dividend

Diving into the stock market can be an excellent way to build lasting wealth. One type of stock that you may find appealing is dividend stocks. A study conducted by Hartford Funds found that, over a 50-year period, dividend stocks consistently outperformed non-dividend payers with lower volatility.

Dividend Kings are companies that have consistently increased their dividends for 50 years or longer. These stalwarts have earned the trust of their shareholders and consistently demonstrated a proven ability to grow payouts year after year, regardless of the economic conditions.

If you’re looking to boost your portfolio with a passive income component and seek steady returns, here are three dividend stocks that could make excellent additions today.

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Federal Realty Investment Trust

Federal Realty Investment Trust (FRT -0.59%) operates as a real estate investment trust (REIT). It specializes in high-quality retail-based properties, which include shopping centers and mixed-use properties. As a REIT, Federal Realty is required to distribute 90% of its taxable income to shareholders, making it a popular choice among dividend investors.

Federal Realty holds the distinction of being the only REIT to earn Dividend King status, having raised its payout for 57 consecutive years. This impressive streak is a testament to its diversified holdings and strong balance sheet in what can be a volatile real estate market.

The REIT primarily invests in real estate regions characterized by high population density and affluent populations. This approach helps insulate it from changing economic conditions, as more affluent households can be resilient in the face of recessions or inflation in the economy. With a strong business and robust development pipeline supported by steady funds from operations growth, Federal Realty is a quality dividend stock to consider buying today.

Cincinnati Financial

Cincinnati Financial (CINF 0.06%) provides property and casualty (P&C) insurance to corporate and individual customers. It’s one of the top 25 largest P&C insurers in the United States.

In the insurance industry, underwriting profitable policies is the name of the game. Insurers like Cincinnati Financial operate in a highly competitive environment, so accurately assessing risk and pricing policies is crucial.

Over the past five years, Cincinnati Financial’s combined ratio has averaged a solid 94.6%. This means that for every $100 in premiums it writes, it has generated roughly $5 in profit. In the highly competitive insurance industry, the combined ratio tends to average around 100%, so consistently generating an underwriting profit is key to sustainable, long-term growth.

Cincinnati Financial boasts an impressive history of raising its annual cash dividend over the past 65 years. Only seven companies can boast a longer streak. Its long track record is a testament to its sound underwriting and stellar capital management. With a conservative dividend payout ratio of 29%, Cincinnati Financial is well-positioned to keep rewarding investors with a growing dividend.

S&P Global

S&P Global (SPGI -0.03%) provides credit ratings to entities that issue debt worldwide and serves an important role in financial markets. As a credit rating agency, it provides opinions about credit risk and the ability and willingness of entities to meet their financial obligations. Investors rely on these opinions on credit quality to help manage risk.

The company also owns the S&P 500 index (in a joint venture with CME Group), along with a variety of other index benchmarks used by professional investors. Finally, it provides data and analytics, such as through its Capital IQ Pro platform, which offers another stream of cash flow that’s uncorrelated with credit ratings.

S&P Global enjoys a robust 50% share of the credit ratings market, giving it a strong competitive advantage, especially considering the importance of credit ratings for the global economy. With its stable and diverse business model and strong balance sheet, S&P Global has grown its dividend payout for 52 consecutive years and has a solid platform to keep this streak going.

If you have $5,000 you can afford to invest in the stock market, a good option is to put that money into an investment that can generate recurring dividend income, while also having the potential to rise in value in the long run. That can put your money to work in multiple ways, potentially accumulating gains over time while also generating some good cash flow for your portfolio.

Exchange-traded funds (ETFs) can be excellent options to consider because they can give you a balanced investment into many stocks, possibly even hundreds or thousands of them. That means you don’t have to worry about how individual stocks are doing.

From a dividend investor’s point of view, that also means you don’t have to worry about the dreaded risk that a company will announce a dividend cut or suspension. I’ve been there, and even investing in seemingly safe dividend stocks can still end up with disappointment later on. The best way to protect yourself against that is with a well-diversified dividend ETF.

A great option is the Schwab U.S. Dividend Equity ETF (SCHD -0.44%).

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The Schwab U.S. Dividend Equity ETF offers a terrific yield

One of the most appealing features of this Schwab fund is undoubtedly its high dividend yield. At 3.7%, that’s a far higher payout than what you’d collect if you simply tracked the S&P 500, as its average yield is just 1.2%.

To put that into perspective, if you invested $5,000 into the ETF today, you could expect to collect approximately $185 in dividends over the course of an entire year. In comparison, however, a $5,000 investment in an ETF tracking the S&P 500 would only generate $60 per year, given the index’s low yield.

What’s great is that, because the fund invests in around 100 stocks, your eggs aren’t all in one basket and dependent on one or even a couple of high-yielding stocks.

The fund focuses on safe dividend stocks and keeps its fees minimal

The Schwab U.S. Dividend Equity ETF tracks the Dow Jones U.S. Dividend 100, an index that prioritizes quality and sustainability when it comes to dividends. It isn’t simply adding high-yielding stocks into its portfolio. Some of the big names in the Schwab portfolio include Verizon Communications, PepsiCo, and Chevron. These are blue chip dividend stocks that are known for not only regularly paying dividends, but also for growing their payouts over time. Not every stock will have the same robust background, but it’s a good indication of the quality of the dividend stocks the fund is invested in.

Another solid feature of the fund is that its expense ratio is just 0.06%. That means if you invested $5,000, your annual fees from holding the ETF would be just $3. That’s less than the price of a cup of coffee in most places, and in exchange, you get an investment with a diversified position in some of the best dividend stocks in the world.

A great ETF to buy and forget about

The Schwab U.S. Dividend Equity ETF isn’t a high-powered growth investment, but it can be a dependable investment to hold in your portfolio for many years. When the market was in turmoil in 2022 and the S&P 500 crashed, this Schwab fund’s total returns (which include reinvested dividends) were a negative 3%. That’s a far cry from the performance of the broad index, which lost 18% in value.

This year it’s been a different story, with the Schwab U.S. Dividend Equity ETF’s total returns coming in at just 2% versus nearly 14% for the S&P 500. That’s the trade-off that you often need to take when opting for safety and security. You’ll sacrifice some gains when times are good, but in return, you can minimize your losses when times are tough.

Along the way, you can still collect an above-average dividend from this ETF without incurring significant fees. That’s why the Schwab U.S. Dividend Equity fund can be a suitable option to hang on to for the long haul.

It is tempting for a dividend investor to simply select the highest yielding stocks. The problem with that approach is that it exposes you to the risk of dividend cuts if the yield is too high for the company to support.

Which is why dividend lovers also need to consider dividend history as they look at a company. And, when you do that, you’ll find that companies like Pfizer (PFE -0.50%), which has a huge 7.2% yield, don’t match up to companies like Johnson & Johnson (JNJ 1.03%), Omega Healthcare (OHI -0.50%), and Merck (MRK -0.03%).

