 📊 (Get Access to the Best High Yield Savings Accounts!)

Disclaimer: As a reader of Dividendology, you agree to our disclaimer. You can read the full disclaimer here.

With Buffett retiring at the end of 2025, this document reveals the LAST moves Buffett made before he stepped down.

I spent hours reviewing it, and found 10 key takeaways for us to review. 👇

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1. 💰 Buys & Sells

In the most recent quarter, Buffett added to 4 positions, and added 1 entirely new position, The New York Times (NYT).

He reduced the size of 9 positions.

2. 🔻 Buffett is a Net Seller of Stocks

The last 3 years, Buffett has been a net seller of stocks every quarter.

While the official amount isn’t out yet, here is my rough math for Q4 2025 based on average prices for the stocks he bought and sold:

• 🟢 Total Buys ≈ $2.5B

• 🔴 Total Sells ≈ $7.6B

That’s net outflows of over $5 billion.

3. 💵 Buffett’s MASSIVE Cash Pile

In Q3 of 2025, Buffett’s cash position hit a staggering $382 billion.

Based on the fact he was again a net seller of stocks, we can safely assume this cash position is closer to $400 billion now.

4. 🍎 Still Selling Apple

Buffett had previously claimed over a year ago that he trimmed his Apple position for tax purposes...

But his actions tell us differently.

• Q4 2023: Reduced AAPL -1.09%

• Q1 2024: Reduced AAPL -12.83%

• Q2 2024: Reduced AAPL -49.33%

• Q4 2024: Reduced AAPL -25%

• Q1 2025: No change

• Q2 2025: Reduced AAPL -6.67%

• Q3 2025: Reduced AAPL -14.92%

• Q4 2025: Reduced AAPL -4.32%

He has now trimmed his Apple position in 7 of the last 8 quarters.

His Apple position has gone from 51% of his portfolio to around 22.6% in 2 years.

5. 🛒 His New Buy

Buffett only added 1 new position to his portfolio.

The New York Times (NYT).

The company is currently up over 50% in the last year.

• Forward P/E: 27.23

• Projected 5YR EPS CAGR: 11%

• Dividend Yield: 1.22%

• 5YR Dividend CAGR: 24.57%

6. 📊 Outperformance is Dwindling

Buffett is the greatest of all time.

He has outperformed in every decade, but that outperformance has started to grow smaller.

• 2025 S&P 500: 17.3%

• 2025 Berkshire Hathaway: 11.43%

7. 🛢️ Betting On Energy

Buffett’s biggest purchase in the recent quarter was CVX.

His Chevron position grew from 122,064,792 shares to 130,156,362 shares, making it his 5th largest position.

Energy has been the best performing sector in 2026 so far.

8. 💻 Leaving Tech And Financials... (Or Not)

The biggest moves in Buffett’s portfolio were reducing his positions in:

• Apple - AAPL

• Amazon - AMZN

• Bank of America - BAC

Despite this, tech and financials still account for the majority of his capital allocation, with the 2 sectors making up over 65% of his portfolio.

9. 🎯 Buffett’s Big Bets

There are currently 42 holdings in Buffett’s portfolio.

Buffett’s top 10 holdings make up 88.27% of his portfolio.

The top 5 holdings make up 70.88% of the portfolio.

10. 📋 Buffett’s Portfolio

Here is what Buffett’s entire portfolio looks like as of right now.

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Members will get access to the full list every month, as well as all other Dividendology features.

This month, only 35 stocks made the list.

Let’s dive in.

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1. 🖥️ International Business Machines Corporation (IBM)

Wall St. Price Target: $338 | Upside: 28.64%

For most of the last decade, IBM was viewed as a slow-moving legacy tech company.

And to be fair, the revenue compounded annual growth rate from 2021 to 2025 was only 4.1%.

This is no longer that IBM.

Under CEO Arvind Krishna, the company has repositioned itself around Hybrid Cloud + AI, with three primary business segments:

1. Software (~44% of revenue | $30B FY25)
   Hybrid cloud, automation, data, and transaction processing software. This is IBM’s AI platform layer and grew 9% in 2025.

2. Consulting (~31% of revenue | $21B FY25)
   AI and hybrid cloud implementation services for enterprises. Revenue was flat for the year but margins improved.

3. Infrastructure (~23% of revenue | $16B FY25)
   Mainframes (IBM Z), Power servers, and support services. This segment grew 10% in 2025, driven by strong demand for the new AI-enabled mainframe cycle.

Software is now clearly the growth engine, but all three segments contributed to 2025’s acceleration.

Management now expects:

• 5%+ revenue growth in 2026
• Software accelerating towards around 10% growth
• Free cash flow increasing another $1B

IBM also reports $12.5B+ in cumulative generative AI bookings, suggesting enterprise demand is building.

However, not everyone (including myself) is convinced.

Despite the $12.5B AI book of business, the majority sits inside Consulting, which only grew 1% in Q4. Backlog rose just 2% to $32B.

In other words, many investors would argue that AI consulting wins may be replacing legacy contracts rather than creating true incremental growth.

Guidance for 2026 revenue growth of ~5% (4.5% constant currency) is decent, but not enough to justify their current valuation in my opinion, which is about 22% higher than they’ve historically traded.

The stock has sold off by around 13% in the last month putting them at a forward P/E of around 21, but their mid-term EPS growth projections only sit at around 6% annually.

Despite this, Wall Street seems to be caught up in the AI hype, giving this stock a price target that gives IBM 28.64% upside.

2. 🔌 PG&E Corporation (PCG)

Wall St. Price Target: $22 | Upside: 18.39%

Utility stocks in general have been off to a hot start in 2026, and were the best performing sector last week as well.

PCG is no different, and is already up over 12% year to date.

After years of wildfire liabilities, bankruptcy, and restructuring, PG&E is now in the middle of a multi-year operational and financial turnaround-

And the numbers are finally starting to reflect it.

One of the most important developments this quarter was PG&E’s updated data center pipeline.

While total megawatts requested declined from 9,600 MW in September to 7,250 MW in December, the quality of those projects improved significantly.

Projects in final engineering, meaning they are much closer to construction and actual power usage, more than doubled from 1,600 MW to 3,550 MW.

