Title: Boost Your Pocket by an Additional Grand in 2025: Invest $11,400 in These High-Yield Stocks
If you're aiming to establish a hassle-free income stream for your golden years, you've got more than one route to that goal. Buying rental properties is a familiar strategy, but for many retirees, the associated duties are a turnoff.
An alternative landscape unfolds with dividend-paying stocks. Embrace Pfizer (PFE), PennantPark Floating Rate Capital (PFLT), and Ares Capital (ARCC), each boasting high yield averages of approximately 8.8%. With an investment of around $11,400 splashed evenly among these stocks, you'll secure yourself an annualized dividend income of $1,000.
Pfizer (PFE)
Should you have faith in income-concentrated investors, few regions are as trustworthy as the ever-growing demand for prescription drugs. As one of the globe's titans in pharmaceutical companies, Pfizer has extended its dividend payouts for a remarkable 15 consecutive years. As we speak, it offers a 6.7% yield.
Pfizer faced a setback in 2023, as its stock sank due to falling COVID-19 product sales. The company's larger income sources, such as the oral blood thinner Eliquis, confront potential patent-protected exclusivity loss in the coming years.
Future patent cliffs will put pressure on the growth rate of Pfizer's dividend payouts in the approaching decade. Although some fresh income streams will emerge, expect them to sustain -but not halt- the company's dividend increase streak for another 15 years.
Pfizer produced a sizable portfolio of investments following its COVID-19 vaccine windfall, several of which have shown promise. Though the first nine months of 2024 saw a 66% decline in COVID-19 vaccine sales to $2.0 billion, Pfizer's total revenue climbed 3% overall.
The FDA approved nine fresh drugs from Pfizer's dynamic advancement pipeline in 2023. These developments have paved the way for impressive 27% year-over-year growth in the U.S., Pfizer's most significant market.
PennantPark Floating Rate Capital (PFLT)
PennantPark Floating Rate Capital belongs to a specialty known as Business Development Companies, or BDCs, which loan to mid-sized corporations. American banks have been less involved in direct borrowing to companies for several decades.
Mid-sized businesses starved for capital often borrow at seemingly surprising rates. The average investment yield in this BDC's portfolio was an impressive 11.5% at the end of September.
Currently, PennantPark Floating Rate Capital provides a 11.1% yield with simple monthly distributions. The BDC has managed to enhance –or preserve– its payout since it initiated dividends in 2011.
This BDC's underwriting team boasts an exceptional track record. By the end of September, only two borrowers, representing 0.4% of the portfolio, had been added to non-accrual status.
Ares Capital (ARCC)
As the most significant publicly-traded BDC, Ares Capital boasts a portfolio more than 13 times larger than PennantPark's. At current pricing, it offers an 8.7% yield and a comforting level of expertise in its underwriting team.
The average member of Ares Capital's investment committee has over 30 years of experience, and this know-how shows in their work. By the end of September, only 1.3% of Ares Capital's portfolio had been deemed non-accrual.
If you harbor any concerns regarding the U.S. economy, it's challenging to find a safer stock. Despite sustained market turmoil, Ares Capital has boasted a commendable cumulative net realized loss rate of zero percent on investments over the past two decades.
If you include dividends, this stock delivered a 13% average annual return from 2004 through the present. Considering Ares Capital for diversification in your portfolio appears to be a shrewd move for the long haul.
Investing in dividend-paying stocks like Pfizer, PennantPark Floating Rate Capital, and Ares Capital can provide a steady income stream. Pfizer, with a 6.7% yield, has extended its dividend payouts for 15 consecutive years.
Regarding money management in retirement, consider Business Development Companies (BDCs) such as PennantPark Floating Rate Capital. This BDC offers a 11.1% yield with simple monthly distributions, having maintained its payout since initiating dividends in 2011.