Here’s what you need to know about these three healthcare dividend stocks.

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1. If you need the money to live, dividend reliability is key

Pfizer is actually a well-run company. Sure, it is facing hard times right now, but it has dealt with difficult periods before and survived. It is highly likely that it will do so again, noting that some of the issues it is dealing with are a natural part of the pharmaceutical industry. For example, patent expirations are on the horizon, and it needs to find new drugs to replace older ones. Investors rightly worry about such patent cliffs, but they aren’t the least bit unusual for drug makers.

That said, Pfizer’s huge 7.2% dividend yield is also a reflection of the downbeat view among regulators and consumers around vaccines. So there’s more to watch here than the normal industry swings. But the same things could, largely, be said of Merck, one of Pfizer’s competitors. The drugs and vaccines in question are different, but the worries are basically the same. You could easily buy either one if you wanted exposure to the pharma sector. Why pick Merck and its less impressive, though still high, 4% yield?

The answer is simple. Merck has a long history of supporting its dividend even through difficult periods. Pfizer cut its dividend in 2009 when it bought Wyeth. The acquisition was good for Pfizer, but the dividend cut was terrible for income investors. If dividend consistency matters to you, Merck wins here.

Data by YCharts.

2. Omega Healthcare has survived the hardest of times

If Merck’s dividend resilience over time impresses you, you’ll probably find Omega Healthcare even more exciting. The company owns senior housing facilities, which were hard hit during the COVID-19 pandemic. To put it simply, older people in group settings were at severe risk of dying from the pandemic. That had the exact negative impact you would expect on nursing homes and similar properties. And yet Omega Healthcare, a senior housing-focused real estate investment trust (REIT), didn’t cut its dividend like many of its competitors.

It didn’t raise the dividend, either, but it did stand behind the payment, realizing that investors were relying on that quarterly check. That should make Omega’s nearly 6.4% yield look a lot more attractive, even for more conservative dividend investors.

Data by YCharts.

And don’t forget that the pandemic is now mostly in the rearview mirror. The second quarter of 2025 saw Omega invest in new assets, which should help spur growth and post an 8% year-over-year increase in adjusted funds from operations (FFO). With the business looking like it is on the mend, the dividend is likely more secure now than it has been in years.

3. The Dividend King approach

If you are looking to stick to only the most reliable of dividend companies, however, then you’ll want to buy a Dividend King. These are stocks that have raised their dividends for over 50 years. Johnson & Johnson’s string of over 60 annual dividend increases makes it the healthcare stock to beat when it comes to dividend reliability. Of course, investors know how reliable this drug and medical device maker is, so the stock is usually afforded a premium valuation. Right now, the yield is around 3% or so, the lowest on this list. However, it is still higher than the 1.7% yield of the average healthcare stock, making J&J a good pick for investors who place a high value on dividend consistency.

Clearly, Johnson & Johnson has its own warts to consider. For example, it faces all of the same issues in the pharma space as Merck and Pfizer. It is also dealing with a lingering class action lawsuit around talcum powder that it once sold. So even this Dividend King isn’t risk-free. But if history is any guide, you can count on the dividend continuing to be paid through thick and thin.

Don’t just jump at the highest yield

Although there’s nothing particularly wrong with Pfizer, a comparison to Merck, Omega, and J&J shows that a high yield isn’t the only factor you should consider if you are looking for a good dividend stock. If reliable dividend stocks are what you want populating your dividend portfolio, you will clearly want to look past Pfizer’s yield. And when you do that, you’ll likely find that Merck, Omega, and Johnson & Johnson all offer a more compelling combination of income reliability and yield.

Vail Resorts (MTN -2.58%) runs a global network of destination and local ski areas, anchored by the Epic Pass. Its assets are iconic and irreplaceable, making it a stock worth keeping on any investor’s watchlist. After all, its competitive advantage is arguably insurmountable, as it’s incredibly difficult to get regulatory approval for new ski resorts. Despite these reasons to love the company, the stock is struggling.

After a tough stretch for the shares, the company’s dividend yield now sits at around 6%, likely drawing fresh interest from many income-focused investors. The yield alone, however, does not answer whether the stock is a buy. The better lens is business momentum, cash generation, and today’s valuation.

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Recent performance and cash generation

In Vail’s third quarter of fiscal 2025, Vail reported resort net revenue roughly flat year over year and earnings before interest, taxes, depreciation, and amortization (EBITDA) at just 1% lower, reflecting the ballast of pre-sold pass revenue despite a decline in skier visits. Management noted that destination passholder visitation improved late in the season, while uncommitted lift-ticket demand trailed expectations.

The company also updated fiscal-year resort reported EBITDA guidance to a range of $831 million to $851 million (quite substantial in the context of the company’s market capitalization of $5.3 billion), pointing to continued cost discipline and the benefit of its two-year resource efficiency plan.

Early pass trends heading into the 2025/2026 season were mixed but stable through late May: units down about 1% and sales dollars up roughly 2%, aided by pricing. Importantly for dividend investors, Vail’s trailing-nine-month cash from operations was about $726 million, providing ample flexibility to fund capex, repurchases, and dividends even in a year with choppy in-season visitation. Net debt stood near $2.23 billion at quarter-end, consistent with the balance-sheet posture Vail has maintained through cycles.

The investment case at a 6% yield

Vail’s quarterly dividend payments pencil out to roughly $8.88 per share annually, or something on the order of $330 million a year at the current share count. Management has been explicit: Today’s dividend level is underpinned by strong cash generation, but any future increases will depend on “a material increase in future cash flows,” the company said in its most recent earnings release. In other words, investors should not expect automatic hikes until the business has clearly stepped up its earnings and cash flow run rate.

Fortunately, the stock’s valuation is reasonable. In other words, Wall Street clearly isn’t expecting much. The stock trades at just 6.3 times the midpoint of management’s forecast for full-year resort reported EBITDA, a fair price for a capital-intensive, seasonal operator with substantial net debt.

Importantly, the company also returns cash to shareholders indirectly through stock buybacks. The board also expanded the buyback authorization in June, giving Vail the option to retire shares when it sees value. These dynamics — healthy cash generation and a disciplined capital return framework — support the case that investors are being paid to wait for steadier demand. In addition, if execution goes as well as management hopes, there are levers to improve margins through a companywide efficiency plan.

The risks, however, are significant. Weather is the obvious variable, but the latest quarter also underscored sensitivity to lower lift-ticket visitation from non-pass guests, even as passholders remained resilient. Additionally, macro volatility can defer pass purchase decisions, a labor-intensive operating model adds cost pressure, and Vail is executing leadership changes with Founder-Chair Rob Katz back as CEO. None of these is new to the story, yet they argue for patience and a meaningful margin of safety when estimating the stock’s intrinsic value before buying shares.

