The stock market has historically outperformed other investment options, with the S&P 500 delivering an average 10% annual return. However, market downturns can impact investors heavily, especially with low dividend yields. Many investors are turning to alternative income sources like business development companies (BDCs) for higher dividends. BDCs lend to smaller US firms and are required to distribute 90% of their income as dividends to investors. While BDCs can be risky, selective investments like Main Street Capital Corporation (MAIN) have shown strong performance and reliable yields.

Combining BDCs with closed-end funds (CEFs) can offer both growth and income opportunities. Equity-focused CEFs have outperformed the S&P 500, with many delivering an average 8% dividend yield. Funds like Adams Diversified Equity Fund (ADX) have provided high returns through investments in blue-chip companies like NVIDIA, Amazon, Microsoft, and JPMorgan. CEFs are trading at a discount to their net asset value, making them attractive to income-seeking investors looking for stability and growth in 2026.

For investors interested in high dividend yields and price upside, a selection of top CEF picks is available for 2026, offering an average yield of 9.2% and potential 20%+ upside. These funds are positioned to provide strong income streams and capital appreciation in the coming year. By combining the strengths of BDCs and CEFs, investors can navigate market volatility and secure attractive returns on their investments.

Read more at Nasdaq.: From BDCs to CEFs, Here’s How We’re Getting 8%+ Dividends in 2026