Yo wanted to Let’s just say there are more ways to generate passive income than you can imagine. However, that expression may not be true, depending on how big your stick is and how committed you are to swinging it. However, there are many ways to generate passive income.
Buying dividend stocks is one of the best approaches. If you have a good amount of cash to invest and can find stocks with especially juicy dividend yields (and the ability to maintain those dividends), you can potentially earn some serious passive income. The good news is that it is not difficult to find these types of stocks. Investing $134,800 in these three high-yield dividend stocks could generate $10,000 in reliable passive income in 2025.
Ares Capital(NASDAQ:ARCC) is the largest publicly traded business development company (BDC). As a BDC, Ares primarily provides financing to middle market companies with market caps between $100 million and $1 billion. It has approximately $464 billion in assets under management, and more than half of its assets are first lien secured notes.
BDCs must return at least 90% of their profits to shareholders in the form of dividends to be exempt from federal income taxes, so their dividend yields tend to be quite high. Ares Capital is no exception with its forward dividend yield of 8.72%. If you invested one-third of the initial $134,800 (about $44,933), you would receive a passive income of almost $3,919 in 2025.
While there is always a risk that a given company could cut its dividend, I think Ares Capital’s dividend is solid. Chief Financial Officer Scott Lem noted in the company’s third-quarter update: “Our conservative approach to investing and financing our balance sheet has allowed us to pay a regular, stable-to-growing quarterly dividend to our shareholders for more than 15 years.”
The traditional mid-market presents a $3 trillion market opportunity. The addressable liquid credit market for companies with annual revenues of more than $1 billion adds another $2.4 trillion to Ares Capital’s total addressable market. With more companies turning to direct lending due to its convenience and speed of execution, I expect Ares Capital’s business to continue to grow and its dividends to continue to flow.
Enterprise Product Partners(NYSE: EPD) It is among the largest midstream energy companies in the U.S. It operates more than 50,000 miles of pipelines transporting natural gas liquids (NGL), crude oil, natural gas and petrochemicals. The company’s other midstream assets include 42 natural gas processing trains, 26 fractionators and facilities that can store more than 300 million barrels of liquid hydrocarbons.
Investing in limited partnerships (LPs), such as Enterprise Products Partners, comes with some additional tax filing hassles. However, I think the trouble is worth it, as Enterprise offers a forward distribution yield of 6.76%. One-third of your initial $134,800 would provide just over $3,037 in annual income.
I bet your real passive income in 2025 will be even higher. Because? Enterprise Products Partners has grown its distribution for 26 consecutive years. The chances of the company extending that streak this year look very good.
Enterprise Products Partners’ business is recession-resistant. Its income is not greatly affected by fluctuations in oil and gas prices. About 90% of its long-term contracts include inflation protection provisions. As expected, Enterprise has been able to generate strong cash flow per unit in both good and bad times for the energy sector.
Most investors are probably already familiar with Verizon Communications(NYSE: VZ). The company is a telecommunications giant that serves millions of consumers and businesses (including nearly all of the Fortune 500 companies).
Verizon has been popular with income investors for years, and still is, with its very high forward dividend yield of 6.79%. If you invested the last third of your initial $134,800 in stocks, you should receive approximately $3,051 in annual income. That brings your total passive income for 2025 from these three stocks to just over $10,000.
However, I suspect Verizon could increase that total a bit more. The company has increased its dividend for 18 consecutive years. My hunch is that in 2025 the count will increase to 19.
Could Verizon’s pending acquisition of Border communications Will it negatively impact your ability to fund the dividend? I don’t think so. Verizon expects the deal to be immediately accretive to its revenue and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).
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Keith Speights holds positions at Ares Capital, Enterprise Products Partners and Verizon Communications. The Motley Fool recommends Enterprise Products Partners and Verizon Communications. The Motley Fool has a disclosure policy.
Investing $134,800 in These 3 High-Yield Dividend Stocks Could Generate $10,000 in Reliable Passive Income in 2025 Originally Posted by The Motley Fool
