Dividend stocks are a favorite among investors for good reason. They provide a steady income stream and offer a promising avenue for total return. Total return, a comprehensive measure of investment performance, encompasses interest, capital gains, dividends, and distributions realized over time. In simpler terms, it’s the sum of income and stock appreciation. This means dividend stocks can boost investment success by delivering regular income and capital appreciation.
For example, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13%. That is, 10% for the increase in stock price and 3% for the dividends paid.
We screened our 24/7 Wall St. blue chip dividend universe, looking for the top stocks that pay at least a 7% dividend, and found five top companies that passive income investors should load up on this summer. Two of these are European giants, and one is a leader in Canada. With interest rate cuts likely to start at the end of the year or in early 2025, investors need to be positioned in stocks that will benefit when rates do indeed start coming down.
Why do we care about dividend stocks?
Source: relif / Getty Images
Dividend-paying stocks are among the best ways for investors to generate passive income streams. Passive income is a steady stream of unearned income that does not require active traditional work. Shared ideas for earning passive income include investments, real estate, or side hustles.
Altria
Source: Mario Tama / Getty Images
This tobacco company offers value investors a great entry point now and a rich 8.73% dividend. Altria Group Inc. (NYSE: MO) manufactures and sells smokable and oral tobacco products in the United States through its subsidiaries.
The company provides cigarettes primarily under the Marlboro brand, as well as:
- Cigars and pipe tobacco, principally under the Black & Mild brand
- Moist smokeless tobacco and snus products under the Copenhagen, Skoal, Red Seal, and Husky brands
- on! Oral nicotine pouches.
It sells its tobacco products primarily to wholesalers, including distributors and large retail organizations, such as chain stores.
Altria owns over 10% of Anheuser-Busch InBev S.A. (NYSE: BUD), the world’s largest brewer. Recently, the company announced it would sell 35 million of its 197 million shares through a global secondary offering.
Ares Capital
Source: Panasevich / iStock via Getty Images
This high-yielding business development company (BDC) pays a massive 9.37% dividend. Ares Capital Corp/ (NASDAQ: ARCC) specializes in the acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle-market companies.
It also makes growth capital and general refinancing. It prefers to invest in companies engaged in basic and growth manufacturing, business services, consumer products, health care products and services, and information technology service sectors.
The fund will also consider investments in:
- Restaurants
- Retail
- Oil and gas
- Technology
It focuses on investments in the Northeast, Mid-Atlantic, Southeast, and Southwest regions from its New York office, the Midwest region from the Chicago office, and the Western region from the Los Angeles office.
The fund typically invests between $20 million and $200 million and a maximum of $400 million in companies with an EBITDA between $10 million and $250 million. It makes debt investments between $10 million and $100 million
The fund invests through:
- Revolvers
- First-lien loans
- Warrants
- Unitranche structures
- Second-lien loans
- Mezzanine debt
- Private high yield
- Junior Capital
- Subordinated debt
- Non-control preferred and common equity
The fund also selectively considers third-party-led senior and subordinated debt financings and opportunistically finds the purchase of stressed and discounted debt positions.
Ares Capital prefers to be an agent and lead the transactions it invests in. The fund also seeks board representation in its portfolio companies.
Enbridge
Source: sarkophoto / Getty Images
This is an off-the-radar idea based in Canada, which looks poised to break out to new highs soon and pays a solid 7.49% dividend. Enbridge Inc. (NYSE: ENB) operates as an energy infrastructure company.
The company operates through five segments:
- Liquids Pipelines
- Gas Transmission and Midstream
- Gas Distribution and Storage
- Renewable Power Generation
- Energy Services
The Liquids Pipelines segment operates pipelines and related terminals in Canada and the United States to transport various grades of crude oil and other liquid hydrocarbons.
The Gas Transmission and Midstream segment invests in natural gas pipelines and gathering and processing facilities in Canada and the United States.
The Gas Distribution and Storage segment is involved in natural gas utility operations serving residential, commercial, and industrial customers in Ontario and natural gas distribution and energy transportation activities in Quebec.
The Renewable Power Generation segment operates power-generating assets, such as wind, solar, geothermal, waste heat recovery facilities, and transmission assets in North America and Europe.
The energy services segment provides energy marketing services to refiners, producers, and other customers, as well as physical commodity marketing and logistical services in Canada and the United States.
Mercedes-Benz
Source: kurmyshov / iStock Editorial via Getty Images
The German luxury car giant pays investors a 7.16% dividend. Mercedes-Benz Group AG (OTC: MBGAF) is an automotive company in Germany and internationally.
It operates through three segments:
- Mercedes-Benz Cars
- Mercedes-Benz Vans
- Mercedes-Benz Mobility
The company develops, manufactures, and sells cars and vans under the Mercedes-Benz, Mercedes-AMG, Mercedes-Maybach, and G-Class brands, as well as related spare parts and accessories.
It also provides:
- Financing
- Leasing
- Car subscription and rental
- Fleet management
- Insurance Brokerage
- Mobility services
- Digital services for charging and payment
The company, which was formerly known as Daimler, changed its name in February 2022. Founded in 1886, Mercedes-Benz has its headquarters in Stuttgart, Germany.
Four Strong Buy Dividend Aristocrats Wall Street Loves Are Trading Just Above 52-Week Lows
Ternium
Source: Tom Mihalek / Getty Images
Based in Luxembourg this company offers solid growth and a rich 7.82% dividend. Termium S.A. (NYSE: TX) manufactures and distributes steel products in Mexico, Southern Region, Brazil, and internationally.
It operates through three segments:
- Steel
- Mining
- Usiminas
The Steel segment offers slabs, hot and cold rolled products, coated products, roll-formed and tubular products, bars, billets, and other products.
Its Mining segment sells iron ore and pellets.
The Usiminas segment offers a wide range of products and services, from iron ore extraction and steel transformation to the production of capital goods and logistics.
The company also manufactures and sells various products and raw materials, such as flat steel, iron ore, and stamped steel parts for the automotive industry, and products for the civil construction and capital goods industry.
Additionally, Termium provides medical and social services, scrap, renewable energy, and engineering services, and operates as a distribution company and is actively involved in the exploration, exploitation, and pelletizing of iron ore.
∴
ALERT: Take This Retirement Quiz Now (Sponsored)
Take the quiz below to get matched with a financial advisor today.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Take the retirement quiz right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
