3 Dividend Stocks Yielding 9%+ That Might Actually Hold Up

Most dividend stocks yielding over 9% are traps. Maybe there's too much debt, maybe cash flow is not covering the dividend, or maybe the company's facing threats of disruption. No matter the reason, this tends to be an unforgiving part of the market, and it's one I'd normally stay away from as a conservative investor. But in this video, I'm wading into the ultra high-yield swamp to walk you through three companies that might actually hold up. These firms still carry real risk, especially if a recession hits. So, keep that in mind as I walk you through them from lowest yield to highest. We'll end with a name that yields almost 12%. All three stocks have paid steady dividends for nearly a decade or longer, and one even pays monthly with an investment grade credit rating. I'll be using our website Simply Safe Dividends to analyze each company. If you're not already a member and want to track your dividend portfolio or find more income ideas, there's a free trial link below, no credit card required. First up is Cross America Partners, ticker CAPL, with an 8.7% yield that was actually over 9% just a few days ago. Cross America is an MLP that distributes motor fuel, and it also owns and rents out the real estate under gas stations, and runs some of the convenience stores itself as well. The yield is high in part because this is a small business with a market cap under a billion dollars, and it does issue a K-1 format tax time, which some investors don't prefer. We give it a borderline safe dividend safety score of 50, which I'll explain more as we get into the rest of the story here, but it's an interesting company that's been around for about 15 years and has paid reliable dividends throughout most of that period, outside of a 16% cut here in 2018. Back then, its payout ratio was just over 100%. It was carrying a lot of debt, and like most MLPs at the time, it relied too much on issuing equity to fund its business, which no longer worked once the price of many MLPs was in the dumps. Today, Cross America is on much stronger footing. The company's founder bought back the general partner in 2019, eliminated the incentive distribution rights, which had been taking an increasing cut of cash flow as the payout grew, and he's has overseen a big shift in how the business makes money. CrossAmerica used to mostly collect rent and a small wholesale fuel margin from third-party dealers running its gas stations. Those are the blue and green bars you see here. Uh it's actually one of Exxon's largest fuel distributors in the country by volume along with relationships with brands like BP and Shell, but supplying that fuel wholesale might only earn CrossAmerica a nickel or a dime a gallon. Now it's converted a lot of those sites to run the pumps and the convenience stores itself. And then a gallon of gas sold directly to a driver at the pump, that margin can be closer to 40 or 50 cents. Call it a five to 10 times more per gallon. Plus whatever profit comes from selling coffee and snacks inside. These retail businesses here in orange and blue are now over 60% of the firm's gross profit, up from just 13% in 2019. That's pushed operating margins up, and combined with several years of selling off weaker real estate to pay down debt, leverage has come down now to its lowest point in over a decade. So, there's not a need to prioritize debt reduction over distributions. CrossAmerica's payout ratio has also settled near 70%, which provides a healthy cushion and is well below the 100% plus level here that forced the 2018 cut. So, why did the company undertake this big shift? Well, I think the main reason is because gas station fuel volumes in the US have been declining gradually over most of the past decade as cars become more fuel-efficient and as more drivers pick electric vehicles. Running the stores directly instead of just renting them out and delivering fuel lets CrossAmerica squeeze more profit out of fewer gallons, and it can also sell more snacks and merchandise inside. The strategy seems to be working pretty well so far, but it's obviously not free of risk either. Collecting rent and running wholesale fuel contracts was a lot more hands-off than running hundreds of stores yourself, and that shift brings labor and execution risk that CrossAmerica didn't really carry a decade ago. But it's also better insulated now from fuel volume declines than it used to be, so I think the trade-off is probably worth it. One more thing worth knowing about gas stations is that they tend to make more money per gallon when oil prices are swinging around a lot, and that's because they have fuel sitting in the ground in tanks that was bought earlier. So, when oil prices jump up, gas stations tend to raise prices at the pump pretty fast, but they're selling off that older, cheaper fuel they bought before the price jump, which boosts their fuel margin. That's exactly what has happened this year with the conflict in Iran that has helped lift Cross America's earnings. The stock has been bid up as a result, which has pushed the yield well below the 5-year average of about 10%. That makes the stock look a little overvalued today uh compared to where it's traded relative to its own yield history over time. The pandemic would have been a great chance to buy here, but if you're looking for a better entry point on Cross America, a calmer, more boring stretch for oil prices might actually be the best setup since that's usually when the margin advantage fades, and the stock could cool off with it. You just have to be comfortable owning a small MLP and the risks that come with that territory. Next up is Capital Southwest, ticker CSWC, with a 9.5% yield. Capital Southwest is a business development company, or BDC, so it basically raises capital from shareholders and debt investors, and