3 Stocks Giving You More Than 4 Percent Income in 2026

With inflation and uneven earnings cited as drivers, the piece highlights three income-focused equities for 2026: Annaly Capital Management (NLY) yielding 12.28% ($2.80/share annually) with a 125.31% payout ratio and 5.77% one‑year dividend growth; Enterprise Products Partners (EPD) yielding 6.82% ($2.18/share) with a 27‑year dividend growth record and an 81.68% payout ratio; and Realty Income/NNN REIT (NNN) yielding 5.91% ($2.40/share) with 36 consecutive years of raises and a 113.45% payout ratio (3.06% growth last year). The article frames these names as defensive, predictable cash‑flow plays for income investors and notes annuities (advertised at a 5.0% APY) as a no‑market‑risk alternative.

Analysis

Market structure: Income-seeking flows are clear winners — midstream/MLP-like cash-flow names (EPD) and single-tenant net-lease REITs (NNN) benefit from yield-hungry buyers, compressing spreads and cap rates by an estimated 50–150bp if demand persists into 2026. Rate-sensitive financings (mortgage REITs like NLY) are the losers if 10-year Treasury yields re-price up 50–100bp, because leverage and repo funding costs will widen net interest margins and force payout cuts. Cross-asset impact: rising allocations to these equities tighten IG credit spreads modestly, put upward pressure on MBS spreads, and create USD bid if flows exit low-yield EM assets.

Risk assessment: Tail risks include a rapid Fed-driven 75–100bp spike in the 10Y within 3 months, a material MBS liquidity shock that impairs NLY’s access to repo, or a commodity collapse that removes EPD volumes. Immediate risks (days) are ex-dividend trading and volatility around Fed statements; short-term (weeks/months) are refinancing windows and Q4 distributable cash flow prints; long-term (quarters/years) are secular cap-rate normalization and tenant credit deterioration. Hidden dependencies: mortgage REIT dividends depend on short-term funding and hedge P&L; midstream cash flow correlates to volume and takeaway capacity constraints, not just commodity prices.

Trade implications: Favor a core long in EPD sized 2–3% of portfolio for 6–12 months to capture ~6–8% yield plus 5–10% price upside if yields compress 75–100bp; hedge interest-rate tail risk with 6–9 month 10Y calls or buys of short-duration Treasury ETFs. Reduce net long exposure to NLY to <1% or hedge with 3–6 month puts if 10Y >3.75% or repo spreads widen by 25bp; consider pair trades long NNN/short NLY (1:1) to express tenant-quality premium. Use covered-call overlays on NNN to harvest yield if shares remain rangebound.

Contrarian angles: The consensus understates balance-sheet fragility in mortgage REITs — dividend yields >10% like NLY price in income but not liquidity risk; this is reminiscent of 2013 taper tantrum dynamics where rate spikes forced asset fire-sales, not a steady rotation. Yield-chasing may be overdone — a 50–100bp rise in 10Y could erase distributions and cause >20% drawdowns in levered REITs, while midstream names with fee-based contracts (EPD) are underappreciated for downside protection. Watch for unintended demand shifts to annuities and fixed products that could reduce equity yield bids within 6–12 months.

Key Decisions for Investors

• Establish a 2–3% portfolio long position in Enterprise Products Partners (EPD) for a 6–12 month horizon aiming to capture 6–8% yield plus 5–10% price upside if yield compresses ~75–100bp; hedge with a 6–9 month 10Y Treasury call if rates rise more than 50bp.
• Trim NLY exposure to <1% of portfolio or initiate a tactical 1:1 hedge: buy 3–6 month at-the-money puts on NLY sized to cover existing shares if 10-year Treasury yield exceeds 3.75% or repo spreads widen by 25bp; exit hedge if 10Y drops below 3.25% or NLY coverage ratio improves >200bp.
• Implement a pair trade long NNN / short NLY (equal notional) sized 1–2% net exposure to exploit tenant-quality and midstream fee-stability versus mortgage REIT leverage; hold 6–18 months, cut if relative spread moves >150bp in favor of the short or if NNN occupancy falls >200bp QoQ.
• Use income overlays: sell 3–6 month covered calls on NNN at ~10–15% OTM to boost yield if rangebound; alternatively, sell 6–9 month puts on EPD at strikes ~5–7% below current market to collect premium, but size at no more than 1% portfolio risk and close if implied vol rises >50%.