In other words, the pipeline is developing quite nicely.

That matters because utilities only earn returns when electricity is actually delivered.

As more data center projects move from “application” to “final engineering” to “construction,” PG&E gains clearer visibility into real load growth.

And real load growth supports their 9–10% long-term EPS outlook.

On top of this, the company:

• Doubled its annual dividend to $0.20 for 2026 (current yield is 1.1%)

• Management expects consistent increases over the next two years.

• Management is targeting investment-grade credit metrics.

The biggest risk/variable is California legislature, as California lawmakers continue debating how future wildfire costs will be shared between utilities, insurers, and the state.

Wildfire liability reform under SB 254 Phase 2 remains critical.

Management has been clear that if progress stalls or outcomes are unfavorable, all aspects of the capital plan could be revisited.

In other words, while operational performance is improving, Sacramento unfortunately still holds meaningful influence over valuation and risk perception.

This is reflected in the valuation, as PCG is trading at a discount to their historical valuation multiples, despite the fact they are now growing earnings at a higher rate.

3. 💳 PayPal (PYPL)

Wall St. Price Target: $51 | Upside: 27.3%

PayPal is now down over 86% in the last 5 years, and 47% in the last year.

The performance has been so bad, they’ve started to become the butt of ‘finance jokes’…

For example, I present to you, the new fear & greed index:

PayPal recently reported earnings, and the stock dropped 20%.

They also replaced CEO Alex Chriss with Enrique Lores, HP’s current CEO.

Is PayPal Failing?

A failing business usually shows:

• Falling revenue
• Collapsing margins
• Shrinking user base
• Weak cash generation

PayPal shows none of those… Yet.

So what’s the problem?

PayPal generates most of its revenue from e-commerce.

E-commerce is growing ~7% annually-

But PayPal’s branded checkout volume grew only 1% this quarter.

Investors fear PayPal is losing market share to Apple Pay, Shopify, and others.

Under new leadership, PayPal is now:

• Deploying full feature packages instead of rolling out one tool at a time
• Creating dedicated teams for top merchants
• Aligning merchant incentives to share in conversion upside
• Investing $1.5–$2B back into growth in 2026

That investment will pressure margins short-term, but it’s aimed directly at stopping market share erosion.

But in my opinion, the real bull case for PayPal right now is the math behind its share buybacks.

As a quick refresher, if a company bought back 50% of its outstanding shares, even without earnings growing or a change in the valuation multiple-

The stock would still double.

So what does this mean for PayPal?

Well, management recently guided towards $6 billion of share repurchases in 2026 alone.

At today’s price of roughly $41 per share, that math becomes very interesting.

$6,000,000,000 ÷ $41 = 146 million shares

That means if the stock price stayed around current levels, PayPal could retire approximately 146 million shares in just one year.

At the end of 2025, they had 959 million shares outstanding.

That’s a reduction of approximately 15% of the entire company in a single year.

Let that sink in.

That means even if:

• Revenue doesn’t grow

• Margins don’t expand

• The valuation multiple doesn’t change

The stock would climb by 15%.

Ironically enough, reducing shares through buybacks also makes it easier for companies to grow their dividend payments over time.

With that being said, PayPal is priced at peak fear, with the market currently pricing in nearly -8% annual free cash flow growth over the next decade.

While the company is undoubtedly facing serious issues and has lost market share, they seem to be priced as if the company is quite literally set to die.

Now, let’s dive into the full list of dividend stocks with the most upside according to Wall Street.

Read more

One that generates MASSIVE dividends day after day.

Dividends are, of course, the most passive form of income all time.

For example, when you buy the S&P 500, you have roughly 28.9 million employees working at all hours to maximize shareholder value.

Today, we will review the 10 principles you MUST understand to turn your portfolio into a Dividend Kingdom in 2026-

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1. 🏅Dividend Growth Outperforms

The most in depth research study on dividend growth stocks was recently performed by Hartford Funds.

One of the main takeaways?

Stocks that grow their dividends have historically outperformed.

But the study doesn’t just stop there.

Dividend growth stocks not only outperformed, but also outperform while seeing lower levels of volatility.

Buy stocks that grow dividends.

2. ⚖️ Capital Allocation

The reason for this outperformance from dividend growers isn’t technically because they grow dividends-

It’s because of wise capital allocation, leading to growing free cash flow.

Don’t make the mistake of assessing the quality of a dividend stock without assessing the quality of their free cash flow.

Remember, the most important task of management is allocating capital.

In general, management has five options:

1. Reinvest back into the business

2. Pay down debt

3. Mergers & acquisitions

4. Buyback shares

5. Pay out dividends

Management’s goal is to maximize shareholder value.

They must determine how to do that through proper capital allocation.

If management uses all of its capital to payout dividends, there is no capital left over to pursue the other four options.

3. 💵 Show Me the Free Cash Flow!

Based on the capital allocation chart we can see above-

Dividends are not free money.

They are paid out of free cash flow.

Let’s look at the example below.

Above, we see three example stocks listed with their 2025 dividend per share listed and their 2025 free cash flow per share listed.

When someone asks-

‘How much do your stocks earn for you?’

Most people answer with how much they pay them in dividends.

This technically isn’t correct.

The real answer should be how much they generate for you in free cash flow.

While in the above example, those three stocks paid out a total of $1,652 in dividends-

They generated $5,291.34 in free cash flow.

This is the true measure of how much these stocks actually earned you.

Management is then left with the decision on how to properly allocate it to maximize shareholder value.

Proper allocation will lead to growing free cash flow, which leads to rapidly growing dividends.

4. 🛡️ Dividend Growth vs Inflation

A history of dividend growth isn’t good enough.

The reality is that if a stock is not growing their dividend at a rate above inflation, then the amount paid in dividends is technically shrinking.

This is detrimental if you are looking to one day live off dividends.

Look at Verizon’s dividend growth for example:

While Verizon has been growing dividends for over 20 years, the rate they grow them at is below the rate of inflation.

And of course, Verizon only has a total return of 62% in the last decade, due to slow free cash flow growth.

5. ♻️ Look for Sustainable Dividend Growth

Have you ever heard of the term ‘Sustainable Dividend Growth’?