then lends that money out to small private businesses operating in lots of different industries. The portfolio today sits at just over $2 billion, about 90% of that is in first lien secured loans, so that debt gets paid back first in the event of default and is viewed as less risky in the capital structure. Most of the remainder is sitting in equity investments in some of the small companies that it works with. Uh no industry exceeds 15% of the portfolio, and there's no real obvious uh problem areas here in terms of really cyclical areas or areas facing potential AI disruption like software, which has been a problem for some other BDCs. Uh taking a closer look here at the portfolio, we can see that it's grown significantly over the last 10 years. The average holding size today is less than 1% of the portfolios fair value. So, if something were to go wrong with any of these companies, it's not going to cause a big problem for Capital Southwest. It's also worth noting that this is an internally managed BDC, so it has its own management team. And as the portfolio has grown over time, that results in very low operating expenses as a portion of total assets. That helps keep the cost down and also allows Capital Southwest to have cheaper access to capital because investors like that trait in a BDC and are willing to pay a bit more of a premium. Uh from a credit performance perspective here, we can see that 90% of the portfolio sits in a one or two rating. These are internal ratings that the company discloses each quarter, showing how its loans are performing. That's where you want to be. So, we're not really seeing any big cracks there either with underperforming loans, which is a good sign as well. Taking a look at the company on our website, we give Capital Southwest a borderline safe dividend safety score of 50. Unlike Cross America Partners, it does not issue a K-1, you'll get a 1099 at tax time, but most of that dividend is going to be non-qualified, so keep that in mind. S&P doesn't rate the company, but Fitch and Moody's both give Capital Southwest an investment grade rating, making it one of the few BDCs to achieve that. It's a small company, market cap of about 1 and 1/2 billion dollars, and it's paid a reliable and growing dividend for the last decade. Its payout was actually cut here in 2016 when it spun off its industrial business to become a pure play BDC, but it's been a very reliable income payer since then, including 7% annualized dividend growth over the last 5 years. Uh above and beyond the regular dividend, Capital Southwest has been making supplemental payouts each quarter. When you add that to the base dividend here, that pushes the total payout up high enough where you'd be getting over a 10% yield today if those payouts continue. I think they will. The company has about 90 cents of what it calls undistributed taxable income. That's usually realized when it sells off equity stakes in the businesses that it invests in and keeps the gain on the books before paying it out to shareholders. It can be used to kind of help cover the base dividend during lean periods or go towards the supplemental payout. So, there's some nice nice flexibility there, margin of safety. Taking a look at the financials here, we can see the payout ratio has always been close to 100%. That's fairly typical when looking at BDCs. It's expected to go above 100% just barely in the next 12 months there. Um that's reflecting some uncertainty with where short-term interest interest rates will head. So, the vast majority of these loans carry floating rates that are tied to what the Fed does with rates. Every percentage point change in short-term rates will impact the company's profits by about 10% according to management. So, when the Fed was hiking rates here in 2022-23, that was a big boost to most BDCs profits, but as rates have come back down now, profits have also been falling a bit and are expected to decline again 4% in the year ahead. I don't think that's a risk to the dividend. If of course, if rates came down significantly or if there was a big recession that caused a big spike in loan losses, that could raise some questions, but Capital Southwest has done a nice job holding its ground, especially compared to most of its peers. That 9 and 1/2% base dividend yield here is just below the 10-year average of 10.1%. You can see there were a few times throughout history here in the last 5 years you could have bought at a 12% plus yield. That's typically when investors are worried about the economy and a potential jump in credit losses. Uh the most recent example here is 2025 with the trade war kicking off. BDCs got hit pretty hard before recovering. Uh right now, the stock looks reasonably valued. It's trading kind of in the middle of this blue band, which is where the stock would be if it traded within 10% above or below its 5-year average dividend yield since stock prices and dividends tend to be pretty well connected in this space as a valuation indicator. So, BDCs are certainly not for everyone. They are going to be highly volatile investments. I would avoid most of them as a conservative investor, but Capital Southwest is one of the few that I would consider owning and that also does pay its dividend monthly. That was a recent change in the last year or so. Um so, this is one to keep on your radar if you're comfortable with some of the risks in this space. Last but not least is Starwood Property Trust ticker STWD with an 11.6% yield. Starwood was formed in 2009 as a commercial mortgage REIT where it focused on originating first mortgages with floating rates backing properties like apartments, offices, industrial sites. And since then the business has diversified across a number of areas including residential and infrastructure lending. And in 2025 it even bought a triple net lease business with over 500 