Investing

3 High-Yield Dividend Stocks to Buy in 2025

Ian Cooper

Published: January 10, 2025 4:38 pm

One of the best ways to protect your portfolio and pull in passive income is with high-yielding dividend stocks. 

Key Points About This Article

• One of the best ways to protect your portfolio and see passive income is with high-yield dividend stocks.
• Look at Realty Income (O), for example. With a yield of just over 6%, it’s well above the 3.37% yield on the S&P 500 with monthly payouts.
• Do you own the right dividend stocks for 2025? An experienced financial advisor can help with a full portfolio review. Click here now to get started finding the right one for you. (sponsored)

Look at Realty Income (NYSE:O), for example.

With a yield of just over 6%, which is well above the 3.37% yield on the S&P 500, Realty Income has a long history of monthly dividend payouts. Strengthening its yield, the company holds a diversified portfolio of properties that prove stable rental income for the company.  Even better, the company just increased its monthly dividend of $0.264 per share, which is payable January 15 to shareholders of record as of January 2.

And, if you missed the January dividend, another one is on the way in just weeks.

Ares Capital

With a yield of 8.7%, Ares Capital (NASDAQ:ARCC) is a business development company (BDC).

As a BDC, it’s helping provide the necessary capital for privately held, lower-middle market companies. By owning the stock, an investor can indirectly participate in its success of doing such transactions by way to regular dividend payments. In addition, by investing in a BDC like ARCC, you’re gaining exposure to a diversified pool of privately-held companies you wouldn’t have direct access to.

We also have to consider that BDCs are often attractive investments for income-focused investors because of their potential for higher yields.

Plus, RBC Capital analysts just reiterated a buy rating on ARCC with a price target of $23. The company also just paid out its quarterly dividend of 48 cents per share on December 30. The next one should be out by March.

Enbridge (ENB)

With a dividend yield of 6.14%, Enbridge (NYSE:ENB) is another one of the lower-risk, high-yield dividend stocks to consider. The company holds the second-longest natural gas pipeline in the U.S., North America’s longest crude oil pipeline, and a high-growth, renewable power generation business. Recent earnings haven’t been too shabby either.

In its most recent quarter, the company’s EPS of 39 cents did miss by a penny. But revenue of $10.66 billion, up 48% year over year beat by $5.77 billion.

“Q3 net income rose to C$1.29B (~US$1.04B), or C$0.59/share, from C$532M, or C$0.26/share, in the year-earlier quarter, and operating revenues jumped 51% Y/Y to C$14.88B, due to higher revenue on the Mainline pipeline system from higher tolls, higher contributions from U.S. Gulf Coast natural gas storage assets, and contributions from recently acquired assets,” as noted by Seeking Alpha. ENB also raised its dividend to C$0.9425, which is payable on March 1 to shareholders of record as of February 14.

Even better, a good number of firms just raised their price targets on ENB, including National Bank, CIBC, BMO Capital, Scotiabank, and RBC Capital.

“The company’s core businesses remain positioned to benefit from favorable secular energy trends in North America that support the delivery of multi-year earnings, cash flow and dividend per share growth,” RBC added.

Kinder Morgan 

With a yield of 4.14%, Kinder Morgan (NYSE:KMI) is also an attractive opportunity at $27.80.

For one, Kinder Morgan is the biggest natural gas pipeline operator with a 40% market share.

Two, KMI could be a strong beneficiary of the artificial intelligence data center energy boom. In fact, as reported by CNBC, “Natural gas is expected to supply 60% of the power demand growth from AI and data centers, while renewables will provide the remaining 40%, according to Goldman Sachs’ report published in April.”

Three, the company recently forecasted above-consensus 2025 earnings.

For the year, the company is guiding for adjusted EPS of $1.27 a share, which is slightly above expectations of $1.25. It also projected an annualized dividend of $1.17 a share in the new year, which marks the eighth consecutive year of increased dividends.

“Our end-of-year 2025 net debt-to-adjusted EBITDA ratio is forecast to be 3.8x, which is in the lower part of our 3.5x-4.5x leverage target range and provides good capacity for additional opportunistic investment,” CEO Kim Dang said, as quoted by Seeking Alpha.

Plus, KMI expects even more growth from stronger natural gas market fundamentals.