It’s not a very common term.

It’s easy to be impressed by seeing large double digit dividend growth-

But that doesn’t tell you if that growth was sustainable.

Here’s the reality:

If a stocks grows dividends faster than the rate they grow free cash flow, then the free cash flow payout ratio increases.

This means that level of dividend growth is unsustainable.

Look at Zoetis for example.

Zoetis grew dividends over the last 5 years at a compounded annual growth rate of 16.22%-

But free cash flow only grew at 6.41%.

As a result, the free cash flow payout ratio climbed higher.

It isn’t enough to simply check for dividend growth.

It must be backed by growing free cash flow.

This is why I use automated sheets from Tickerdata to easily assess dividend sustainability.

6. ❄️ The Dividend Snowball

You’ve probably heard of the dividend snowball effect.

It’s the idea that as time goes on, your dividends get larger and larger due to compounding.

Dividend payments can grow from:

1. Contributing capital

2. Reinvesting dividends

3. Your holdings increasing dividend payouts

To maximize the dividend snowball, you need all three working together.

But remember:

Early on, dividend income grows mainly from contributing capital.

But as the snowball starts rolling, dividend income grows mainly from reinvesting dividends and your holdings increasing dividend payouts.

7. 📝 Track Your Portfolio

Everyone wants to live off dividends.

But if you aren’t actively:

• Tracking your dividends

• Tracking expenses

• Projecting what your portfolio will look like in the future

Then you have no idea if you are behind, ahead, or right on track to living off dividends.

And as a result, you have no idea if you should be pursuing more of a high yield strategy, or a primarily dividend growth strategy.

Here is an example of the Investment Dashboard from Tickerdata that you can use to track your portfolio:

8. 📊 Dividends Can Increase Total Returns

Did you know dividends have the ability to increase total returns?

Meta is a great case study of this.

Nearly 2 years ago, Meta announced plans to start paying dividends.

If we examine their financials, we see a company with exceptional profitability.

Meta was growing revenue rapidly and had a very strong balance sheet.

Yet, despite their financial strength, Meta faced a unique problem-

They had too much cash.

Over the past five years, Meta burned through $45 billion+ trying to build Reality Labs, their metaverse division, which turned out to be unprofitable.

This illustrates a critical point.

Even the best companies can misallocate capital if they reinvest too much without getting proper returns.

By choosing to pay dividends now, Meta is simply acknowledging they are generating too much cash to intelligently reinvest back into the business, so they now pay out a growing dividend.

If Meta would have paid out that $45 billion as a dividend instead of wasting it on a project with a negative return, it would have substantially increased their total returns.

Capital allocation is everything.

9. 💰 Know When & How to Pursue High Yield Investing

I love Dividend Growth investing.

But depending on your situation, it can sometimes make sense to pursue High Yield investing.

In the long term, Dividend Growth investing can generate more in dividends.

But in the short term, High Yield investing can generate far more income.

This sounds obvious, but have you ever thought about how powerful High Yield investing can be?

If you can achieve a sustainable yield of 8%, the amount of capital we would need to retire is cut in half. (based on the 4% rule).

We started building our real money High Yield Portfolio for members of Dividendology back in September of 2025.

So far, that portfolio has outperformed, while providing a sustainable yield of 8.61%!

You can read more about our High Yield Portfolio and its goals here.

10. 🌅 Enjoy the Ride

Have you ever heard the story of the Mexican fisherman?

If not, then you need to take 3 minutes to read it below. 👇

Perspective is everything.

Want Access to More?

We are currently still in the beginning stages of building out our Dividend Growth and High Yield Portfolio on Dividendology.com.

You can get access to them and everything else mentioned below here:

Subscribe now

Check out these resources:

Tickerdata 🚀 (My automated spreadsheets and instant stock data for Google Sheets!)

Interactive Brokers 💰 (My favorite place to buy and sell stocks all around the world!)

Seeking Alpha 🔥 (Research stocks $30 off! + 7 day free trial)

HYSA 📊 (Get Access to the Best High Yield Savings Accounts!)

Disclaimer: As a reader of Dividendology, you agree to our disclaimer. You can read the full disclaimer here.

Then you’ve likely seen a large drop in your portfolio over the last few months.

But it isn’t just software stocks selling off.

Many names across tech have also pulled back meaningfully over the past ~2 months, even after strong long-term runs.

The message the market is sending is actually quite clear:

1. AI will be the downfall of software stocks

2. Tech companies are overspending on capex

Whether or not you agree with that narrative, that is how the market is currently pricing the sector.

On top of this, the shift toward AI is introducing meaningful risks that the market has not fully priced in yet, and investors need to be aware of them.

However, this is creating some incredible opportunities, particularly from a dividend growth investor perspective.

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🪫 Are Software Stocks Dead?

The S&P 500 is in the green year to date, but that does not paint the picture for what is actually going on.

We are currently being carried by 4 sectors that are up double digits:

• Energy

• Materials

• Consumer Staples

• Industrials

Despite this, the S&P 500 is only up 1.7%.

Why?

Because tech makes up the largest portion of the S&P 500, and software in particular has been hammered.

Whenever we have an entire sector selling off as a whole, it typically means one thing:

The market is not intelligently selling off equities.

What do I mean by this?

Not all stocks (even stocks in the same sector) are created equally.

In other words, this sell-off may be justified for some software stocks as the total addressable market is being reduced by AI-

But for others, it certainly is not.

Let’s look at an obvious example.

Chegg.

Chegg is a software-based education platform that built its business around helping students complete homework, study for exams, and access step-by-step solutions.

For years, this was a great business model.

• Recurring subscriptions

• High margins

• A clear value proposition

But the problem?

That value proposition has now been directly challenged by AI.

When a student can open an AI tool and get an instant explanation, often for free, the core reason to pay for Chegg starts to disappear.

This is what true disruption looks like.

In cases like this, the market is absolutely right to be ruthless.

It’s being sold off because the long-term cash flow outlook has fundamentally changed.

Now let’s look at the other side of the spectrum.

S&P Global (SPGI).

At a glance, SPGI gets lumped into the same bucket as “software and data” companies.

