24/7 Wall St. Insights
- Stocks that consistently raise their dividends offer investors huge total return potential.
- Dividend stocks will become more popular as interest rates decline.
- Explore this free report today: Access 2 legendary, high-yield dividend stocks Wall Street loves.
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.
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.
One critical aspect for growth and income investors when selecting stocks for their portfolios is the safety and security of a company’s dividend and the prospect of the dividend being increased regularly. We decided to screen top blue-chip companies, looking for those increasing their dividends this year and beyond.
We located a top business development company (BDC) that has been around for years and looks like an outstanding candidate to raise the dividend paid to shareholders as early as the fourth quarter of this year. Also, dividend investors should jump on this free report today.
Why do we cover dividend stocks?
Dividend stocks provide investors with reliable streams of passive income. Passive income is characterized by its ability to generate revenue without requiring the earner’s continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.
Ares Capital is a top BDC
According to its website, Ares Capital Corp. (NASDAQ: ARCC) is a market-leading BDC and one of the largest direct lenders in the United States. The company’s dynamic global platform combines powerful origination capabilities and extensive knowledge to deliver comprehensive solutions to meet private middle-market companies’ distinct and underserved financing needs across a wide range of industries.
Experienced market professionals run this high-yield dividend giant
The top members of the company’s Investment Committee have an average of 31 years of relevant financial and industry experience. This is very positive for investors as the company has a wide swath of investments over multiple categories.
What does Ares Capital focus on?
Ares Capital specializes in acquisitions, recapitalizations, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle-market companies. It also provides growth capital and general refinancing. The company 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 dividend has fluctuated over the years while going higher
The company has paid out $0.48 per quarter since March 2023, which actually dropped from the fourth quarter of 2022, when investors were paid $0.51. Ares Capital has paid dividends consistently since 2004 and has increased its dividend yearly since 2010. The company’s next dividend is scheduled for September 30, 2024. The current dividend yield for investors at recent closing prices is 9.19%.
Falling interest rates could mean a dividend increase soon
With the potential for interest rates to start heading lower as soon as September, Ares Capital may soon be in the position to lift the current payout to shareholders. As the cost of capital starts to decrease margins on the debt the company holds could widen providing ample room to lift the payout. Plus, it’s a very good bet the company would like to continue its streak of yearly dividend increases to shareholders.
Six Dividend Kings Every Passive Income Investor Should Own
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