Want an Extra $1,000 of Dividend Income in 2025? Invest $11,400 in These 3 High-Yield Stocks. – Harris International Group LLC HIG Consortium

If you’re trying to secure a stream of passive income to support your retirement dreams, there’s more than one way to make it happen. Buying rental properties is an easy-to-understand option that you’re probably already familiar with. Unfortunately, owning rental properties comes with daily responsibilities that most retirees would rather avoid.

If you want to build a truly passive income stream, you’re probably better off buying dividend-paying stocks and holding them for the long term. Pfizer (NYSE: PFE), Pennant Park floating rate capital (NYSE: BLT)and Ares Capital (Nasdaq:ARCC) It offers very high returns averaging 8.8% at recent prices. With an average return this high, an investment of $11,400 evenly distributed among them is enough to provide you with an annual income of $1,000.

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If there’s one thing income-seeking investors can count on, it’s the steadily increasing demand for prescription drugs. As one of the world’s largest drugmakers, Pfizer has already raised its dividend for 15 consecutive years. At recent prices, it offers a yield of 6.7%.

Pfizer’s stock price fell in 2023 in response to a rapid decline in sales of COVID-19 products. It has remained depressed because some of its biggest sources of revenue, such as the oral blood thinner Eliquis, He could lose Patented exclusivity over the next few years.

Upcoming patent cliffs will pressure Pfizer’s dividend growth rate in the next decade. And with so many new revenue streams coming online, it likely won’t stop the company from increasing its payouts for another 15 years.

Pfizer has made a lot of investments with its COVID-19 vaccine windfall, and many of them are succeeding. In the first nine months of 2024, COVID-19 vaccine sales fell 66% to $2 billion. Despite the loss, total revenue increased 3% year over year.

The US Food and Drug Administration has approved nine new drugs from Pfizer’s production development pipeline in 2023. In the US, where these new drugs are already driving growth, product sales rose 27% year over year during the first nine months of 2024 .

PennantPark Floating Rate Capital is a business development firm (BDC), which means that it lends to medium-sized companies. US banks have been less inclined to lend directly to companies for decades.

Mid-sized companies are hungry to borrow capital at rates you may find surprising. The average return on debt investments in Brookings Bank Doha’s portfolio was 11.5% at the end of September.

At recent prices, PennantPark Floating Rate Capital offers an 11.1% yield and comfortable monthly payments. BDC has raised or maintained its payouts since it began paying dividends in 2011.

BDC’s underwriting team has a proven track record. At the end of September, just two borrowers representing 0.4% of its portfolio were in default.

Ares Capital is the largest publicly traded BDC with a portfolio more than 13 times larger than PennantPark’s. At recent prices, it offers an 8.7% yield and the confidence that comes with a highly experienced underwriting team.

The average member of the Investment Committee at Ares Capital has been on this committee for 30 years, and the experience shows it. At the end of September, only 1.3% of this BDC portfolio was in non-accrual status.

If you’re nervous about what the US economy holds, it’s hard to find a safer stock. Despite some serious economic downturn, Ares Capital boasts a cumulative net realized loss rate of 0% on investments over the past two decades.

If you include dividends, this stock has generated an average annual return of 13% from 2004 to the present. Adding some stocks to a diversified portfolio now to hold them for the next 20 years seems like a smart move for almost any investor.

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Corey Renoir He has positions in Ares Capital. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has Disclosure policy.

Do you want to get an extra $1,000 in dividend income in 2025? Invest $11,400 in these three high-yielding stocks. Originally published by The Motley Fool

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