Most dividend investors seek solid passive income streams from quality dividend stocks. Passive income is a steady stream of unearned income that doesn’t require active traditional work. Shared ideas for earning passive income include investments like dividend stocks, bonds, mutual funds, real estate, and additional income-producing side hustles. 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, and four of our favorite companies fit the bill perfectly.
These days, investors, especially those nearing retirement, seek passive income streams to supplement Social Security, pension income, or qualified retirement account withdrawals. We constantly screen our 24/7 Wall passive income stock research database for the best ideas. Four stocks often overlooked by investors were identified, all of which pay 8% or higher dividends, and all are rated Buy by top Wall Street firms.
Why do we cover high-yield passive income 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, while garnering a Buy rating from 12 analysts. This company pays a high-yield dividend and is a Business Development Company (BDC). 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.
Wells Fargo has an Overweight rating to go with a $23 target price.
CTO Realty Growth
CTO Realty Growth is a publicly traded real estate investment trust that owns and operates a portfolio of high-quality, retail-based properties. With a rich dividend and solid upside potential, this unknown REIT makes sense for passive income investors. CTO Realty Growth, Inc. (NYSE: CTO) owns and operates a portfolio of high-quality, retail-based properties located primarily in higher-growth markets in the United States. With a 96% leased occupancy rate and a strategy targeting high-yield acquisitions, CTO offers strong income potential. It has paid dividends for 48 consecutive years, reflecting reliability. In addition, CTO’s smaller market cap and focus on retail REITs in specific growth markets make it less visible compared to larger, more diversified REITs.
The Company’s segments include:
- Income properties
- Management services
- Commercial loans and investments
- Real estate operations
CTO holds a stake in Alpine Income Property Trust, adding diversification. With a 96% leased occupancy rate and a strategy targeting high-yield acquisitions, CTO offers strong income potential. It has paid dividends for 48 consecutive years, reflecting reliability. (NYSE: PINE), a publicly traded net lease REIT.
The commercial loans and investments segment includes a portfolio of five commercial loan investments and two preferred equity investments.
Its income property operations consist of income-producing properties.
CTO Realty Growth’s business includes its investment in PINE. The portfolio of properties includes:
- Carolina Pavilion
- Millenia Crossing
- Lake Brandon Village
- Crabby’s Oceanside
- Fidelity
- LandShark Bar & Grill
- Granada Plaza
- The Strand at St. Johns Town Center
- The Shops at Legacy
- Price Plaza
Raymond James has a Strong Buy rating on the shares with a $22 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
UBS has a Buy rating with a $25 target price objective.
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.
Royal Bank of Canada has an Outperform rating with a $14 target price.
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