But economically, it couldn’t be more different than a company like Chegg.

Chegg’s product delivers answers.

SPGI’s products deliver infrastructure.

SPGI sits at the center of the global financial system:

• Credit ratings that determine borrowing costs for governments and corporations

• Indices that underpin trillions of dollars of passive investment flows

• Market and commodity data embedded directly into institutional decision-making

  

An AI model can explain a concept to a student and eliminate the need for Chegg.

But an AI model cannot invent decades of proprietary financial data.

🧩 What About Capex Spending?

Capex spending from Big Tech has certainly risen to absurd levels.

Capex spending from META, AMZN, GOOG, & MSFT has nearly 3x’d in just the last 2 years.

And this is where the conversation around “tech risk” starts to shift from valuation risk to something potentially more important for the long term:

Capital allocation risk.

For most of the past decade, large-cap software and tech companies were incredible businesses for one simple reason:

They were cash machines with high margins, low capital intensity, and exceptional ROIC, which translated to rapidly growing free cash flow.

That free cash flow could be used to:

• Buy back shares

• Strengthen balance sheets

• Make disciplined acquisitions

• Or increase dividend payments

But the AI arms race is changing that dynamic.

Rapidly.

Many of these companies are now pouring hundreds of billions of dollars into data centers, chips, energy infrastructure, and networking equipment.

In other words…

They are transforming from asset-light software businesses into capital-intensive infrastructure businesses.

This is why investors can no longer just look at how much a company is spending on capex.

They must analyze the quality of that capex, and its ability to justify itself with a clear, predictable return on invested capital over time.

With this massive capex spending, there will be winners, and there will be losers.

🎯 Stock Pickers Market

For years, passive investing worked beautifully.

Why?

Because capital-light tech businesses compounded earnings at high rates, margins expanded, and multiples followed.

You didn’t need to pick winners, you just needed exposure.

That environment is changing.

Today, when you buy an index like the S&P 500, you are making a very specific bet:

• Nearly 40% of your capital is allocated to a handful of hyperscalers

• Those hyperscalers are spending aggressively on AI infrastructure

• Free cash flow is being compressed by capex

• Returns now depend heavily on flawless execution

Passive investing is no longer a neutral bet.

It’s an active bet, disguised as a passive one.

💵 Buy Predictable Businesses

For the dividend growth investor, I certainly still believe tech and many software stocks should have a place in your portfolio-

But you must have the ability to assess things right now like:

• How they are threatened by AI

• The quality of their capex spending

• Their valuation risk

We will continue to take advantage of irrationality in the tech sector as we build our dividend growth portfolio on Dividendology.com.

However, there’s another group of assets quietly benefiting from the market shift that is happening.

Real assets.

REITs, MLPs, infrastructure businesses, and utilities are already designed to operate in capital-intensive environments.

They are built around:

• Long-lived assets

• Contractual cash flows

• Regulated or toll-road-style revenue

• Inflation-linked pricing in many cases

And most importantly…

They don’t rely on hope for future monetization.

For example, REITs own tangible assets with contractual lease revenue.

Data centers, industrial facilities, energy infrastructure, housing, these assets are becoming more valuable as AI expands, not less.

And unlike tech stocks, many REITs already price in capital intensity.

Which means their returns depend less on perfect execution and more on steady cash flow.

And despite the fact REITs are still trading at historically low valuations, their funds from operations have continued to grow.

MLPs are another interesting option in this market.

MLPs and midstream businesses operate like toll roads.

Volumes flow through pipelines and infrastructure whether commodity prices are volatile or steady.

They have:

• Long-term contracts

• Fee-based revenue

• Predictable cash generation

These businesses are boring and predictable by design.

It’s why we’ve already added two MLPs to our High Yield Portfolio, both of which are yielding over 8% and growing distributions with healthy dividend coverage.

💰 The Perfect Dividend Growth Scenario

This environment is a gift for dividend growth investors.

Why?

Because volatility does four powerful things:

1. It pushes prices lower, raising starting yields

2. We reinvest dividends at better valuations, increasing our future dividend income

3. Share buybacks are performed at lower valuations, enhancing a company’s ability to pay dividends

4. It creates mispricings between quality and speculation

All four of these lead to an increase in the speed of the dividend snowball effect, which ultimately determines how soon you can live off dividends.

🚀 Keep Growing Your Income

The tech and software selloff we’re seeing today isn’t random, and it isn’t purely emotional, it’s the market grappling with a real shift in capital allocation, business models, and risk.

Some software companies will come out of this stronger.

Others won’t.

This is no longer a market where passive exposure alone guarantees success.

It’s a market that will reward investors ability to actually buy high quality businesses.

For dividend growth investors, this is an opportunity to take advantage of.

By buying high-quality businesses at lower valuations, and buying ‘AI proof’ assets like REITs and MLPs, and reinvesting income during periods of volatility, you accelerate the dividend snowball in your favor.

We are still in the beginning stages of building out our real money Dividend Growth and High Yield Portfolios.

If you want to get access to the Portfolios and all the features mentioned below, you can do so here:

Subscribe now

Check out these resources:

Tickerdata 🚀 (My automated spreadsheets and instant stock data for Google Sheets!)

Interactive Brokers 💰 (My favorite place to buy and sell stocks all around the world!)

Seeking Alpha 🔥 (Research stocks $30 off! + 7 day free trial)

HYSA 📊 (Get Access to the Best High Yield Savings Accounts!)

Disclaimer: As a reader of Dividendology, you agree to our disclaimer. You can read the full disclaimer here.

This is the end result of 100’s of hours of research every month.

It’s time to dive in.

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🔍 Quick Market Update

It’s been a brutal week in the market-

But not all sectors have been impacted the same.

Those that are heavily invested in tech, software, and crypto saw their portfolios drop substantially.

But in the midst of all this, a clear market rotation has taken place.

One of the main beneficiaries of this rotation has been the dividend ETF, SCHD, which is already up over 14% year to date.

This was a market rotation that I saw as very likely.

In fact, I wrote about it in depth in early December, which you can go back and read here:

However, this sell off has sent the market in two different directions.

