3 Ultra-High-Yield Dividend Stocks to Buy in August (1 Yields Over 13.5%)

The article highlights three ultra-high-yield income stocks: AGNC Investment yields 13.5%+ and has paid its dividend for 75 consecutive months; Ares Capital is approaching a ~10% yield with a 17-year streak of stable/growing dividends (core earnings $0.47 in H1 vs a $0.48 quarterly dividend, but with a $0.14 net realized gain YTD and $1.38/share excess taxable income carried forward for 2026); and Western Midstream yields ~8% and has raised its distribution 193% since its 2020 reset (and ~420% since 2012). Western Midstream targets $2.1B-$2.3B of distributable cash flow and expects 4%-5% long-term annual earnings growth. Overall, the piece is constructive on dividend durability but notes earnings pressure for Ares in the first half of the year.

Analysis

This is less a stock-picking setup than a factor trade on yield scarcity. The crowded bid for headline distributions can keep high-yield names supported in the next few weeks, but the market is paying too little attention to what actually drives each cash stream: funding costs and mortgage basis for AGNC, underwriting/credit migration for ARCC, and volume-plus-capex discipline for WES. In a risk-off tape, the first two behave like levered credit proxies and can gap down faster than the stated yield compensates.

The cleanest relative winner is WES: contracted cash flow plus visible expansion spend makes the payout more self-funding, so the market should be willing to pay a higher multiple if coverage and deleveraging continue. ARCC is the best-quality credit vehicle here, but its upside is mostly defensive unless private credit spreads widen enough to create better entry points; the real risk is a lagged rise in non-accruals that typically shows up after the easy refinancing window closes. AGNC is the most fragile because its equity value is essentially a call on mortgage spread stability and rate volatility, not on the coupon itself.

Over the next 1-3 months, watch 10-year yields, MBS OAS, and private-credit delinquency commentary more than dividend announcements. Over 6-18 months, falling rates help all three only if recession does not force wider credit spreads; otherwise ARCC and AGNC can both lose book value despite intact payouts. The consensus seems to be treating these like bond substitutes, but the better framing is quality of spread capture versus duration risk.

If the yield trade is overdone, the most likely reversal is a rates-backed de-risking: higher real yields or wider credit spreads will hit AGNC and lower-quality BDCs first. Conversely, a stable-to-lower rate path with contained credit losses should lift WES and ARCC more sustainably than AGNC.

Key Decisions for Investors

• Prefer long WES on pullbacks over AGNC for the next 3-6 months; WES has the cleaner cash-flow visibility and lower mark-to-market risk. Falsify if coverage drops materially or expansion capex fails to convert into DCF.
• Pair trade: long ARCC / short CSWC for 1-3 months to express best-in-class underwriting versus smaller-cap BDC credit risk. Cover if non-accruals stay benign across the peer group and the spread differential stops widening.
• Avoid chasing AGNC for yield until mortgage spreads and funding costs improve; if you need exposure, use a tight stop or wait for a rate-volatility spike to fade. Thesis breaks if 10-year yields and MBS basis both move against the book value trend.
• Watch BIZD or other BDC proxies for a broader read-through on private-credit sentiment; if the sector sells off on benign macro data, the market is starting to price in delayed credit stress.
• If seeking income with lower fundamental risk, rotate incremental capital from AGNC into WES or ARCC rather than adding outright exposure to the highest headline yield.