Put together, a near-6% dividend backed by robust operating cash flow and a pragmatic capital allocation stance makes the shares a solid option for income-oriented investors who can tolerate seasonal swings. But the dividend is not a growth engine on autopilot. For investors comfortable with weather and demand variability — and who value a large, pass-anchored ski network — today’s price looks reasonable. But those seeking faster dividend growth may want to watch pass sales and early season trends, waiting for signs of an inflection, before buying the stock.

Some decisions are tough to make. Others are so easy that they don’t require much thought and are practically no-brainers.

Three Motley Fool contributors believe they’ve identified dividend stocks to buy in September that fall into the latter category. Here’s why they picked Abbott Laboratories (ABT 0.81%), AbbVie (ABBV -0.85%), and Eli Lilly (LLY -0.20%).

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A tremendous track record of stability and dividend growth

David Jagielski (Abbott Laboratories): A top blue chip dividend stock to hold for the long term is that of Abbott Laboratories. It may not be the flashiest stock or have the highest dividend yield, but the long-term stability and consistency it offers investors makes it a no-brainer option for not only years but potentially decades.

Currently, the stock pays 1.8%, which is a bit higher than the S&P 500 average of 1.2%. It’s not a huge yield by any means, but the big payoff for investors is from simply hanging on to the stock. That’s because Abbott Laboratories is a Dividend King — it has been raising its dividend for decades. Last December, it announced a 7.3% increase to its payout, and with the significant bump up, Abbott extended its streak to 53 consecutive years of increases. And the healthcare company has been generous with its increases; the stock’s dividend has risen by over 60% since 2020.

The company’s fundamentals also look solid, which is key when selecting a quality dividend stock. This year, excluding COVID-19 testing sales, its revenue will grow at an organic rate between 7.5% and 8%. Its broad business encompasses pharmaceuticals, nutrition, diagnostics, and medical devices. As a leading company in the healthcare industry with many ways to grow in the long run, Abbott makes for a great income-generating investment to buy and hold.

Checking all the boxes — income, growth, and value

Keith Speights (AbbVie): AbbVie was spun off from Abbott Laboratories in 2013, and inherited its impressive track record of dividend increases. Its current forward dividend yield of roughly 3% is well above its parent company’s, though, making AbbVie a great choice for income investors.

Growth investors have something to like about this stock, too. AbbVie quickly shook off any effects from the patent cliff it faced in 2023 with its former top-selling drug, Humira. Its shares have outperformed the S&P 500 so far in 2025, and over the last five years.

Even better, AbbVie expects to deliver solid earnings growth through the rest of the decade. Soaring sales for Skyrizi and Rinvoq, its two successors to Humira, should help the company meet its goals. The company also has other big winners, including cancer drug Elahere and migraine therapies Qulipta and Ubrelvy. Vyalev, which was approved by the U.S. Food and Drug Administration in October 2024 for treating Parkinson’s disease, has built strong sales momentum as well in its first year on the market.

Is AbbVie an attractive stock for value investors, too? Yep. The big drugmaker’s shares trade at only 15 times forward earnings. Its price-to-earnings-to-growth (PEG) ratio, which reflects analysts’ five-year projections for earnings growth, is a super-low 0.4.

Few stocks offer something for income, growth, and value investors. But AbbVie checks all the boxes.

Much more than just a weight loss stock

Prosper Junior Bakiny (Eli Lilly): Over the past few years, Eli Lilly has dominated the headlines in the pharmaceutical industry, and with good reason: The drugmaker has established itself as the leader in the rapidly expanding weight loss market. Both Lilly’s lineup, with brands like Mounjaro and Zepbound, and its pipeline in this field look incredibly exciting.

The company has generated strong revenue and earnings growth in recent quarters, and is likely to continue doing so. However, it would be a mistake to think that Eli Lilly is just a weight loss stock. The company has a lot more to offer. Its lineup features blockbusters outside of its area of expertise, including cancer treatment Verzenio. Recent approvals, such as Ebglyss for eczema, could also achieve over $1 billion in annual sales at their peak.

Then there’s the pipeline, which boasts promising programs beyond diabetes and obesity. Lilly’s investigational drug lepodisiran completed phase 2 studies in reducing lipoprotein(a), a substance in the body that, in high concentrations, is strongly linked to various cardiovascular problems. So along with excellent financial results, investors can expect robust clinical and regulatory progress in the foreseeable future.

Lastly, the stock is an excellent pick for income seekers. It’s true that Lilly’s forward yield is a modest 0.8% — but the company has increased its dividend by an impressive 200% in the past decade. Eli Lilly’s excellent business and remarkable dividend track record make it a no-brainer stock to buy.

You could do a lot of things with $2,000. Spend it. Bury it in jars in your yard. Buy lottery tickets. However, I think a smarter approach is to use the money to buy stocks that pay attractive dividends.

The obvious question that arises is: Which dividend stocks should you buy? There are thousands of alternatives, some of them good and some not so good. Here are my picks for the smartest dividend stocks to buy with $2,000 right now.

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1. Enbridge

Enbridge (ENB 0.60%) is a Dividend Champion with 30 consecutive years of dividend increases. Its forward dividend yield currently stands at 5.63%. The company should be able to continue increasing its dividend, with expected distributable cash flow (DCF) of around 3% through next year, which should jump to 5% after 2026.

A strong underlying business supports those dividend payouts. Roughly 30% of the crude oil produced in North America and 20% of natural gas consumed in the U.S. flow through Enbridge’s pipelines. The company ranks as the largest natural gas utility in North America based on volume. And it has expanded beyond fossil fuels, with over $8 billion committed to renewable energy projects that are either currently in operation or under construction.

The stability of Enbridge’s relatively low-risk business model should be especially appealing now, considering the uncertainty surrounding a potential U.S. government shutdown, tariffs, and weak jobs reports. I like that the company has been able to consistently deliver solid earnings per share and DCF per share during turbulent times, including the financial crisis of 2007 through 2009 and the COVID-19 pandemic.

But Enbridge isn’t just a dividend stock to buy as a defensive move. The energy infrastructure leader has around $50 billion of growth opportunities through 2030, with nearly half of the total related to expanding its gas transmission business.

2. Realty Income

Realty Income‘s (O 0.50%) track record of 30 consecutive years of dividend increases matches Enbridge’s. Its forward dividend yield of 5.43% is nearly as high as Enbridge’s. Realty Income offers one nice advantage compared to the energy company, though: It pays a monthly rather than quarterly dividend.

This real estate investment trust (REIT) owns over 15,600 properties. Its tenant base represents 91 industries, including convenience, grocery, and home improvement stores, as well as restaurants. None of Realty Income’s tenants generate more than 3.5% of its total annualized contractual rent.

Realty Income shares another similarity with Enbridge: remarkably stable cash flows. The REIT has generated positive cash flow in every year since 2004 except for 2020, when the COVID-19 pandemic disrupted the global economy. Even then, though, its total operational return remained positive.