We now have:

• 16% of S&P 500 stocks are trading at 52-week highs

• 5% are sitting at 52-week lows

This has only occurred 3 other times:

1. July 1990

2. August 2015

3. March 2025

Every time, the S&P 500 saw a 10%+ correction within around 2 months.

I’m by no means looking to try and time the market, but periods like this are exactly when long-term investors are rewarded for staying disciplined, focusing on valuation, and selectively putting capital to work in high-quality stocks trading at a discount.

Let’s dive in.

1. Gaming and Leisure Properties (GLPI)

Gaming & Leisure Properties is a specialized triple-net REIT that owns the real estate beneath casinos and gaming destinations.

Under this structure, tenants are responsible for:

• Property taxes

• Insurance

• Maintenance and capital expenditures

Due to this triple-net lease structure, GLPI’s cash flows are much more predictable, inflation-resistant, and largely insulated from day-to-day operating volatility.

If you’ve been utilizing the Dividendology REIT Database on Dividendology.com, then you’ve likely noticed some attractive characteristics surrounding this REIT:

• 5 YR AFFO per share CAGR: 10.2%

• Projected 3 YR AFFO per share CAGR: 5.16%

• Dividend Yield: 6.88%

• Trading below historic valuation multiples

However, their current position stands out far more when you compare them to their triple-net lease peers.

Despite offering above-average AFFO growth relative to both its gaming peer VICI Properties and the broader triple-net REIT group, GLPI trades at a meaningfully lower AFFO multiple while maintaining reasonable leverage and one of the highest dividend yields (~7%) in the group.

In other words, investors are getting comparable or better growth and balance-sheet quality at a discount, while being paid more income to wait.

Of course, the main risk investors are concerned about is the concentration of tenants.

But unlike their peer VICI (which I’m generally still a fan of), who is heavily exposed to Las Vegas or destination markets, GLPI focuses on domestic regional gaming markets across 20 states. These properties tend to benefit from:

• More stable, local customer bases

• Lower peak-to-trough volatility across economic cycles

• Less reliance on tourism and airfare-driven demand

This regional focus pairs extremely well with the triple-net lease model and results in more durable, recession-resistant rental income.

On top of this, while they are heavily concentrated to just a few tenants, the tenants rent coverage as of 2025 is still quite healthy.

When it comes to valuation, if GLPI can achieve dividend growth of just 3% moving forward, this would give them a fair value of $58.05.

That means over 27% upside from current prices.

While the AFFO payout ratio is slightly higher than I like to see currently, keep in mind they are projected to grow AFFO per share at around 5% moving forward.

So if dividend growth is below 5% during that time, the payout ratio will continue to go lower, pushing the company into a healthier position.

2. Microsoft (MSFT)

Microsoft has quietly become one of the most interesting large-cap dividend opportunities in the market after a sharp tech-led selloff pushed the stock below $400 for the first time since the April 2025 tariff scare.

Trading at this price puts them at their 2nd lowest forward PE multiple in the last five years.

The surface level concern is that free cash flow stagnated in 2025.

For a company historically growing free cash flow at double digits, this obviously caught the market’s eyes.

However, this lack of FCF growth was completely expected as management let us know throughout the year.

This decline is almost entirely the result of aggressive growth capex tied to cloud and AI infrastructure, not deteriorating fundamentals.

The level of capex spending for MSFT has been unprecedented.

The company’s capex to revenue ratio historically sat near 10%-

But it hit 36.76% in the recent quarter.

We’ve seen tech stocks punished in the past for a significant growth in capex spending.

But Microsoft has one of the strongest backlogs in all of big tech, as commercial RPOs surged to $392B (+51% YoY).

The true concern of the market centers on one issue:

The fact that roughly 45% of that backlog is tied to OpenAI-related commitments, introducing a new perceived concentration risk.

While OpenAI does not represent anything close to 45% of Microsoft’s current revenue, it does account for a meaningful share of future contracted cloud demand, which means a disproportionate amount of Microsoft’s near-term growth expectations are linked to the success, scalability, and capital needs of a single customer.

This has raised concerns around customer concentration, long-term pricing power, and the durability of returns on Microsoft’s massive AI-driven capital expenditures.

If OpenAI’s growth were to slow, renegotiate terms, or shift workloads over time, it could create volatility in cloud revenue realization.

That said, it’s important to note that these are signed, multi-year commitments with a roughly two-year weighted duration, and they exist precisely because demand is already in place, not speculative.

The risk is real and worth monitoring, but it’s also being more than reflected in the stock’s current valuation.

If MSFT:

• Grows EPS at 15% (below expectations)

• TTM Pe Multiple reverts to 28 (10% below average)

Then MSFT would provide a return of 101.72% by 2030, not including dividends.

3. S&P Global (SPGI)

SPGI provides essential financial infrastructure through four main segments:

1. S&P Global Ratings – Provides credit ratings for corporate, sovereign, and structured debt. (~31% of revenue, ~40% of operating income)

2. S&P Dow Jones Indices – Home to the S&P 500 and thousands of benchmarks used globally by ETFs, index funds, and pension plans. (~11% of revenue, ~16% of operating income)

3. S&P Global Market Intelligence – Offers platforms like Capital IQ that analysts, bankers, and corporations use for market research and data. (~33% of revenue, ~22% of operating income)

4. S&P Global Commodity Insights & Engineering Solutions – Delivers proprietary energy, commodities, and industrial data analytics. (~15% of revenue, ~14% of operating income)

Through its Ratings, Indices, Market Intelligence, and Commodity Insights segments, SPGI sits at the center of debt issuance, equity markets, and institutional decision making worldwide.

What makes the business so powerful is the combination of deep entrenchment and extreme cash-flow predictability:

• Nearly 96% of revenue is recurring,

• Free cash flow margins approach 40%

• Free cash flow per share compounded at roughly 16% annually over the last five years

Despite recent fears around AI and the broad selloff in so-called “software-adjacent” stocks, the market is fundamentally mischaracterizing what S&P Global actually does.

AI may enhance data processing, but it does not replace credit judgment, regulatory-recognized ratings, or globally accepted benchmarks like the S&P 500 that are embedded into trillions of dollars of capital, investment mandates, and legal frameworks.

