3 Ultra-High-Yield Dividend Stocks -- Sporting an Average Yield of 9.5% -- Which Are No-Brainer Buys in October

Core Viewpoint - The article highlights three ultra-high-yield dividend stocks that present significant investment opportunities for patient investors, emphasizing the historical performance of dividend stocks compared to non-payers and the potential for wealth creation through strategic investments in these securities [1][2][3]. Group 1: Dividend Stock Performance - Research indicates that dividend-paying stocks have outperformed non-payers with an annualized return of 9.2% compared to 4.31% over a 51-year period [3]. - Dividend stocks have shown less volatility than the S&P 500, making them a more stable investment choice [3]. Group 2: Pfizer (PFE) - Pfizer offers a 7.24% yield, significantly higher than the S&P 500 average [6]. - The company experienced a dramatic revenue drop from COVID-19 products, with sales falling from over $56 billion in 2022 to an estimated $11 billion in 2024 [7]. - Despite this decline, Pfizer's net sales increased by over 50% from 2020 to 2024, indicating underlying growth [8]. - The acquisition of Seagen for $43 billion is expected to enhance Pfizer's oncology pipeline and create cost synergies [9]. - Pfizer's shares are trading at a historically low valuation of 7.5 times forward earnings, 25% lower than its average P/E multiple over the past five years [10]. Group 3: United Parcel Service (UPS) - UPS has a yield of 7.84%, despite a 34% drop in share price in 2025, underperforming the S&P 500 by 46 percentage points [11]. - The company is shifting focus from volume to margin quality, planning to reduce shipments from Amazon by over 50% by the second half of 2026 [12][13]. - UPS aims to target higher-margin opportunities, including small and medium-sized businesses and temperature-controlled shipping [13]. - The management intends to maintain its dividend payout, with a forward P/E ratio of less than 12, representing a 27% discount to its average over the last five years [15]. Group 4: PennantPark Floating Rate Capital (PFLT) - PennantPark offers a substantial yield of 13.41%, with monthly dividend payments [16]. - The company primarily invests in debt securities, with a $2.4 billion investment portfolio, of which $2.15 billion is in various debt instruments [17]. - PennantPark's average yield on debt investments is 10.4%, benefiting from lending to middle-market companies that lack access to traditional banking [18]. - The company's loans are predominantly variable rate, allowing it to maintain a superior yield even as interest rates fluctuate [19]. - PennantPark is currently trading at over a 16% discount to its book value, indicating a historically cheap valuation [20].