What about growth? Realty Income checks off that box, too. It’s targeting a total addressable market of roughly $14 trillion. Around 60% of that market is in Europe, where the REIT faces only one major rival.

3. Verizon Communications

Verizon Communications (VZ -0.35%) has increased its dividend for 19 consecutive years. While that isn’t as impressive as Enbridge’s and Realty Income’s streaks of dividend hikes, Verizon beats them in another way, with its ultra-high dividend yield of 6.35%.

I think Verizon’s dividend program is on solid footing. The telecommunications giant recently increased its free cash flow guidance for 2025 to a range of $19.5 billion to $20.5 billion, up from its previous forecast of $17.5 billion to $18.5 billion. Over the last 12 months, Verizon has paid out dividends of $11.4 billion. This reflects plenty of free cash flow cushion to continue growing the dividend.

Although the telecom market is highly competitive, Verizon more than holds its own. The company generated the highest wireless services revenue in the industry in the second quarter of 2025. Its broadband market share continued to grow. Verizon was also recently recognized by J.D. Power as having the best wireless network quality for the 35th time.

The company’s pending acquisition of Frontier Communications should boost growth over the near term, with the transaction expected to close in early 2026. Verizon could have strong long-term growth prospects as well as a 6G wireless networks launch in a few years.

The energy sector is a great spot to find high-quality, high-yielding dividend stocks. It has the highest dividend yield in the S&P 500 index at 3.4%, nearly three times higher than the index (1.2%). Many energy companies have built resilient businesses that can withstand the volatility of energy prices, putting their high-yielding payouts on very sustainable foundations.

My top three energy stocks for dividend income right now are Energy Transfer (ET -0.23%), Chevron (CVX -0.64%), and Brookfield Renewable (BEPC 0.21%) (BEP 0.92%). These companies offer high-yielding and steadily rising payouts backed by strong financial profiles.

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A very low-risk, high-yielding payout

Energy Transfer currently has a yield of more than 7.5%. The master limited partnership (MLP), which sends investors a Schedule K-1 Federal Tax Form, backs that payout with a very strong financial profile. It generates very stable cash flow as fee-based agreements supply 90% of its annual earnings. The company produced nearly $4.3 billion in cash during the first half of this year, $2 billion more than it distributed to investors. Energy Transfer retained that surplus cash to invest in organic expansion projects and maintain its strong financial profile.

The MLP’s leverage ratio is currently in the lower half of its 4 to 4.5 times target range. That puts Energy Transfer in the strongest financial position in its history. This provides it with ample financial flexibility to invest in organic expansion projects and make strategic acquisitions.

Energy Transfer expects to invest $5 billion in growth capital projects this year, with the majority of these projects coming online by the end of next year. They’ll provide the MLP with meaningful incremental cash flow. It recently approved several more projects, including the $5.3 billion Desert Southwest Pipeline that should enter service by the end of the decade. These growth projects support its plans to increase its cash distribution to investors by 3% to 5% annually.

The fuel to grow into the 2030s

Chevron‘s dividend yield is approaching 4.5%. The oil giant backs its high-yielding dividend with one of the most resilient portfolios in the oil patch. Chevron currently has the industry’s lowest break-even level at $30 a barrel. It also has a fortress financial profile, with one of the lowest leverage ratios in the sector. At less than 15%, Chevron is comfortably below its 20% to 25% target range.

The oil giant expects to deliver a massive amount of additional free cash flow over the coming year. A combination of recently completed expansion projects, its Permian Basin development program, and cost savings initiatives could add $10 billion of incremental free cash flow from its legacy portfolio next year. Meanwhile, its acquisition of Hess will provide an additional $2.5 billion boost to its free cash flow in 2026.

Chevron’s Hess deal extends and enhances its free-cash-flow growth outlook into the 2030s. Meanwhile, the company is investing in building several new energy businesses, including lithium. These growth drivers should give it plenty of fuel to continue increasing its dividend, which it has done for 38 straight years.

The powerful dividend growth should continue

Brookfield Renewable’s dividend yield is also approaching 4.5%. The global renewable energy producer backs that payout with very stable and predictable cash flow. It sells about 90% of the power it produces to utilities and corporations under long-term power purchase agreements (PPAs) with an average remaining term of 14 years. Those PPAs index 70% of its revenue to inflation.

The company expects its existing portfolio to deliver annual funds from operations (FFO) growth of 4% to 7% per share through the end of the decade. It will benefit from inflation-linked rate increases and margin enhancement activities such as signing new PPAs at higher market prices as legacy ones expire. Brookfield also expects to continue investing in growing its portfolio through development projects and acquisitions. The company’s numerous growth drivers should increase its FFO per share by more than 10% annually.

Brookfield’s growing earnings should support 5% to 9% annual dividend increases. That aligns with its historical trend of growing its payout at a 6% compound annual rate since 2001.

Top-notch energy dividend stocks

Energy Transfer, Chevron, and Brookfield Renewable pay high-yielding and steadily rising dividends backed by strong financials and visible growth profiles. Those features make them my top energy stocks to buy for dividend income right now.

Some investors look for stocks that have good growth potential, while others look for stocks that can provide consistent income. It’s not always an either-or thing as some stocks have proven to do both.

Case in point: energy company MPLX (MPLX 2.05%). Although MPLX may not be a household name like other top energy companies, the stock has been on an impressive run over the past five years. In that span, it’s up close to 186%, while the S&P 500 is up 95% (as of Sept. 9).

No one can predict if the stock will continue growing at its current pace, but one thing’s for sure: Its ultra-high dividend is a dream for investors interested in income stocks.

Image source: Getty Images.

How MPLX’s business works

You can think of the energy industry as three parts: upstream, midstream, and downstream. Upstream companies explore for and produce oil and natural gas; midstream companies focus on storing and processing; and downstream companies refine, market, and sell end products like the gasoline you buy at gas stations.

Some larger companies may operate in two or three of the phases, but MPLX solely operates in the midstream section. Formed by Marathon Petroleum, it owns pipelines, processing plants, storage facilities, and other infrastructure that moves and conditions oil, natural gas, and natural gas liquids (NGLs).

MPLX says it handles over 10% of all natural gas produced in the U.S.

MPLX has a shareholder-friendly business structure

MPLX isn’t structured like your typical corporation. It’s a master limited partnership (MLP), meaning its profits and losses are passed on to partners (investors) to avoid paying taxes on the corporate level, allowing it to pay out more money to its investors.

Its current 7.6% dividend yield is below its 9% average over the past five years, but it’s still more than six times the S&P 500’s average.

MPLX Dividend Yield data by YCharts

MPLX’s dividend payout won’t be consistent like typical corporations because it depends on its distributable cash flow (DCF). However, its DCF has had a compound annual growth rate (CAGR) of 6.9% since 2021.

MPLX has shown solid financials in recent years

MPLX makes money by charging fees for transporting, storing, and processing oil, natural gas, and NGLs. These are typically long-term contracts, which help provide the company with stable and predictable cash flow.