Credit ratings require qualitative assessment, management behavior, capital allocation, political and regulatory risk, areas where human oversight and institutional credibility are indispensable.

Likewise, indices are not just datasets; they are standards.

The S&P 500 is hard-wired into ETFs, pensions, derivatives, and asset allocation models worldwide, and that kind of entrenchment cannot be disrupted by a new algorithm.

As interest rates begin to fall, debt issuance is already rebounding, ETF assets continue to grow, and private capital markets are re-accelerating, all trends that SPGI monetizes directly by earning a toll on each transaction, issuance, and dollar of assets tied to its ecosystem.

In other words, the business model has not weakened at all.

What has changed is sentiment.

SPGI is now trading nearly 20% below their historic average valuation multiples.

Now, let’s review the full list for February.

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The growth of the assets under management for actively managed ETFs.

While this growth looks minimal when compared to index ETFs and index mutual funds-

Take a closer look at the total growth of covered call ETFs since 2015.

Assets under management have more than 10x’d over the last decade, with nearly all of the growth coming in the last 5 years.

Investors are starved for high yield opportunities.

However, not all covered call ETFs are created equal.

In fact, as I’ve tried to warn many times before-

Many covered call ETFs are incredibly dangerous.

Even funds that have historically had periods where they performed very well can be structured in a way where that performance will certainly NOT last.

Take YieldMax’s MSTY for example.

This fund was considered (by some) to be the gold standard for covered call ETFs.

However, in the last year, the fund has:

• Fallen by 82%

• Seen distributions fall by around 87%

As a result, we can see investors have been fleeing from this fund.

This type of performance can be devastating to those looking to utilize the distributions as income.

As we build out our High Yield Portfolio on Dividendology.com, we must avoid this type of performance from any funds we add to our portfolio.

Today, we will be looking at the top performing covered call ETFs over the last year, and then assessing if that performance is actually still sustainable.

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🔍 Dividendology Database

I just updated the Dividendology Covered Call ETF Database, adding more data to actively track performance.

We are currently actively tracking 68 different covered call ETFs in the database.

Out of the 68 ETFs in this database, only 26 have grown NAV since inception.

That’s only 38%!

Most covered call ETFs are simply liquidating themselves to make payments.

Let’s review the top performing covered call ETFs in the last year.

1. 🥇 FT Vest Gold Strategy Target Income ETF (IGLD)

IGLD’s performance stands out, climbing 40.4% in the last year!

But to understand why IGLD has worked, and whether that performance is sustainable-

We need to look closely at how the fund is actually structured.

IGLD is fundamentally different from many of the high-yield covered call ETFs investors are used to seeing.

Instead of writing calls on a single high-volatility stock (like MSTY does with MicroStrategy), IGLD is built around gold exposure, combined with a systematic options strategy designed to generate income while limiting downside risk.

Gold does not behave like high-beta (volatile) equities.

It doesn’t compound earnings, but it typically doesn’t experience the same type of catastrophic drawdowns that single-stock covered call funds can suffer when sentiment turns.

History tells us that it can also be viewed as a hedge against market crashes.

Here’s what makes IGLD interesting:

• The fund gains exposure to gold via options rather than owning physical gold outright

• It sells call options to generate income, but does not rely on extreme volatility to fund distributions

• Distributions are targeted, not promised, meaning payouts can flex based on market conditions

Importantly, distributions are not guaranteed.

The fund has a stated income objective, but payouts can change based on market conditions, options income, and Treasury yields.

In some periods, distributions may include return of capital, which investors must monitor carefully.

The trailing twelve month yield is 9.64%.

The trailing twelve-month yield for IGLD can be misleading.

While the fund pays relatively modest monthly distributions throughout the year, the headline yield is often inflated by a large year-end distribution (when NAV performance is good).

As a regulated investment company, IGLD must distribute the majority of its taxable income to shareholders.

During the year, income is generated primarily from option premiums on GLD and interest from Treasury holdings.

If additional taxable income or gains from options activity are realized and have not yet been distributed, the fund will typically make a catch-up distribution at year-end.

This payout isn’t a bonus, it’s simply the fund meeting its distribution requirements.

When it occurs, the NAV declines by the amount of the distribution, shifting value from NAV into cash without impacting total return.

With that being said, it is very likely we see a much lower trailing 12 month yield moving forward unless Gold continues to see exceptional performance.

2. 🌍 Amplify CWP International Enhanced Div Inc ETF (IDVO)

In the last year, IDVO is up nearly 37%!

The strategy is straightforward:

• Own a portfolio of high-quality international dividend stocks

• Overlay opportunistic covered calls to generate additional income

• Aim for a smoother income stream, without fully sacrificing long-term upside

That’s the intent, at least.

The fund’s primary objective is current income, with capital appreciation as a secondary goal.

And unlike many “100% overwrite” call-writing ETFs, this strategy is explicitly described as tactical, meaning it may write calls on some, all, or none of the portfolio at any given time.

Basically it’s not forced to overwrite continuously.

The manager (CWP) describes a target mix of gross income roughly like this:

• 3–4% from dividends

• 2–4% from sold call option premiums

• Plus whatever capital appreciation the portfolio can deliver

That matters, because it tells you what kind of “yield engine” this is:

This is not a fund targeting a 15–30% payout that requires constant volatility and/or NAV decay to sustain.

It’s aiming for a more moderate, repeatable yield, built on dividends first, and option premium second.

This creates a MUCH more sustainable yield.

The trailing 12 month yield is 5.06%.

This is a much lower yield than most covered call ETFs.

However, because a large portion of the yield actually comes from the underlying holdings, the payouts from this fund have actually grown over time!

This is one of the few covered call ETFs that has sustained dividend growth.

The yield on cost for this fund is above 8.5% since September of 2022!

If you want international equity exposure with a sustainable built-in income overlay, this is one of the more “structurally sane” covered call designs I’ve seen.

3. 💻 YieldMax Target 12 Semiconductor Option Income ETF (SOXY)

I bet you didn’t expect a YieldMax fund to be on this list.

However, SOXY is radically different from the vast majority of the YieldMax funds.

In the last year, SOXY is up nearly 34%.

