Altria, Verizon, and Ares Capital are noteworthy options for income generation.
When the Federal Reserve increased interest rates in 2022 and 2023, many investors focused on income began to favor risk-free CDs and T-bills over stocks that pay dividends. Yet, this shift changed after the Fed cut rates six consecutive times during 2024 and 2025.
If you’re thinking about where to invest $10,000 for passive income, it might be wise to consider strong blue-chip dividend stocks instead of bonds. Stocks that offer high yields, low valuations, and solid competitive advantages are particularly appealing. The following three companies meet these criteria: Altria (M.O.), Verizon (VZ), and Ares Capital (ARCC).
Altria
Altria is the leading tobacco company in the United States. Its flagship product, Marlboro, holds a market share exceeding 40%, and it also deals in snus, e-cigarettes, and nicotine pouches. While it may appear risky to invest in a company primarily reliant on cigarette sales—especially with adult smoking rates at historic lows—Altria is navigating these challenges.
Today’s changes
(2.19%) $1.32
current price
$61.47
Key data points
Market capitalization
$103 billion
daily range
$60.10 – $61.55
52 week range
$50.08 – $68.60
volume
10M
average volume
9.2 million
gross profit
71.98%
dividend yield
6.77%
To counter declining sales, Altria has raised cigarette prices, invested more in smokeless products, streamlined operations, and increased stock buybacks. These measures have led to an increase in earnings per share (EPS) despite stagnant growth in sales.
Remarkably, the company has increased its dividend 60 times over the past 56 years. It currently offers a forward dividend of $4.24 per share, translating to a forward yield of 7.1%. Analysts anticipate that dividends will be well-supported by an expected adjusted EPS of $5.44 in 2025 and $5.59 in 2026.
With shares priced at $61, Altria appears attractive at 11 times the expected EPS. High yields and low valuations suggest limited downside risk, positioning it as a solid avenue for steady income, even amidst market declines.
Verizon
As one of the largest telecom providers in the U.S., Verizon services 146.1 million wireless customers. Lately, though, it’s faced hurdles attracting new subscribers, particularly as rivals boost promotions. Additionally, its wireline division has been decreasing as businesses transition to cloud-based communications.
Today’s changes
(2.10%) $0.82
current price
$39.83
Key data points
Market capitalization
$168 billion
daily range
$39.10 – $39.85
52 week range
$10.60 – $47.35
volume
26M
average volume
28M
gross profit
46.08%
dividend yield
6.87%
Even with these struggles, Verizon is expanding its high-growth broadband services and anticipates adding over 2.2 million new fiber subscribers. They’re also bundling more wireless services and enhancing their 5G networks with AI features to draw in enterprise customers.
Verizon has consistently raised its dividend for 19 years straight. As their restructuring efforts take hold, projections suggest that adjusted EPS may rise by 2% to $4.59 in 2025 and again by 2% to $4.69 in 2026. These figures comfortably outpace a projected future dividend of $2.76 per share, equating to a forward yield of 7.1%. At a price point of $40, it trades at less than nine times next year’s earnings.
Ares Capital
Ares Capital stands as the largest BDC globally, boasting a $28.7 billion investment portfolio across 587 companies. BDCs are crucial for lending to “middle-market” firms that often struggle to secure loans from conventional banks, primarily due to their perceived risk. In exchange, BDCs charge higher interest rates compared to traditional banks. The firm mainly serves companies generating annual EBITDA between $10 million and $250 million.
Today’s changes
(1.95%) $0.40
current price
$20.88
Key data points
Market capitalization
$15 billion
daily range
$20.41 – $20.89
52 week range
$18.26 – $23.84
volume
3.3M
average volume
4.7M
gross profit
76.26%
dividend yield
9.20%
For Ares to see growth, the Fed’s interest rates need to remain in a favorable range. If they are excessively high, while net interest income could rise, portfolio companies might struggle. Conversely, low rates might support company growth, but at the cost of net interest income.
Projected EPS may drop by 14% to $1.99 in 2025 and 2% to $1.95 in 2026, yet this would still easily cover their future dividend of $1.92 per share. While Ares doesn’t guarantee annual dividend increases, it currently offers a robust forward yield of 9.4%. Priced at $21, the stock appears undervalued at 11 times its forward P/E ratio. Once interest rates stabilize, there’s potential for earnings growth, enhancing its appeal as a safe investment.