real estate properties that are leased out for about 17 years on average with built-in contractual annual rent increases. So, very diversified cash flow now of the $32 billion portfolio today about half comes from those commercial loans mostly in apartments which are 19% of the portfolio followed by industrial 8%. Offices are also an area of concern here. They're about 8% US offices of this portfolio. But other healthier areas like net lease, residential, and infrastructure lending are meaningful contributors. So, there's nice cash flow diversification compared to the typical mortgage REITs. Taking a look on Simply Safe Dividends we can see that Starwood has a borderline safe dividend safety score of 50 and has a double B credit rating from S&P which is two notches below investment grade status. It does issue a 1099 but the dividend is non-qualified and it's slightly bigger than the first two companies we looked at with a $6 billion market cap. Now, Starwood is the only mortgage REIT that has not cut its dividend. It's kept its payout stable to rising since inception in 2009, but the dividend has been frozen since 2014. Some investors are wondering if Starwood can really keep that streak going because the payout ratio jumped above 100% in 2025 and it's expected to stay there for at least the next 12 months sitting just below 120%. Now, a big part of this pain here is caused by the Fed's interest rate hikes a few years ago. That caused some of the borrowers in areas like office and multi-family apartments to face stress where those higher interest payments no longer made it practical for them to refinance. So, some of them chose to instead walk away from their properties. And when that happens, Starwood has to foreclose on them and take possession of the property. It will often work to fix them up, rent them out, and eventually sell them. But until it does that, it loses the interest income from those loans. And that reduces the company's earnings per share, which we've seen play out. The other challenge has been in the net lease business that Starwood acquired. Again, that makes up maybe 10% of the company's asset base. Uh that business has been dilutive to earnings, uh meaning it's been reducing Starwood's earnings because it's not scaled up yet. So, it has all of its management costs and it's legacy financing costs, but until Starwood adds more properties to the portfolio, it's actually losing the company money each year. So, those two factors have really weighed on the payout ratio. Uh the good news is that that's supposed to be an inflection point next year. If everything goes according to management's plan, next year we'll see the payout ratio move back below 100% in the second half of the year. That will take place as Starwood works through its troubled loan portfolio, reinvest that capital, and also scales up its property leasing business. Uh right now, of course, the dividend is not covered. The company's founder and CEO acknowledges that and believes that shareholders value consistency and transparency. So, he's confident that the dividend is going to remain the same and he's not considering changing the payout policy unless things go very differently. A lot of the CEO talk about dividends should probably be ignored, but I think he's one of the more candid CEOs out there and his word is worth something. So, if there was a downturn in the credit cycle, I think yes, the dividend probably does get cut, but we're not talking about, you know, a 50% plus type of drop. I think Starwood has a pretty solid track record and it's just a matter of time before the business will eventually stabilize and bounce back. Right now, the stock is trading for about 90 cents for every dollar of the company's assets on the book. This chart here is showing you the price to book value multiple going back to 2021. During the pandemic when people were really worried about souring loans, it traded at 50 cents on the dollar, ratio of 0.5 down here. But right now, it's kind of below where the stock usually trades. It's usually close to book value. So, investors are kind of reflecting some of their nervousness about what could happen if the Fed starts raising rates again and causes more stress in a few parts of the loan portfolio that have already experienced some bumps with offices and apartments. So, of course, with a 12% yield, they're going to be encountering some risks for sure. This is a stock that has diversified cash flow, but it also uses a lot of leverage. It's working with a lot of borrowers who use leverage as well. There's a lot of moving parts to the story, so it's not a big surprise to see it trading at a bit of a discount. But the long-term track record of creating value for shareholders is actually quite good even if the dividend does get reduced. I think you'd still have a pretty healthy yield. And this is a company that I think has a fairly stable long-term outlook. So, definitely not for the faint of heart. That's going to come with the territory of a 12% yield, but Starwood Property Trust caught my eye as an interesting one to highlight in this video. So, that's three stocks yielding well above what you'll find almost anywhere else in the market and none of them got a clean pass. Cross America's had to rebuild its business to fight off shrinking gas demand. Capital Southwest is feeling the pinch from falling rates and Starwood is working through some troubled loans that have pushed its payout ratio to around 120%. There's no free lunch in the market, especially when you're looking at these really high yields, and that's a big reason why we built Simply Safe Dividends, because we wanted to help income investors make better informed decisions, and also reduce risk in their portfolios. There's a link below to try Simply Safe Dividends if you're interested, and I hope to catch you in the next video.