### Attractive Dividend Stocks Amid Rising Market Trends

As the S&P 500 reaches unprecedented heights, income-focused investors increasingly find it challenging to locate high-yield dividend stocks. Despite that, Ares Capital and EPR Properties stand out with striking dividend yields exceeding 8%.

Ares Capital Corporation, the largest publicly traded business development company globally, offers significant appeal. This specialized lender serves a varied set of midsize enterprises, filling the void left by U.S. banks reducing direct lending for years. Ares Capital’s remarkable quarterly dividend has grown by 26% over the past decade, currently presenting an attractive 8.9% yield. At the close of June, the company had a diversified portfolio comprised of 525 companies, with no single entity controlling more than 1.8% of the total. This diversification, coupled with a stable financial track record, has awarded Ares an investment-grade credit rating, recently enabling it to sell $850 million in five-year notes with a modest 5.95% coupon rate. Notably, the midsize businesses receiving loans from Ares yield a lucrative average of 12.2% from debt securities in its portfolio.

EPR Properties, a real estate investment trust (REIT), caters to experiential ventures, providing an impressive 9.3% dividend yield at recent stock prices. This REIT has faced pressure due to a perceived stagnation in its recovery, mainly because underperforming theaters made up 37% of its portfolio as of June. Looking forward, EPR’s theater segment only accounted for a minimal 0.3% of its total investment expenditures in the first half of 2024. The REIT has expanded its investments in eat-and-play facilities like Top Golf, which are becoming increasingly popular. Though total revenue saw a minor decline, a strategic shift towards non-theater tenants has enhanced profitability.

EPR Properties resumed its monthly dividend payments at a reduced rate in July 2021 after halting them during the COVID-19 pandemic. Since resuming these payments, the REIT has increased its dividend by 14%. Additionally, the funds from operations (FFO), a measure used to assess REIT earnings, shows promising potential for further dividend increases. In fact, EPR Properties’ management forecasts an adjusted FFO range of $4.76 to $4.96 per share for this year, comfortably supporting and possibly increasing the current annualized payout of $3.42 per share.

Investors have learned the importance of diversification from the recent pandemic, yet EPR Properties’ resilience through such a challenging period underscores its ability to navigate unforeseen obstacles. Acquiring shares of these high-dividend payers could be a promising strategy for those seeking to bolster their passive income streams over the long term.