In the second quarter, MPLX generated $3 billion in revenue, which was down around 1.6% year over year. Its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) — which focuses strictly on its profits from core operations — was $1.7 billion, up 5% year over year.

MPLX isn’t a company that will typically produce double-digit percentage revenue growth consistently, but what matters most to investors is its DCF because that determines its dividend payout (the main reason many investors invest in the stock to begin with).

MPLX’s DCF in the second quarter only increased 1% year over year to $1.42 billion, but it was able to pay out $0.9565 per share compared to $0.8500 per share in the same quarter last year.

Should you own MPLX’s stock?

An ultra-high dividend yield is great for income investors, especially when it’s as high as MPLX’s. However, that alone shouldn’t be the sole reason you invest in a stock, because it could be a yield trap. Thankfully, when it comes to MPLX, that doesn’t seem to be the case.

MPLX likely won’t experience tech-like high growth over the long term, but it has solid growth opportunities. One of the key ways MPLX grows is via acquiring systems and assets that expand its footprint.

A recent example is its acquisition of Northwind Midstream, which it purchased for $2.375 billion. The company expects this to increase its treating capacity by roughly three times by the second half of 2026 and return mid-teen percentages, which is pretty impressive.

If you don’t mind dealing with the additional tax step needed when dealing with MLPs and their distributions (like filing a Schedule K-1 form), then MPLX can be a good income addition to your portfolio.

As the month of September gets underway, dividend investors looking for new opportunities shouldn’t be put off by the lofty levels of the broader market. Sure, the S&P 500 index (^GSPC -0.69%) is near all-time highs, but there are still some very attractive high-yield stocks hiding under the surface.

Three of the most attractive buys right now in the energy sector could be NextEra Energy (NEE 0.79%), Chevron (CVX 0.77%), and Enterprise Products Partners (EPD -0.45%). Here’s why.

Image source: Getty Images.

1. NextEra Energy has an attractive yield, relatively speaking

The S&P 500 index’s dividend yield is a miserly 1.2% or so. Utility NextEra Energy’s dividend yield is more than twice as high, at 3.1% or so. The average utility, meanwhile, has a yield of roughly 2.7%. So, while NextEra Energy’s yield may not be as high as some investors might like, it is still a very attractive yield compared to relevant benchmarks.

That said, the really exciting story here is the dividend growth. During the past decade, NextEra’s dividend has increased at a 10% annualized clip. That’s good for any company, but particularly good as the utility sector is known for more for slow and steady growth. NextEra expects to raise the dividend by 10% a year through at least 2026. The 6% to 8% earnings growth that is backing the dividend increases is expected to last through at least 2027. In other words, strong dividend growth is likely to continue beyond the current projection.

Two things are driving that growth. First is the company’s core regulated electric utility operations in Florida. This state has benefited for years from in-migration. More residents means more customers and more demand. But NextEra has a second business in the mix, since it is also one of the world’s largest solar and wind companies. This division is the growth driver and given the energy transition going on, it will likely remain a growth driver for years to come. If you like growth and income stocks, high-yield NextEra Energy should be on your list in September.

2. Chevron has a high yield and a resilient business

Integrated energy giant Chevron’s dividend yield is about 4.3%. The average energy stock’s yield is roughly 3.3%. Like NextEra, Chevron looks like a dividend stock with a relatively attractive yield. It surpasses the 4% yield mark that many dividend investors use when looking for investments. So it might be more tempting than NextEra Energy.

Adding to the attraction here is the fact that Chevron has increased its dividend for 38 consecutive years. This is despite the fact that Chevron operates in the commodity-driven energy sector, where oil prices have a huge impact on financial performance. Using an integrated model, which provides exposure to the entire energy value chain, and a focus on a strong balance sheet, with a low debt-to-equity ratio of 0.2, both help Chevron keep the dividend growing. Basically, its business is resilient to the industry’s typical swings.

But the real linchpin here is the fact that Chevron’s business foundation is getting stronger. First, after a long and difficult effort, the company’s troubled acquisition of Hess has been completed. That’s good for growth. And second, the company’s Venezuelan operations, which can be a bit of a political headache, are starting to function more normally again. This high-yield and reliable energy business is finally working from a position of strength again.

3. Enterprise Products Partners is a tortoise with an ultra-high yield

Master limited partnership (MLP) Enterprise Products Partners’ distribution yield is a mighty 6.8%. And the distribution has been increased for 27 consecutive years. That combination will probably be appealing to most dividend investors.

Enterprise’s business is built from the ground up to support its distributions. It has an investment-grade rated balance sheet. And its energy business is squarely in the midstream, where a toll-taker model is used. Enterprise owns vital energy infrastructure assets, like pipelines, for which it charges usage fees. Those fees are tied to volume, not energy prices, making cash flows fairly reliable through the energy cycle.

That said, there is one potential problem. While NextEra is known for being a dividend-growth hare, Enterprise is known for being a distribution-growth tortoise. Slow and steady distribution growth is likely the best you can expect, but given the lofty starting yield, that probably won’t upset dividend investors looking to maximize the income they generate today.

Plenty of great options for dividend investors

The S&P 500 index is a top-level view of the market and frequently, one that is driven by a small number of large companies. There are always plenty of attractive dividend stocks hidden under the surface. Right now some of the best might be NextEra, Chevron, and Enterprise Products Partners. As September gets underway, you should probably take the time to get to know each one of these energy stocks.

I’m on a mission to reach financial freedom through passive income. My goal is to build multiple income streams that combine to eventually cover my basic living expenses, thereby eliminating the stress of having to earn money to meet my financial needs.

Every week, I aim to make progress toward this financial goal. This time, I plan to invest $250 into three leading dividend stocks: Coca-Cola (KO 0.94%), Camden Property Trust (CPT 1.12%), and W.P. Carey (WPC 0.90%). I believe these companies offer great potential to help me achieve my passive income ambitions.

Image source: Getty Images.

Satisfying income-seeking investors for decades

Coca-Cola has a terrific record of paying dividends. The global beverage giant has paid dividends for over a century, while increasing its payout for 63 consecutive years. That qualifies it for the elite group of Dividend Kings, companies that have had 50 or more consecutive years of annual dividend increases. Coca-Cola has been growing its payout at a low- to mid-single-digit rate in recent years.

The iconic beverage company’s dividend currently yields about 3%. That’s more than double the S&P 500‘s dividend yield, which is around 1.2%.

Coca-Cola generates significant cash flow, enabling it to reinvest in growing its business while paying its lucrative dividend. The company expects its capital investments to drive 4%-6% annual organic revenue growth over the long term, which should support mid- to high-single-digit annual earnings-per-share growth. Coca-Cola also has an A-rated balance sheet, giving it the financial flexibility to make acquisitions as attractive growth opportunities arise. Since 2016, a quarter of the company’s earnings growth has come from acquisitions. Those drivers should enable Coca-Cola to continue growing its cash flows and dividends.