SOXY is a specialized option-income vehicle with a very specific focus:

Generate monthly income by writing call options on a concentrated portfolio of semiconductor stocks, with the goal of delivering a targeted option income return of approximately 12% annually.

This “Target 12” label is literal.

The fund is designed to produce ~12% in option premium income per year, assuming a stable option premium environment.

This mechanism is very different from:

• Dividend-centric covered call ETFs like JEPI (which blend dividends + calls), or

• Index-tracking option income funds (which lean heavily on breadth and diversification).

SOXY’s income engine comes primarily from selling weekly and monthly call options on its semiconductor equity holdings.

Here’s how it works:

• Portfolio is concentrated in semiconductor names
  The fund holds a basket of semiconductor equities rather than broad indices. Popular components include large semiconductor producers and chipmakers with high implied volatility. This concentrates both risk and opportunity.

• Call options are systematically sold on those holdings
  SOXY writes short-term calls — often weekly and monthly expirations — to collect option premium. These premiums are the primary driver of the fund’s income.

• Targeted income approach
  The “Target 12” framework means the manager seeks to produce option premium income equal to roughly 12% of the portfolio annually. This target influences strike selection, timing, and position sizing.

The semiconductor sector has obviously performed very well over the last few years leading to great performance from SOXY.

However, the 12% target yield is still certainly on the more aggressive side when considering what full market cycles look like.

For example, we can see the distributions during the April 2025 tariff scare are about 30% lower than they are today.

Ironically enough, this is one of YieldMax’s least popular funds, with only $23 million in assets under management.

While the fund alleviates single stock risk, it is still dependent on a single sector, leaving it more vulnerable to market drawdowns, especially since they target a 12% yield.

With that being said, a prolonged period of NAV erosion is absolutely possible for this fund.

⚖️ Structure, Not Performance

The biggest mistake an investor looking to utilize covered call ETFs for yield can make is to simply look at past performance to try and determine the viability of a fund in the future.

This is why we MUST value the structure over past performance.

Out of the 3 funds we reviewed today, each performed very well in the last year.

However, when taking a closer look, we see the structure for each is radically different:

• IGLD generated income from options on gold, paired with Treasury exposure, creating a more defensive income profile that benefited from strong gold performance and may offer lower correlation to traditional equity markets

• IDVO blended international dividend-paying equities with a tactical call-writing overlay, producing a lower, but far more sustainable yield

• SOXY harvested option premium from a high-volatility sector, targeting a much higher yield at the cost of greater cyclicality and NAV risk

Each fund answers a different question.

Poorly designed funds can deliver great performance for short periods of time.

But the structure of the fund will always reveal what the actual sustainability of the fund looks like.

⚡ High Yield Portfolio

We are currently in the process of adding positions to our Dividend Growth and High Yield Portfolio.

Very soon, we will be adding more positions, with one of them being a covered call ETF in our database.

If you want to be a part of the process of building these portfolios and also get access to everything mentioned below, you can join here:

Here’s everything you’ll get as a paid Dividendology member 👇

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• 📊 Full Access to the Dividendology Database
  Built with over $10,000 invested in tools and research, this powerful database tracks dividend stocks and alternative income assets like Covered Call ETFs, REITs, and BDCs.

• 📈 The Dividend Growth Portfolio
  A real-money portfolio built from scratch, focused on long-term wealth creation and building a rapidly growing stream of dividend income

• 💸 The High Yield Portfolio
  A real-money portfolio, designed to generate massive sustainable income with an average yield of 8%+

• 📉 Running List of Undervalued Dividend Stocks
  Updated regularly — stay ahead with a curated list of the most attractively valued dividend opportunities in the market

• 🧠 In-Depth Research & Reports
  Deep dives into dividend stocks and income strategies you won’t find on mainstream platforms

Check out these resources:

Tickerdata 🚀 (My automated spreadsheets and instant stock data for Google Sheets!)

Interactive Brokers 💰 (My favorite place to buy and sell stocks all around the world!)

Seeking Alpha 🔥 (Research stocks $30 off! + 7 day free trial)

HYSA 📊 (Get Access to the Best High Yield Savings Accounts!)

Disclaimer: As a reader of Dividendology, you agree to our disclaimer. You can read the full disclaimer here.

The goal of the High Yield Portfolio is simple:

1. Deliver a sustainable dividend yield of around 8%

2. Preserve capital (no long-term value erosion)

3. Provide predictable cash flow

Why 8% yield?

Because the amount of capital we would need to retire is cut in half. (based on the 4% rule).

Members of Dividendology will be able to view all the holdings of the High Yield Portfolio on Dividendology.com.

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🏆 Our High Yield Portfolio

Before today’s purchase, here is how our portfolio stands:

Before today, we had added 3 positions to the High Yield Portfolio:

1. We added a fund with an over 9%+ yield, paying out monthly, that grows dividends over time WITHOUT selling options

2. We added an 8%+ yielding REIT with the potential for significant upside

3. We added an 8%+ yielding stock growing their distributions by double digits

The first position is one I believe our High Yield Portfolio will likely be able to hold forever.

The second one is in ‘deep value’ territory and carries a bit more risk, but has recently gone through a significant shift in structure that has allowed them to pay a much more sustainable dividend.

The third was perhaps the best combination of yield and dividend growth on the market today.

But the position we’re adding today is yielding close to 9%, plans to grow distributions at a low to mid single digit rate, and also has upside at current prices.

After today’s addition, our portfolio looks like this:

Our portfolio’s projected earnings growth goes up, our dividend yield goes up, while our payout ratio simultaneously goes down.

💰 The High Yield Advantage

The stock we are buying today has limited analyst coverage, leading to what I believe is a mispricing of the stock, which simultaneously creates a High Yield opportunity.

This is what makes me so excited about High Yield Investing.

While there are many newer funds out there yielding well over 10% in many instances, we must buy stocks that meet all three of our portfolio criteria.

Buying high yield stocks is easy, buying high yield stocks that can preserve capital, provide predictable cash flow, and still provide the yield is much more difficult.

We want to build a portfolio we can live off of and still sleep well at night.

I have no interest in buying a company where I can’t project a range of what their cash flows will look like 3 years from now.

The company we are adding today is not only growing their cash flows, but is doing so with a high degree of predictability.

