Strong dividends aren’t the only appealing aspects of these three stocks.
Investors looking to sift through the array of dividend stocks can easily feel overwhelmed. There are roughly 6,000 dividend-paying stocks on U.S. exchanges alone.
Yet, some stocks rise above the rest with better dividend yields and growth potential. Here are my suggestions for the best dividend stocks to consider investing in with $10,000 right now.
1. Ares Capital
If you’re focused on yield, Ares Capital is definitely worth a look. This business development company offers a forward dividend yield of 9.6%, and it has consistently maintained or increased its dividend for over 16 years.
There’s no reason to think Ares Capital’s stock won’t perform well come 2025. Since going public in 2004, it has delivered total returns above historical levels, exceeding that of the S&P 500. I have a feeling this pattern will persist well into the future.
Part of my optimism comes from the fact that business for BDCs is improving. “The market environment is getting better,” said CEO Kort Schnabel during last month’s earnings call. He pointed out that the company has seen an uptick in the number of deals under consideration, with September showing the highest review volume this year.
Additionally, there’s a long-term shift of borrowers towards private capital that could benefit Ares Capital, especially given its extensive industry connections.
2. Brookfield Infrastructure Partners
Investing in Brookfield Infrastructure Partners gives you access to a diverse array of infrastructure assets, from cell towers and data centers to power lines and railroads.
The company boasts a generous distribution yield of 5%, with growth averaging 9% annually over the past decade. They aim to maintain a distribution increase of between 5% and 9% each year.
What I find appealing is the stable cash flow it generates, as around 85% of Brookfield’s funds from operations (FFO) are either regulated or contracted, providing some cushion against inflation.
Brookfield is likely to enhance its FFO through a thoughtful acquisition strategy, improving asset value and selling off less profitable ones to reinvest. If you prefer to avoid the tax intricacies of a limited partnership, consider buying shares in Brookfield Infrastructure Corporation. Though its dividend yield is somewhat lower, it operates under the same business model.
3. Enbridge
If a strong dividend history is what you seek, look no further than Enbridge, which has raised its dividend for 30 straight years. The potential future yield stands at 5.7%.
Similar to Brookfield, Enbridge offers a significant degree of stability. The company enjoys predictable cash flows and has a solid balance sheet, with around 98% of EBITDA being regulated or coming from take-or-pay contracts. It’s also largely insulated from tariff risks.
Enbridge has cemented its status as North America’s largest natural gas utility, transporting 20% of the natural gas used in the U.S. and 30% of crude oil produced in the continent. Their foray into renewable energy adds another dimension, as they hold around 7.2 gigawatts of power generation capacity.
Looking ahead, demand for electricity is on the rise, partly fueled by data centers for AI applications. The shift from coal to cleaner natural gas also favors Enbridge’s midstream and natural gas distribution operations.