Cashing in on demand for rental housing

Camden Property Trust is a real estate investment trust (REIT) focused on owning multifamily properties. The landlord owns nearly 60,000 apartment units across 15 major markets in the southern half of the country. It invests in metro areas benefiting from strong employment and population growth trends. That drives demand for rental housing.

The REIT has paid a stable and steadily rising dividend over the past decade and a half. While Camden hasn’t increased its dividend every single year, it has been on a steady upward trajectory since the REIT reset its dividend during the financial crisis. The company’s payout currently yields around 3.8%.

Camden expects to deliver consistent earnings and dividend growth in the future. Its apartment portfolio should benefit from strong demand for rental housing, which should keep occupancy levels high while driving steady rent growth. Camden also has a strong financial profile, enabling it to invest in expanding its portfolio by acquiring stabilized apartment communities and starting new development projects. These growth drivers should enable Camden to continue increasing its dividend.

Building back better

W.P. Carey is a diversified REIT. It owns operationally critical commercial real estate (retail, industrial, warehouse, and other properties) across North America and Europe, secured by long-term net leases with built-in rental escalation clauses. These properties produce very stable rental income that rises each year.

The REIT has increased its dividend every single quarter since resetting the payment at the end of 2023. W.P. Carey realigned its dividend with its expected cash flows after exiting the office sector by selling and spinning off those properties. That strategy shift enabled the company to focus on properties with better long-term growth potential.

W.P. Carey has been steadily rebuilding its dividend (which currently yields 5.4%) and its portfolio. It spent $1.6 billion on new property investments last year and is on track to invest at a similar rate this year. That should enable it to grow its cash flow per share at a mid-single-digit annual rate, supporting a similar dividend growth rate.

Ideal passive income stocks

Coca-Cola, Camden Property Trust, and W.P. Carey are excellent fits for my passive income investment strategy. They pay dividends with above-average yields that steadily grow. As a result, they enable me to generate an attractive and growing stream of dividend income. Investing an additional $250 in these stocks this week will add nearly $10 to my annual passive income total, bringing me a little closer to achieving financial independence.

The Motley Fool just updated its report on the 10 largest consumer staple companies. You probably know every name on the list, which includes retail giants like Walmart (NYSE: WMT), product makers like Procter & Gamble (NYSE: PG), and tobacco companies like Philip Morris International (NYSE: PM). Also on that list is a Dividend King food and beverage company that has a historically high yield. Here’s why it could be the best opportunity for investors today.

What does PepsiCo do?

To get right to the crux of the topic, PepsiCo (PEP 1.12%) is the company in question. It sits at No. 7 on the list of the largest consumer staple companies, with a market cap of around $200 billion. It is one of three beverage makers on the list, the other two being Coca-Cola (KO 0.94%) at No. 4 and Anheuser-Busch InBev (NYSE: BUD) at No. 10.

Image source: Getty Images.

Unlike those other two, however, PepsiCo’s business extends well beyond beverages. It also has leading positions in the salty snack (Frito-Lay) and packaged food (Quaker Oats) segments of the sector. It is one of the most diversified companies on the top-10 list. Only Unilever (NYSE: UL), which makes household products and food, has a similar degree of diversification.

PepsiCo, meanwhile, stands toe to toe with every company on the list with regard to name recognition. For more direct peers, those that manage brands and are not retailers, it can compete equally on distribution, marketing, and product development. And, like all the other names on the list, PepsiCo is large enough to act as an industry consolidator, buying smaller companies to round out its brand portfolio and keep up with consumers’ buying habits.

The proof of the business’s strength and resilience is best highlighted by the fact that PepsiCo is a Dividend King. It has increased its dividend annually for 53 consecutive years, which is not something a company can achieve if it doesn’t have a strong business model that gets executed well in both good times and bad. For reference, other Dividend Kings on the list include Walmart, Coca-Cola, and Procter & Gamble.

WMT data by YCharts.

This is not a good time for PepsiCo 

Among the sub-grouping of large consumer staples companies that are also Dividend Kings, PepsiCo has been the laggard in recent years. To put a number on that, PepsiCo’s 2.1% organic sales growth in the second quarter was less than half the 5% growth of Coca-Cola, its closest peer. No wonder PepsiCo’s stock is down more than 20% from its 2023 highs, the worst result from the Dividend Kings grouping. That also puts PepsiCo into its own personal bear market.

However, the market’s negative view of PepsiCo could be an opportunity for long-term dividend investors. For starters, history suggests that PepsiCo will muddle through this rough patch, as it has done many times before. Second, the company is already making moves to improve performance, including buying a Mexican-American food maker and a probiotic beverage company. Third, falling share price has pushed its dividend yield up to 3.8%, which is toward the high end of the stock’s historical yield range.

That last point suggests that PepsiCo stock is cheap right now. This view is backed up by the fact that the company’s price-to-sales and price-to-book-value ratios are both well below their five-year averages. The company’s price-to-earnings ratio is sitting around the longer-term average. This is an opportunity if you think in decades and not days.

The time to jump is now

The interesting thing here is that PepsiCo is actually the best-performing stock on the top 10 list over the past three months. It seems investors are beginning to recognize the potential. But given how far the stock has fallen, it is still flying under the radar a bit. If you like owning Dividend Kings with reliable businesses, PepsiCo can still be an attractive long-term investment to add to your portfolio… if you act quickly.

Warren Buffett has led Berkshire Hathaway for six decades. During that time, the one-time textile manufacturer that became a huge conglomerate never paid a dividend. Not even a penny.

However, Buffett loves dividend stocks. He bought 12 stocks in the second quarter of 2025. All of them pay dividends. Which is the best of the bunch for income investors?

Image source: The Motley Fool.

Buffett’s dozen dividend stocks

The following table lists Buffett’s dozen dividend stocks purchased in Q2 (listed alphabetically):

Data sources: Berkshire Hathaway 13F filings, Google Finance.

Half of these stocks were new additions to Berkshire’s portfolio. Buffett bought more than 5 million shares of UnitedHealth Group in Q2, the biggest purchase of the group. The legendary investor probably viewed the health insurance stock as a rare bargain in today’s market after UnitedHealth’s share price plunged roughly 50%.

You might have noticed two similarly named stocks on the list. Homebuilder Lennar has two share classes. Buffett initiated a new position in Lennar Class A and added to the existing stake in Lennar Class B. Other new stocks bought in Q2 were security-products maker Allegion, homebuilder D.R. Horton, outdoor advertising company Lamar Advertising, and steelmaker Nucor.

Buffett also added more shares of several existing holdings. He has owned a sizable position in Chevron since 2020. The “Oracle of Omaha” (or one of Berkshire’s two other investment managers) has built stakes in Constellation Brands, Domino’s Pizza, Heico, Pool, and Pool Corp. more recently.