Below, we will be taking a deep dive into this stock.

If you’d like to get access to the High Yield Portfolio, as well as everything mentioned below, you can do so here:

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Now, let’s dive in.

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In reality, a stock or fund’s dividend yield tells us nothing about the sustainability of the dividend.

It’s always about the fundamentals.

The issue with this?

The vast majority of investors have no idea how to assess the dividend sustainability of high yielding assets.

Today, we will be reviewing the 5 major high yield asset classes, and how to analyze them for dividend sustainability

And on Friday-

We will be adding a stock yielding 9% to the High Yield Portfolio.

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⚠️ 2 Major Issues…

When I look at the high yield investing space, I see two major issues:

1. Lack of knowledge on how to analyze High Yield assets

2. Lack of data on these assets

Not only do investors not know how to analyze these assets, traditional softwares don’t provide the necessary data to analyze them.

Despite this I ran a poll last month asking if my subscribers owned any of these asset classes, and 77% of you said you did!

What was even more shocking were the results from when I asked if you had a general understanding of how to analyze the alternative income assets classes…

77% of the people who took the survey stated they owned these asset classes-

But only 4% felt confident in how to analyze the key metrics for these asset classes!

Today, we will be solving both of these problems.

There are 5 main asset classes that typically have high yields:

• 💰 Covered Call ETFs

• 🛢️ MLPs (Master Limited Partnerships)

• 🏢 REITs (Real Estate Investment Trusts)

• 💼 BDCs (Business Development Companies)

• 🧾 Preferred Shares

The way we analyze the dividend sustainability for each of them is different.

Let’s look at an example of each.

1. 💰 Covered Call ETFs

Example: ICAP - Infrastructure Capital Equity Income Fund ETF

ICAP currently yields 8.54%.

But many high-yield ETFs are just slowly liquidating themselves.

Here’s why that’s dangerous:

Shrinking Net Asset Value → fewer assets to write call options → lower premiums → dividend cuts

ICAP only writes options on around 30% - 40% of their portfolio.

Because of this, ICAP’s net asset value has held up well (and even grown), which tells us:

• Its yield is more sustainable

• It’s not eroding capital just to fund distributions

Softwares don’t provide data on things like portfolio options coverage and options moneyness, making covered call ETFs incredibly difficult tom analyze.

This is why we built the Dividendology Covered Call ETF Database.

It provides data on things like:

• Portfolio options coverage

• Options moneyness

• NAV since inception

This provides us much of the information we need to assess dividend sustainability for covered call ETFs.

If you want to learn more about ICAP, you can do so here.

2. 🛢️ MLPs (Master Limited Partnerships)

Example: MPLX - MPLX LP Common Units

Have you heard of MPLX?

MPLX is a midstream energy partnership formed by Marathon Petroleum in 2012.

It operates pipelines, terminals, and storage across major U.S. basins, focusing on crude oil, refined products, natural gas, and NGLs.

MPLX generates stable cash flow through long-term, fee-based contracts.

A few things you need to know about MPLX:

• MPLX’s business model is highly defensive, generating stable, long-term contracted cash flows through its midstream operations.

• These contracts provide strong insulation from commodity price volatility.

• The balance sheet is solid, with a 3.4x leverage ratio and a BBB credit rating.

But what about the dividend?

1. MPLX is currently yielding 7.86%

2. They have a 10 year dividend compounded annual growth rate of 8.77% (Wow!)

But how do we assess the dividend sustainability of MPLX and Master Limited Partnerships?

We look at the distributable cash flow (DCF) coverage ratio.

Formula: DCF Coverage Ratio = Distributable Cash Flow / Distributions Paid

What to look for:

• >1.2x = Comfortable cushion

• <1.0x = Red flag; they’re paying more than they generate

The MPLX dividend is well-covered by distributable cash flow, with a current coverage ratio of 1.5x

On top of this, management made this statement in a recent earnings report:

We see a period of time where 12.5% is very doable. It’s tough to give you an extremely long horizon, but we certainly are trying to convey to you that distribution growth at 12.5% has the potential...to be durable for a period of time.

Not only do they expect their large payouts to be sustainable, they expect to grow them at a 12.5% annual growth rate!

An amazing combination of yield with dividend growth.

3. 🏢 REITs (Real Estate Investment Trusts)

Example: O - Realty Income Corporation

Realty Income makes money by owning and leasing single-tenant, net-lease commercial properties to some of the strongest retailers and service businesses in the world.

The company is known as “The Monthly Dividend Company” because it generates highly predictable rental income from long-term leases-

Most of which are triple-net leases, meaning tenants pay property taxes, insurance, and maintenance.

Here are a few key things to know about Realty Income:

• Realty Income has grown AFFO per share consistently over time, supported by disciplined acquisitions and contractual rent escalators

• The majority of Realty Income’s debt is fixed-rate and long-dated, which significantly reduces interest-rate risk compared to many REIT peers

• •The company currently yields 5.4%, with steady dividend growth of roughly 3–4% annually, supported by recurring cash flow

But how do we assess the dividend sustainability of Realty Income (and REITs in general)?

We don’t use the traditional payout ratio.

We don’t rely on free cash flow either.

Instead, we look at AFFO (Adjusted Funds From Operations).

AFFO is the REIT equivalent of free cash flow and is the best measure of how much cash is truly available to pay dividends.

Formula: AFFO Payout Ratio = Dividend per share ÷ AFFO per share

How to interpret AFFO payout ratios:

• Below 80% → Safe
• 80–90% → Occasionally Acceptable
• Above 90% → Riskier, less margin in downturns

We closely track historical AFFO payout ratios, as well as projected AFFO payout ratios in the Dividendology REIT Database.

Here is a small snippet from the database:

Realty Income currently has an AFFO payout ratio of roughly 75%, which places the dividend firmly in the safe and sustainable range.

4. 💼 BDCs (Business Development Companies)

Example: MAIN - Main Street Capital Corporation

Have you heard of MAIN?

Main Street Capital is a Business Development Company (BDC), which means they generate income by lending to small and mid-sized private businesses at high interest rates and collecting interest income, fees, and sometimes equity stakes in return.