For over a hundred years, the stock market has stood out as the leading generator of wealth. No other investment type has consistently matched the long-term average returns of stocks. With thousands of listed companies available, investors can almost always find securities that align with their financial objectives.
Among the many approaches to building wealth, investing in and holding top-tier dividend stocks has proven to be one of the most effective methods.
According to The Power of Dividends: Past, Present, and Future, a study by Hartford Funds and Ned Davis Research, dividend-paying stocks were compared to non-dividend payers over a 51-year span (1973-2024). The findings showed that dividend stocks delivered an annualized return of 9.2%, far outpacing the 4.31% return of non-dividend stocks, all while being less volatile than the S&P 500 benchmark.
Image source: Getty Images.
Ideally, investors seek to maximize yield while minimizing risk. However, history shows that higher yields often come with increased risk. In other words, chasing the biggest yields can sometimes lead to investing in troubled companies facing financial difficulties.
The encouraging news is that there are ultra-high-yield dividend stocks—those yielding at least four times the S&P 500 average—that offer reliable payouts. The following three ultra-high-yield stocks, averaging a 9.5% yield, are standout buys for October.
Pfizer: 7.24% yield
The first high-yield dividend stock you might regret missing out on this October is pharmaceutical giant Pfizer ( PFE -0.50%), which, as of September 26, offers a 7.2% yield—over six times the S&P 500 average.
Pfizer presents a unique case, having been penalized for its own achievements. After launching its COVID-19 vaccine (Comirnaty) and oral treatment (Paxlovid), combined sales for these products surged past $56 billion in 2022. Now that the pandemic has largely subsided, revenue from these drugs dropped to $11 billion in 2024 and is expected to decline further this year.
Although losing $45 billion in sales over two years is a tough adjustment for some investors, it's important to remember that Pfizer had no COVID-19 revenue at the start of this decade. The addition of Comirnaty and Paxlovid, along with growth in its existing and new treatments, boosted Pfizer’s net sales by over 50% from 2020 to 2024. In short, the company has become even stronger, despite its stock reaching a 13-year low.
Another growth driver for Pfizer is its acquisition of cancer drug maker Seagen in December 2023. While acquisitions are common in the pharmaceutical industry, the $43 billion purchase of Seagen was significant. This deal not only brings substantial cost savings but also greatly expands Pfizer’s high-margin oncology portfolio. As cancer detection technology advances, Pfizer’s cancer drug sales are expected to benefit.
Pfizer’s shares are also attractively priced. Investors can currently buy the stock at just 7.5 times projected earnings, which is 25% below its average forward P/E ratio from the past five years.
Image source: Getty Images.
United Parcel Service (UPS): 7.84% yield
The second compelling dividend stock to consider in October is logistics leader United Parcel Service ( UPS 1.41%), better known as "UPS" to most consumers.
UPS shares have dropped 34% in 2025, lagging the S&P 500 by 46 percentage points. This downturn followed a January announcement that the company would prioritize profit margins over shipment volume. Specifically, UPS plans to cut its shipments from leading e-commerce company Amazon by more than half in the second half of 2026.
Reducing its reliance on Amazon will certainly impact UPS’s revenue. However, most Amazon deliveries generated minimal profits for UPS. The company is intentionally shifting its focus to higher-margin areas, such as serving small and medium-sized businesses and providing temperature-controlled shipping for healthcare clients.
As I’ve noted before, UPS’s brand recognition is a major asset. Most people instantly recognize its iconic brown delivery trucks. The logistics industry also has high barriers to entry, given the significant costs of vehicles and aircraft. This established brand and limited competition provide UPS with a strong competitive advantage.
UPS’s management is committed to maintaining its dividend, which currently yields 7.8%. With a forward P/E below 12, the stock trades at a 27% discount to its average forward earnings multiple over the past five years.
PennantPark Floating Rate Capital: 13.41% yield
The third ultra-high-yield dividend stock offering an impressive payout and a compelling buy in October is small-cap business development company (BDC) PennantPark Floating Rate Capital ( PFLT 1.84%). PennantPark distributes its dividend monthly, and its 13.4% yield is indeed accurate.
BDCs typically invest in or lend to emerging businesses, often referred to as "middle-market companies." By the end of June, PennantPark’s investment portfolio totaled $2.4 billion, with $2.15 billion allocated to various debt instruments, making it primarily a debt-oriented BDC.
The main reason for focusing on lending is straightforward: higher returns. Many of the companies PennantPark supports cannot access traditional bank loans, allowing the BDC to earn a much higher average yield on its debt investments. As of June 30, the company reported a weighted-average yield of 10.4% on its debt portfolio.
What truly sets PennantPark Floating Rate Capital apart is that 99% of its loans have variable interest rates. When the Federal Reserve rapidly increased rates from March 2022 to July 2023 to combat inflation, PennantPark’s average yield on debt investments jumped by over 5 percentage points. Although the central bank is now easing rates, it is doing so gradually and transparently, enabling PennantPark to sustain strong yields on its loan book.
Lastly, PennantPark’s valuation is historically attractive. BDC shares typically trade near their book value, but PennantPark is currently priced at more than a 16% discount to its book value.