How these stocks compare

Most income investors would probably rank dividend yield near the top of the list of factors they consider when selecting stocks to buy. We can eliminate a few of Buffett’s Q2 purchases from contention because of low dividend yields: Allegion, D.R. Horton, and Heico. Lamar Advertising offers the juiciest yield, followed by Chevron.

However, yield isn’t everything. Income investors also want sustainable dividends. One of the most popular ways to determine the sustainability of a dividend is the payout ratio. Lamar Advertising’s payout ratio of 137.5% raises questions about how long the company will be able to fund the dividend at current levels. Constellation Brands’ payout ratio of 104.5% is also somewhat concerning. All of the other dividend stocks bought by Buffett in Q2, though, have payout ratios below 100%.

Many income investors like stocks with long track records of dividend increases. Although there aren’t any Dividend Kings on Buffett’s Q2 list, there is one Dividend Champion (stocks with 25 or more years of dividend hikes). Chevron has increased its dividend for 38 consecutive years.

Valuation is a factor for some income investors. They don’t want to buy a stock that’s so overpriced it could fall and offset any dividends received. Heico’s forward price-to-earnings ratio of 59.5 could cause some income investors to cross it off the list. So could Pool Corp. and Lamar’s forward earnings multiples of 29.9 and 29.5, respectively.

The best of the bunch for income investors

I think two stocks stand out as especially good picks for income investors right now among the 12 stocks bought by Buffett in Q2.

The runner-up is UnitedHealth Group. The health insurer’s dividend yield is attractive. Its payout ratio is a low 36.8%. UnitedHealth should be able to return to growth next year as it implements premium increases.

But Chevron is the best of the bunch, in my opinion. The oil and gas giant offers a juicy dividend yield. It has an impressive track record of dividend increases. The stock isn’t cheap, but neither is it absurdly expensive, with shares trading at 20 times forward earnings. Income investors should be able to count on steady and growing dividends from Chevron for a long time to come.

Dividend investing can be tricky, since income-focused investors want to find high yields while also avoiding stocks that end up cutting their quarterly payouts. There’s a balance that has to be found, and company quality is highly important to consider. That’s why you should be interested in dividend-paying healthcare stocks like Johnson & Johnson (JNJ 0.08%), Medtronic (MDT 1.66%), and Omega Healthcare Investors (OHI -0.38%).

If you have $500 in available cash (or $5,000) that isn’t needed for an emergency fund, to pay monthly bills, or to lower short-term debt, you might want to consider using it to buy and hold one of these dividend stocks (or maybe all three). 

1. Johnson & Johnson is a Dividend King

Johnson & Johnson’s big draw right now is two-fold. First, it has increased its dividend annually for more than 50 consecutive years, making it a Dividend King. Second, its 2.9% dividend yield is well above the 1.2% of the broader market and the 1.8% of the average healthcare stock. But the big story for buy-and-hold investors is really its business.

Johnson & Johnson is an industry leader in both the pharmaceutical and medical device niches. It has a global reach and industry-leading research and development (R&D) chops, making it a valuable partner to medical professionals around the world. The business will wax and wane over time, since R&D success can be lumpy. But it has a proven record of, eventually, either finding its own new blockbuster product or buying smaller peers that have novel product candidates.

There are some concerns right now about litigation around talcum powder to worry about, but if you don’t mind some near-term uncertainty, this high-yield and diversified medical giant is worth a deep dive. A $500 investment would buy you roughly two shares, with $5,000 allowing you to buy 27 shares.

Image source: Getty Images.

2. Medtronic is closing in on Dividend King status

Medtronic has a similar story to Johnson & Johnson, except that Medtronic is focused on just medical devices. That said, Medtronic is diversified across the cardiovascular, neuroscience, medical surgical, and diabetes niches. It has 48 years’ worth of dividend increases under its belt, and its 3% dividend yield is high relative to the market, the healthcare sector, and its own yield history. That last comparison suggests that Medtronic’s shares are on sale today.

There are some reasons for that, with the company only now coming out of a period in which it didn’t introduce many new products. Investors are in a wait-and-see mood, noting that rising costs have also put pressure on the company’s profitability. But new products are starting to gain traction, with demand for its new cardiac ablation products pushing that business segment’s revenue up nearly 50% year over year in the second quarter of fiscal 2026.

Management is working to improve margins by focusing on the company’s most profitable businesses. On that score, the company is spinning off its diabetes business in 2026, a move that is expected to immediately boost earnings.

A $500 investment will get you around five shares of Medtronic, and $5,000 will allow you to buy 55 shares. Either way, you’re still getting in early on the business upturn that’s starting to take shape right now.

3. Omega Healthcare is still standing tall

Johnson & Johnson and Medtronic are both appropriate for risk-averse investors. Omega Healthcare involves a little more risk. This real estate investment trust (REIT) is focused on owning senior housing, a property niche that took it on the chin during the early stages of the coronavirus pandemic. But, while some other senior housing REITs were cutting dividends, Omega stood behind its payment. It didn’t increase the dividend, mind you, but it didn’t cut the dividend either, showing that it understood just how important that dividend is to shareholders. The yield is currently an ultra-high 6.4%.

The good news here is that the world has moved past the worst of COVID-19, and the age wave that is cresting into retirement is already pushing a strong recovery in Omega’s core business. Funds from operations (FFO), which are like earnings for a REIT, rose nearly 8% year over year in the second quarter of 2025. The company is again starting to invest for the future, making over $500 million in new investments in the quarter.

With Omega’s business on the mend, the massive size of the baby boomer generation suggests that the future is going to be bright. You can buy roughly 11 shares with $500, or 119 with $5,000.

A high yield needs a strong business

The big story here is that Johnson & Johnson, Medtronic, and Omega have all proven resilient to adversity over time. The long history of dividend hikes backs that up at the first two companies, and Omega’s ability to hold the dividend line through the pandemic proves its dividend bona fides. If you have $500 (or $5,000) to invest in dividend stocks today, any one of these healthcare stocks could easily find a home in your portfolio.

Dividend investing allows you to have the best businesses in the world automatically send cash to your account on a regular basis. Investors looking to boost their passive income can find attractive dividend yields right now in the consumer goods sector.

To give you some ideas, read why three Motley Fool contributors recently selected Home Depot (HD 3.84%), JD.com (JD 2.17%), and Target (TGT 1.98%) as strong buys right now.

Image source: Getty Images.

A clear industry leader

Jeremy Bowman (Home Depot): Long a leader in dividend growth, Home Depot could also regain its reputation for steady price appreciation soon.

The home improvement retailer has struggled over the last few years due to a sluggish housing market, but the business could reaccelerate soon. First, the company is delivering steady growth with comparable-store sales up 1.4% in the second quarter, and revenue up 4.9% to $45.3 billion. Earnings growth was flat.

Adjusting for one fewer week in the fiscal year, it sees full-year revenue up about 5%.

On the macro front, bets are increasing that interest rates could come down soon. As the labor market cools, investors have gotten more confident that the Federal Reserve will cut rates at its meeting in September, and mortgage rates have hit a nine-month low.

