Investment income primarily depends on two factors. First, how much money you invest upfront—the old saying “it takes money to make money” still holds true. Second, your income depends on the yield your investments generate.
For example, if you invest $30,000 in the S&P 500, you might earn around $735 in dividends. If you put that money into 12-month U.S. Treasury bills, you could make just over $1,330.
But what if you want to earn over $3,300 this year? Consider investing $30,000 in these three high-yield dividend stocks.
1. Ares Capital (NASDAQ: ARCC)
Ares Capital (NASDAQ: ARCC) is the largest publicly traded business development company (BDC). It focuses on providing financing to middle-market companies and currently holds a diverse portfolio of 466 companies.
Like all BDCs registered as regulated investment companies (RICs), Ares Capital must distribute at least 90% of its taxable income to shareholders to avoid paying federal taxes. The company hasn’t cut its dividend in over 13 years.
- Current dividend yield: 11.1%
- Investment: $10,000
- Annual income: $1,110
Don’t be alarmed by Ares Capital’s recent stock decline. Since its 2004 IPO, its total returns have outperformed the S&P 500. Over the past five years, it has also easily beaten major indexes.
One of Ares Capital’s key strengths is risk management. The company maintains a highly diversified portfolio, with no single investment exceeding 2% of total assets. It also focuses on lending to companies in non-cyclical industries, reducing economic risk exposure.
2. Enterprise Products Partners (NYSE: EPD)
Investing another $10,000 in Enterprise Products Partners (NYSE: EPD) would add $783 to your annual income, as the company currently offers a 7.83% distribution yield.
Enterprise has consistently increased its payouts for 24 consecutive years. It raised its distribution in January 2023 and has even increased payouts multiple times within the same year in the past.
- Current dividend yield: 7.83%
- Investment: $10,000
- Annual income: $783
Enterprise’s business model allows it to provide steady distributions to investors. It operates over 50,000 miles of pipelines and other midstream assets, generating stable cash flow that is not directly tied to oil and gas prices.
Despite global efforts to reduce carbon emissions from fossil fuels, Enterprise still has growth potential. The company is also collaborating with Occidental Petroleum to capture and transport CO2 in Texas, positioning itself for future opportunities in the clean energy transition.
3. Medical Properties Trust (NYSE: MPW)
So far, we’ve covered how to earn just over $1,890 in annual income. How can we push that above $3,300? Invest $10,000 in Medical Properties Trust (NYSE: MPW).
This real estate investment trust (REIT) currently offers a massive 14.2% dividend yield, generating $1,420 in additional annual income.
- Current dividend yield: 14.2%
- Investment: $10,000
- Annual income: $1,420
However, some investors question the sustainability of Medical Properties Trust’s high dividend. One of its major tenants, Prospect, has delayed rent payments this year.
Despite this, even if Medical Properties Trust does not collect rent from Prospect, its worst-case scenario guidance for 2023 still indicates sufficient funds to maintain its current dividend.
Other investors worry that poor stock performance could offset dividend income. However, there are reasons for optimism.
- Hospital operators (Medical Properties Trust’s tenants) are receiving reimbursement increases, improving their financial stability.
- Prospect is selling assets to repay its debts, and Medical Properties Trust expects to recover most (if not all) of its unpaid rent within the next 12 to 18 months.
Final Thoughts
By investing $30,000 evenly across these three high-yield dividend stocks, you could earn over $3,300 in passive income this year:
| Stock | Investment | Dividend Yield | Annual Income |
|---|---|---|---|
| Ares Capital (ARCC) | $10,000 | 11.1% | $1,110 |
| Enterprise Products Partners (EPD) | $10,000 | 7.83% | $783 |
| Medical Properties Trust (MPW) | $10,000 | 14.2% | $1,420 |
| Total | $30,000 | Average: ~11.04% | $3,313 |
For income-focused investors, this diversified approach provides a solid mix of high-yield, stable cash flow, and growth potential.
