Dividend Delights and the Daring Investor

For nigh on a century, the stock market has paraded about as the most celebrated of wealth creators, a veritable monocle-wearing aristocrat in a world of paupers. One might think it had been awarded the Order of the Garter for its services to capital appreciation. Yet, as any discerning chap who’s dined at the Ritz knows, even the grandest of institutions can occasionally serve up a dish that’s slightly overdone. Among the myriad ways to grow one’s nest egg-be it by investing in a stable of ponies, a fleet of motorcars, or the latest in electrical contraptions-the acquisition of high-quality dividend stocks remains a most diverting pastime, provided one remembers to keep one’s spectacles polished and one’s wits sharper than a tailor’s shears.

In a rather scholarly little treatise titled The Power of Dividends: Past, Present, and Future, the gentlemen of Hartford Funds and Ned Davis Research-two institutions as reputable as the Bank of England-conducted a most meticulous study of dividend-paying stocks versus their non-paying counterparts over a period of fifty-one years. Their conclusion? That dividend stocks, like a well-brewed pot of Earl Grey, outperformed their rivals by a margin of 9.2% annually to 4.31%, while also exhibiting less volatility than the S&P 500. A most impressive feat, though one might wonder if the researchers had perhaps been indulging in a spot of brandy when they penned their findings.

Ideally, one wishes to generate the highest yield possible while keeping one’s trousers dry in the event of a financial downpour. Yet, as history has so kindly demonstrated, yield and risk are often bosom companions, much like a mischievous pug and a cream cake. The higher the yield, the more likely one is to stumble into a yield trap, where a struggling enterprise flings its dividends at investors like confetti at a royal wedding. But fear not! Ultra-high-yield dividend stocks-those with a yield fourfold the S&P 500’s average-do exist, and they come with payouts averaging a most tempting 9.5%. Here are three such stocks, which, if one is feeling particularly daring, might be added to one’s portfolio in October.

Pfizer: 7.24% yield

The first of these dividend darlings is the pharmaceutical colossus Pfizer (PFE), whose 7.2% yield is a veritable feast compared to the S&P 500’s meager offerings. One might imagine Mr. Pfizer himself, a spry gentleman with a penchant for white coats and laboratory goggles, having been handed a golden goose that laid eggs of unparalleled size. Alas, the goose, like all good things, eventually grew weary and laid only a single egg last year. The combined sales of Comirnaty and Paxlovid, once a veritable avalanche of cash, have dwindled from $56 billion in 2022 to a mere $11 billion in 2024. A most dramatic decline, to be sure, though one might argue that Mr. Pfizer had not been producing a single egg per day when the decade began. Indeed, the inclusion of these therapies, alongside the usual pharmaceutical fare, increased net sales by a healthy 50% from 2020 to 2024. A most remarkable achievement, though one must wonder if the goose will ever return to its former glory.

Another feather in Mr. Pfizer’s cap is his December 2023 acquisition of Seagen, a cancer-drug developer as ambitious as a young barrister with a taste for adventure. This $43 billion acquisition, while a hefty sum, is not without merit. The combination of the two enterprises promises cost synergies and an expanded oncology pipeline, which, as cancer-screening diagnostics improve, should lead to increased drug sales. A most promising development, though one might question whether Seagen’s oncology pipeline is as robust as its promotional materials suggest.

Pfizer’s valuation, however, is a most intriguing affair. Shares currently trade at a forward P/E of 7.5, a figure that is 25% lower than its five-year average. A most attractive proposition for the enterprising investor, though one must remember that even the most promising enterprises can occasionally find themselves in a pickle.

United Parcel Service (UPS): 7.84% yield

The second of our trio is the logistics titan United Parcel Service (UPS), a company whose brown trucks are as ubiquitous as the London double-decker bus. Shares of UPS have plummeted 34% in 2025, a performance that has left many investors clutching their hats in dismay. The cause? A January announcement that the company would reduce its shipments to Amazon by more than 50% by the second half of 2026. A decision that has been met with a mixture of admiration and trepidation, as one might regard a fellow guest at a dinner party who has decided to abandon the wine for lemonade.

While the reduction in Amazon shipments will undoubtedly lead to a revenue hit, it is worth noting that most of these deliveries were, shall we say, marginally profitable. By pivoting to higher-margin opportunities-such as small businesses and temperature-controlled shipping for healthcare companies-UPS is attempting to turn the page on a chapter that, while lucrative, was not without its drawbacks. A most commendable strategy, though one might wonder if the new ventures will prove as profitable as the old.

UPS’s management team has vowed to maintain its dividend, which currently supports a 7.8% yield. With a forward P/E ratio of less than 12, the stock trades at a 27% discount to its five-year average. A most enticing offer, though one must remember that even the most steadfast management teams can occasionally find themselves in a spot of bother.

PennantPark Floating Rate Capital: 13.41% yield

The final member of our triumvirate is the small-cap business development company PennantPark Floating Rate Capital (PFLT), a firm that pays its dividends monthly and boasts a yield of 13.4%. A figure so astronomical that one might suspect it to be a typographical error, though I assure you it is not. PennantPark, a BDC that invests in debt securities, has a portfolio of $2.4 billion, with $2.15 billion allocated to debt. A most peculiar arrangement, though one that has proven fruitful in the current rate environment.

The magic of PennantPark’s model lies in its variable-rate loans, which have allowed it to capitalize on the Fed’s rate hikes. With 99% of its loans tied to floating rates, the company has seen its weighted-average yield soar by more than 500 basis points. A most impressive feat, though one might question whether the current rate cuts will have a deleterious effect on future yields. The Fed, after all, is as unpredictable as a cat in a room full of rocking chairs.

PennantPark’s valuation is another curious matter. The stock currently trades at a 16% discount to book value, a figure that would make even the most seasoned investor raise an eyebrow. A most tempting proposition, though one must remember that BDCs, like all financial instruments, are subject to the whims of the market.

And there you have it, dear reader: three stocks that promise to deliver a most satisfactory yield, provided one is prepared to navigate the occasional pothole. As the old adage goes, “He who risks nothing, gains nothing.” Or, as I prefer to say, “He who invests with his eyes open, avoids the puddles.” 🕵️‍♂️

2025-10-01 11:44

Pfizer: 7.24% yield

United Parcel Service (UPS): 7.84% yield

PennantPark Floating Rate Capital: 13.41% yield

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