According to the Internal Revenue Service (IRS), passive income generally includes earnings from rental activity or any trade, business, or investment in which the individual does not materially participate. It can also include income from limited partnerships, stocks, bonds, and other similar enterprises in which the investor is not actively involved. The more passive income can help cover rising costs, such as mortgages, insurance, taxes, and other expenses, the easier it is for investors to set aside money for future needs as they prepare for retirement. Dependable, recurring dividends are a recipe for success.
24/7 Wall St. Key Points:
- As summer starts to wind down, investors are looking for rates to head lower in September
- High-yield stocks paying 8% and more will be in demand as rates fall the rest of the year
- Safe stocks yielding 8% and more can generate massive passive income streams
- Are high-yielding dividend stocks a good fit for your portfolio? Why not meet with a financial advisor near you for a comprehensive review of your portfolio? Click here now to get started finding one. (Sponsored)
The more passive income can help cover rising costs, such as mortgages, insurance, taxes, and other expenses, the easier it is for investors to set aside money for future needs as they prepare for retirement. Dependable recurring dividends from quality, high-yield stocks are a recipe for success. We screened our 24/7 Wall St. high-yield dividend stock database, looking for companies that pay a dividend of 8% or higher, which can be deemed safe for investors. We considered the length of time the dividends were paid, the company’s length of business, and other factors that quantified the risk-reward for Baby Boomers and others seeking passive income.
Why do we cover High-Yield dividend stocks?
While not suited for everybody, those trying to build strong passive income streams can do exceptionally well with some of these top companies in their portfolios. Paired with more conservative blue-chip dividend giants, investors can employ a barbell approach to generate substantial passive income streams.
Ares Capital
The company specializes in providing financing solutions for the middle market and appears poised to reach new highs. This company is a high-yielding Business Development Company (BDC) that pays a substantial dividend. Ares Capital Corporation (NASDAQ: ARCC) | ARCC Price Prediction specializes in 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, healthcare products and services, and information technology sectors.
The fund will also consider investments in industries such as:
- Restaurants
- Retail
- Oil and gas
- Technology sectors
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, with a maximum investment of $400 million, in companies with an EBITDA between $10 million and $250 million per year. 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 acquires stressed and discounted debt positions.
Ares Capital Corporation prefers to be an agent and lead the transactions in which it invests. The fund also seeks board representation in its portfolio companies.
LyondellBasell
LyondellBasell is a global leader in developing and supplying materials that enable packaging, health, and transportation solutions. This blue-chip chemical giant offers a long history of strong performance. LyondellBasell Industries N.V. (NYSE: LYB) operates as a chemical company in:
- the United States
- Germany
- Mexico
- Italy
- Poland
- France
- Japan
- China
- the Netherlands
- Internationally
The company operates in six segments:
- Olefins and Polyolefins-Americas
- Olefins and Polyolefins-Europe, Asia, International
- Intermediates and Derivatives
- Advanced Polymer Solutions
- Refining Technology
It produces and markets olefins and co-products, including polyethylene and polypropylene, propylene oxide and its derivatives, oxyfuels and related products, as well as intermediate chemicals such as styrene monomer, acetyls, ethylene oxide, and ethylene glycol.
In addition, the company produces and markets compounding and solutions, including:
- Polypropylene compounds
- Engineered plastics, masterbatches
- Engineered composites, colors, and powders
- Advanced polymers, including catalloy and polybutene-1
- Refines heavy, high-sulfur crude oil, other crude oils, and refined products, including gasoline and distillates
Furthermore, it develops and licenses chemical and polyolefin process technologies, manufactures and sells polyolefin catalysts, and serves applications in food packaging, home furnishings, automotive components, and paints and coatings.
Wells Fargo has an Outperform rating with a $85 target price objective.
Plains All American Pipeline
This stock has been locked in a tight trading range and appears poised to break out, while offering a dependable dividend yield. Plains All American Pipeline, L.P. (NYSE: PAA), through its subsidiaries, engages in the pipeline transportation, terminalling, storage, and gathering of crude oil and natural gas liquids (NGL) in the United States and Canada.
The company operates in two segments:
- Crude Oil
- Natural Gas Liquids (NGL).
The Crude Oil segment offers:
- Gathering and transporting crude oil through pipelines
- Gathering systems
- Trucks, barges, or railcars
- Terminalling, storage, and other facilities-related services and merchant activities
The Natural Gas Liquids segment provides:
- Gathering
- Fractionation
- Storage
- Transportation
- Terminalling activities
- Ethane, propane, normal butane, iso-butane, natural gasoline, and crude oil refining processes
Rithm Capital
With a strong and secure dividend, this stock is a favorite among top Wall Street analysts. Rithm Capital Corp. (NYSE: RITM) is a global asset manager focused on real estate, credit, and financial services. The Company makes direct investments and operates several wholly-owned operating businesses.
Its segments include
- Origination and Servicing
- Investment Portfolio
- Residential Transitional Lending
- Asset Management
The Company’s businesses include Sculptor Capital Management, Inc., an alternative asset manager, as well as Newrez LLC and Genesis Capital LLC, mortgage origination and servicing platforms.
Sculptor Capital Management, Inc. offers asset management services and investment products across credit, real estate, and multi-strategy platforms through commingled funds, separate accounts, and other alternative investment vehicles.
Genesis Capital LLC specializes in originating and managing a portfolio of primarily short-term business-purpose mortgage loans to fund single-family and multi-family real estate developers, offering construction, renovation, and bridge loans.
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