Amid a major political shift in the United States, investors may understandably be uncertain about how to distribute their assets. Some anticipate a new administration to be a boon for stocks thanks to loosened regulations and the potential for lower corporate taxes. Others anticipate a return to a highly inflationary environment—or worse—due to tariffs and labor shortages, among other factors.

Investors more bearish about the market environment in the coming quarters may consider dividend stocks. Because these firms pay out regular passive income, investors may be more likely to hold on to these stocks through a falling market, making them more stable for longer. While no company is guaranteed to escape a market downturn unscathed, some investors choose dividend-paying firms as one of the safest ports in a storm.

Financial firms have been a particular focus for many—including institutional investors—both before and after the U.S. election. Hedge funds poured money into financial stocks throughout the summer as investors anticipated a beneficial environment into the new year. Prospect Capital Corp. (NASDAQ: PSEC) stands out among financial companies for its high dividend yield of 16.3%.

Real estate investment trusts (REITs) are a category of company known for their strong dividend payouts as well. AGNC Investment Corp. (NASDAQ: AGNC) and Rithm Capital Corp. (NYSE: RITM) are among the REITs with the highest dividend yields, with 15.0% and 9.3%, respectively.

1. Prospect Capital: Dividend Trim History, But Advantages Over Other BDCs

Prospect Capital is a business development company (BDC) providing services to middle-market companies. BDCs, like REITs, have a mandate to make regular dividend payments, and Prospect Capital's market capitalization of $2 billion allows it to have a wider portfolio than many other companies in this category. Its debt-to-equity ratio of 0.68 is strong, and its price-to-sales ratio of 2.24 is competitive as well.

On the dividend side, Prospect's astronomical dividend yield may seem too good to be true, and indeed there is reason for investors to exercise caution. The firm has cut its dividend multiple times in the last decade, including most recently in November 2024. This latest trim sent PSEC shares plummeting after already sliding a bit throughout the past year—they are now down more than 22% in that time. Investors willing to take a chance on this firm in case it does get some positive news that sends the stock back upward could reap the rewards, although its history of underperformance in recent years should give pause.

2. AGNC Investment Corp: Dipping Share Price Makes For Reinvestment Opportunity

AGNC is a REIT dealing in residential mortgage-backed securities that could be poised for success if mortgage rates continue to move lower. Indeed, shares are up nearly 11% in the last year, and that's after they've fallen since mid-October amid the election season and increased uncertainty about the upcoming rates environment. On the plus side, a falling share price has helped bring AGNC's price-to-book ratio down to 1.06, making it a more affordable option.

AGNC's history of share price declines extends back many years, and its dividend payouts trend alongside stock price. Investors throughout that period may have been better off reinvesting dividends in order to maximize total return. While most investors seek out dividend stocks for a passive income stream, those looking to reinvest may be drawn to AGNC's sky-high yield.

3. Rithm Capital: Diversified REIT With Room to Grow

Rithm Capital also deals in mortgages, like AGNC, but has a wider scope beyond that—the REIT includes consumer loans and both residential and commercial real estate in its portfolio as well. This diversification helps mitigate risk by spreading exposure across various asset classes, making it more resilient to sector-specific downturns.

The company has a record of several dividend increases over the last four years and currently has annualized three-year dividend growth of 26%. Additionally, its consistent dividend payouts provide income-focused investors with a reliable passive income stream, making it particularly appealing in uncertain markets.

Rithm is a favorite REIT among Wall Street analysts, who rate the stock a Moderate Buy and expect upside potential of more than 19%. This optimism is supported by its strong price-to-book ratio of 0.86, which suggests undervaluation and room for significant growth.

Caution Regarding Dividend Yields

High dividend yields can sometimes signal that a company's shares have plunged and it may be forced to reduce or halt dividend payments. All three of the companies listed here are obligated to pay out dividends, but concern about long-term performance is still warranted, particularly in the case of both Prospect and AGNC.