10 Investment Ideas That Yield 10%+
Prepare to embrace the exotic (and plenty of risk) when you chase yield this far.
To get double-digit yields today, you’ll have to invest in the kinds of publicly traded stocks that rarely come up in cocktail-party conversation: mortgage REITs and business development companies. Both borrow at low short-term interest rates and lend at higher long-term rates, so their success depends on the Federal Reserve keeping short-term rates low. If short-term rates start to climb, shares of both mortgage REITs and BDCs are likely to tumble.
Analyst Merrill Ross, of Wunderlich Securities, in Memphis, Tenn., recommends Invesco Mortgage Capital (IVR, $22, 12.0%). Run by an affiliate of the Invesco mutual fund group, the REIT owns residential and commercial mortgages. About 70% of its investments are “agency” loans, those backed by the likes of the Government National Mortgage Association. A relatively high 17% of the portfolio is in higher-yielding but riskier non-agency loans, though rising property values mitigate some of the danger.
Jason Stewart, head of research at Compass Point Investments, a Washington, D.C., firm, likes AG Mortgage Investment Trust (MITT, $25, 13.0%), in part because 18% of its portfolio’s assets are in non-agency loans. Stewart is also high on AG’s execs; they’re affiliated with hedge fund operator Angelo, Gordon & Co., which has a superior record. For more diversification, pick between two ETFs that specialize in this group: iShares Mortgage REIT Capped ETF (REM, 11.1%) and Market Vectors Mortgage REIT Income ETF (MORT, 10.2%).

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Business development companies may be esoteric, but they are hardly undiscovered. The stocks have been sizzling of late, so it has become tougher to find attractively priced high yielders, says analyst Greg Mason, of Keefe, Bruyette & Woods. One BDC that does pass muster with Mason is KCAP Financial (KCAP, $10, 11.0%), which specializes in some of the riskier pockets of the lending market. The New York City firm’s loan portfolio is filled with high-risk, high-return loans. But Mason says KCAP’s executives are highly skilled and will likely minimize defaults.
Some leveraged closed-end muni bond funds also scale to 10%-plus heights. Like the block of BlackRock funds mentioned earlier, these four Invesco funds—Advantage Municipal Income Trust II (VKI, $13, 6.6%), Municipal Opportunity Trust (VMO, $15, 6.6%), Municipal Trust (VKQ, $14, 6.4%) and Trust for Investment Grade Municipals (VGM, $15, 6.6%)—employ similar strategies, only they do so with tax-free debt. The funds invest mainly in long-term high-quality bonds that finance such things as airports and hospitals. For investors in the top 39.6% bracket, a tax-free yield of 6.6% is equivalent to 10.9% from a taxable investment. All four funds recently traded at small discounts to NAV.
If you’re willing to go for broke to earn the best yields, consider Northern Tier Energy (NTI, $27, 20.6%). The Ridgefield, Conn.–based pipeline and refining firm has made only two distributions since going public last year, so the yield is based on what’s been paid so far. If Northern Tier’s profits keep rising, as analysts expect, it will continue to make rich distributions. But commodity prices are volatile, so profits, payouts and the share price could be, too.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.
-
Ask the Editor — Tax Questions on What Congress Will Do Next
Ask the Editor In this week's Ask the Editor Q&A, we answer questions from readers on what Congress will do next with taxes.
-
When Tech is Too Much
Our Kiplinger Retirement Report editor, David Crook, sounds off on the everyday annoyances of technology.
-
Powell Signals Rate Cuts in His Jackson Hole Speech. Here's What Wall Street is Saying
In his speech at the Jackson Hole symposium Friday, Fed Chair Jerome Powell said current conditions "may warrant" rate cuts.
-
Trump-Era Regulations Will Broaden Access to Crypto
The Kiplinger Letter The president wants to make the U.S. the leader in digital assets.
-
July CPI Report Boosts Rate-Cut Odds: What the Experts Say
The July CPI report shows that tariffs are having a slight impact on inflation, though not enough to keep the Fed from cutting interest rates.
-
How Big Will the Fed Rate Cut Be This Fall?
A dismal July jobs report has lifted expectations for fall rate cuts. How low could the fed funds rate be by year's end?
-
July Jobs Report Renews Rate-Cut Hopes: What the Experts Are Saying
The July jobs report shows weakening in the labor market and lifts expectations for a September rate cut.
-
Should You Buy These ETFs Before the Fed Cuts Rates?
The Fed is likely to lower interest rates this fall, and tactical investors might want to look closer at these ETFs before rate cuts resume.
-
July Fed Meeting: Updates and Commentary
The July Fed meeting came and went, with Fed Chair Powell saying little about a September rate cut and President Trump.
-
What Will the Fed Do at Its Next Meeting?
Rate cuts remain on hold this summer, experts say.