What If the Fed Cuts 50 Basis Points? 4 Ultra-High-Yield Favorites Will Explode

"Total return includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or a portfolio consists of income and stock appreciation. Once again, total return refers to the collective increase in a stock's value, including dividends."

"While most of Wall Street sees the first rate cut at 25 basis points, some are starting to argue that the initial cut will be 50 basis points. A 50-basis-point cut would likely ignite another leg up in the huge rally we have seen off of the April lows. Ultra-high-yields stocks could see huge demand as rates move lower over the next year."

Dividend stocks with ultra-high yields can provide substantial passive income and contribute materially to total return, which includes interest, capital gains, dividends, and other distributions. Some market participants expect the first Federal Reserve rate cut to be 25 basis points, while others predict an initial 50-basis-point cut, which could fuel further gains from the April lows. Falling rates would likely increase demand for high-yield equities. A screen of ultra-high-yield stocks identified four companies yielding at least 8% with solid dividend coverage, each carrying Buy ratings at major Wall Street firms. Such stocks are not suitable for every investor.

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