Key Highlights
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Ares Capital has consistently paid stable or increasing dividends for the last 16 years.
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Energy Transfer plans to grow its dividend by 3% to 5% each year.
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Verizon has raised its dividend for 19 years in a row.
Investing in high dividend stocks can be a straightforward way to earn some passive income. Many companies currently offer appealing dividend yields. For instance, if you were to invest $12,500 across five high-yield stocks, you could potentially see over $1,000 in passive income from dividends in the coming year.
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Dividend Stocks Where to put $1,000 now? Analysts suggest focusing on the top 10 stocks to buy now. |
Investment |
Current Yield |
Annual Dividend Income |
|---|---|---|---|
|
Ares Capital (NASDAQ:ARCC) |
$2,500.00 |
9.5% |
$237.50 |
|
Energy Transfer (NYSE:ET) |
$2,500.00 |
8.2% |
$204.00 |
|
Starwood Capital (NYSE:STWD) |
$2,500.00 |
10.3% |
$257.50 |
|
UPS (NYSE:UPS) |
$2,500.00 |
6.5% |
$163.50 |
|
Verizon (NYSE:VZ) |
$2,500.00 |
6.8% |
$171.00 |
|
Total |
$12,500.00 |
8.3% |
$1,033.50 |
Data sources: Google Finance and author calculations.
We’ll take a deeper look at these high-yield stocks below.
Ares Capital
Ares Capital is classified as a business development company (BDC). It focuses on providing capital to private middle-market companies, specifically those generating annual revenues between $100 million and $1 billion. The majority of its portfolio is linked to senior secured loans offered to companies in cyclical sectors. The company has an impressive record, boasting minimal cumulative net realized losses since it began operations. By law, Ares must distribute 90% of its profits to shareholders, and it has successfully raised its quarterly dividend for 16 years, which puts it in a strong position to maintain and potentially grow its dividends moving forward.
Energy Transfer
Energy Transfer operates as a master limited partnership (MLP), dealing with a mix of pipelines, processing facilities, and related infrastructure. In fact, around 90% of its revenue comes from stable, long-term contracts. The company aims to distribute about half of its steady cash flow to shareholders while also investing in new projects. It’s in a solid financial position and expects to boost its dividend by 3% to 5% each year over the next several years.
Starwood Capital
As a real estate investment trust (REIT), Starwood Capital has a varied investment portfolio that includes residential and commercial properties, as well as mortgage loans. This diversification has helped the company maintain its dividends even amidst market fluctuations. Recently, Starwood has ramped up its investments in a net lease platform, which secures consistent rental income, further supporting its dividend payments.
UPS
UPS has faced some challenges lately, with stock prices dropping significantly. Despite these setbacks, the company has a commitment to its dividends. While it has struggled to generate sufficient cash flow recently, UPS is focused on cost-saving measures and still expects to cover its dividend obligations. Historically, the company has maintained its dividend payouts since 1999, emphasizing its dedication to shareholder returns.
Verizon
Verizon is known for its strong cash flow, which comes primarily from customer payments for mobile and internet services. The company has been heavily investing in expanding its 5G network, which they expect to enhance subsequent earnings and cash flow in the coming years. This solid cash generation has allowed Verizon to maintain its dividend growth, with an impressive track record of 19 consecutive years of increases.
Investment Outlook
Ares Capital, Energy Transfer, Starwood Capital, UPS, and Verizon all present compelling dividend opportunities. Given their strong histories of consistent or growing dividends, they are recommended for anyone looking to boost passive income potential next year.
Is Now the Right Time to Buy Energy Transfer Stock?
Before deciding on Energy Transfer, it’s worth considering the analysis provided by financial experts, who have pointed to other stocks that they believe hold greater promise for returns. While Energy Transfer has its merits, some analysts suggest there might be better options in the current market.