While Home Depot is showing that it can grow without help from the housing market, it would certainly benefit from a recovery in home demand.

Over the long term, the company has shown it can be consistently profitable as the leader in the huge home-improvement retail segment, with little direct competition aside from Lowe’s, and that duopoly seems to benefit both companies.

Home Depot should also benefit from pent-up demand related to the national housing shortage, which is now estimated at about 4 million homes.

It now offers a dividend yield of 2.3%, and its competition between growth and income is a great feature for any long-term investor.

A dividend stock with tremendous upside potential

John Ballard (JD.com): JD.com is China’s second-largest e-commerce company, behind Alibaba. Macroeconomic headwinds over the past few years have weighed on consumer spending and sent JD.com shares down 71% from their previous highs. But this has driven its dividend yield up to an attractive 3.21% based on its last annual payout in April.

JD.com distinguishes itself from its larger competitor by using a direct-sales model. Unlike Alibaba, it invests in its own inventory that it can deliver through its extensive warehouse network to nearly anyone in China within one day.

It is investing in artificial intelligence to improve its supply chain efficiency, which could lead to margin expansion and benefit the stock. Management credited improving supply chain capabilities for increasing its operating margin from 3.9% in the second quarter of 2024 to 4.5% a year later.

Revenue is growing at healthy rates. The company reported a top-line increase of 22% year over year in the second quarter, with quarterly active customers growing 40%.

The improving financials of the retail business only make the stock’s yield more attractive. It pays a dividend only once per year, but the recent $1 payment could increase over the next few years if margins and revenue continue to rise, which is likely in a growing economy.

With JD.com trading at a low forward price-to-earnings multiple of 12, investors could see exceptional returns just from the stock climbing to a higher earnings multiple. The 3% yield is a nice bonus while you wait for the market to re-rate the shares with a higher valuation.

Low price, high yield

Jennifer Saibil (Target): Target stock continues to slide, and it fell further after results for the 2025 fiscal second quarter (ended Aug. 2) were reported last week. Revenue dropped less than 1% from last year, but comparable-store sales fell 1.9%. Earnings per share (EPS) of $2.05 were down from $2.57 last year, but they beat Wall Street expectations by $0.01.

The main disappointment for the market, though, wasn’t the quarterly report. CEO Brian Cornell had announced a few months ago that he was ready to step down, and along with the second-quarter report, the company announced the incoming CEO as current chief operating officer Michael Fiddelke. He’s a Target lifer, having started as an intern when he was in business school. The market was looking for an outsider to breathe new life into the company, not more of the same.

Fiddelke says that Target has fallen behind in leading with style, leaning into core categories without the extra touch that has always made it stand out. In addition to his goal of bringing back that magic, he noted that operations have become a bit messy, with stores often out of merchandise due to acting as delivery hubs. While that’s been great for its digital program, which continues to thrive, it’s been less so for the store experience.

Can Fiddelke bring Target back to growth? That remains to be seen. But it has nearly 2,000 stores, a successful digital business, and many loyal fans. So its turnaround chances are strong, especially once the economy becomes more hospitable. Over the long term, it offers excellent potential for the patient investor.

In the meantime, shareholders can enjoy an amazing dividend. Target is a Dividend King, having raised its dividend annually for the past 54 years, an impressive track record that means it’s super reliable. At the shares’ current low price, Target’s dividend yields a high 4.5%, making this an excellent entry point for years of passive income and wealth generation.

In the stock market, $500 might not seem like much, where the top tickers often trade at hundreds or thousands of dollars per share. But with commission-free trades and fractional trading, it’s never been easier to get investing with just a few hundred dollars.

It might be tempting to invest that $500 in high-risk plays like meme stocks and cryptocurrencies to chase bigger and faster gains. However, it would be more prudent to park that cash in some stable blue-chip dividend stocks that can generate big long-term gains through their reinvested dividends.

Let’s take a look at two stable dividend plays that are well-suited for most income investors: Brookfield Asset Management (BAM 3.37%) and Ares Capital (ARCC 0.16%).

Image source: Getty Images.

1. The conservative play: Brookfield Asset Management

Brookfield Asset Management is one of the world’s top alternative asset management firms. Instead of investing in “traditional” assets like stocks, bonds, and T-bills, it invests in “alternative” assets like real estate, infrastructure projects, private equity, and credit markets. As an asset management firm, Brookfield’s growth can be gauged by its fee-bearing capital (FBC), or its total managed capital from its clients; its fee-related earnings (FRE), or its total earnings from its management and advisory fees; and its distributable earnings (DE), which represents its available cash flow for covering its dividends and interest payments.

From 2022 to 2024, Brookfield grew its FBC at a CAGR of 14%, its FRE at a CAGR of 8%, and its DE per share at a CAGR of 6%. Analysts expect its DE per share to rise 11% in 2025 and 17% in 2026. It aims to pay out at least 90% of its DE per share as dividends, and its latest dividend hike this February — which boosted its annual rate to $1.75 (a forward yield of roughly 2.9%) — actually exceeds its projected DE of $1.61 per share for 2025.

That payout ratio exceeds 100%, but it isn’t a red flag because its core business is still growing at a healthy rate. Over the next few years, Brookfield’s growth should be driven by the cloud and artificial intelligence (AI) markets, which are generating tailwinds for its investments in the infrastructure and renewable energy markets; and the inflation-driven rotation toward alternative assets. Its stock isn’t cheap at 31 times next year’s DE per share, but its stability justifies that higher valuation.

2. The high-yield play: Ares Capital

Ares Capital is the world’s largest business development corporation (BDC). BDCs provide financing to “middle market” companies that struggle to secure loans from traditional banks because they’re considered higher-risk clients. In exchange for taking on that risk, BDCs charge higher interest rates than traditional banks. They’re also required to distribute at least 90% of their taxable earnings as dividends to maintain a lower tax rate.

Ares spreads out its investments across 566 companies backed by 245 different private equity sponsors in its $27.1 billion portfolio. It allocates 58.6% of its portfolio to first lien secured loans, 5.7% to second lien secured loans, and 5% to senior subordinated debt. That diversification limits its exposure to single companies and protects it from potential bankruptcies. Ares provides floating-rate loans that are pinned to the Fed’s benchmark rates. It needs interest rates to stay in a “Goldilocks” zone to thrive: low interest rates will throttle its profit growth, but high interest rates could choke the fledgling companies in its portfolio.

Analysts expect the Fed’s recent rate cuts to reduce Ares’ EPS 14% to $2.01 in 2025 and another 2% to $1.98 in 2026, but it can still easily cover its forward dividend rate of $1.92 per share — which equals a whopping forward yield of 8.6%. Its earnings growth should rise again as interest rates stabilize, and its stock looks dirt cheap at 11 times next year’s earnings. So for now, it’s a great place to invest a few hundred dollars and earn some big dividends.