Two Ultra-High-Yield Dividend Stocks for Passive Income Seekers
ICARO Media Group
In a search for reliable dividend stocks that offer lucrative cash returns, look no further than Enterprise Products Partners (EPD) and Ares Capital (ARCC). These two high-quality companies have a track record of consistently paying generous cash dividends, making them attractive investments for those seeking passive income.
Enterprise Products Partners, an energy-services giant, stands out as a reliable dividend stock. With a history of increasing its annual cash payouts for 25 years, it currently offers a dependable 7% yield. The company operates an extensive network of pipelines, processing plants, and deepwater docks, facilitating the transportation of oil and natural gas across North America and international markets. With its volume-based contracts and fee-based business model, Enterprise is well-positioned to generate cash flow in any economic environment. As a master limited partnership (MLP), it is designed to pass profits on to investors through hefty cash distributions. The company has also invested $6.8 billion in expansion projects, expected to further boost its cash production.
Ares Capital, the largest publicly traded business development company (BDC) in the U.S., specializes in providing cash to middle-market businesses seeking to expand. These underserved businesses contribute significantly to the U.S. economy, accounting for approximately one-third of the country's gross domestic product (GDP) and over $10 trillion in annual revenue. By catering to this market segment, Ares has generated average yields of more than 10% on its investments in recent years. Despite offering sizable returns, the company mitigates risk by prudently lending to high-quality borrowers with strong competitive positions and dependable profits. Moreover, Ares diversifies its loans and investments across various defensive industries, ensuring portfolio stability. As a BDC, it is obligated to distribute at least 90% of its loan and investment income to investors, making it an attractive option for those seeking consistent returns.
Both Enterprise Products Partners and Ares Capital offer substantial yields to investors, with Enterprise currently providing 7% and Ares offering an impressive 9%. These companies have proven their ability to deliver consistent dividend growth over the years, attracting investors who are looking to build a sizable passive income stream.
Considering the global demand for oil, rising living standards, and the increasing usage of electricity and natural gas due to the adoption of artificial intelligence (AI), Enterprise Products Partners is well-positioned for long-term expansion. Ares Capital's focus on the underserved middle-market businesses offers a profitable opportunity in a vast market.
Investors looking for reliable dividend stocks with attractive yields should consider these two high-quality companies as potential options for building a passive income stream. However, it is important to conduct thorough research and consult with a financial advisor before making any investment decisions.
Disclaimer: The author of this article, Joe Tenebruso, does not hold any positions in the mentioned stocks. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.