Investors love dividend stocks because they provide dependable passive income streams and an excellent opportunity for solid total return. Total return includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or portfolio consists of income and stock appreciation.

Let’s take a closer look at the concept of total return. Imagine you purchase a stock at $20 that offers a 3% dividend. If the stock price rises to $22 within a year, your total return is 13%. This is calculated by adding the 10% increase in stock price to the 3% dividend.

Many investors are nervous about the recent introduction of worldwide tariffs, but the reality is that these, except those imposed on China, could be short-lived. Lower interest rates and lower oil prices may benefit beleaguered consumers, so it makes sense for growth and income investors to stick with quality companies that pay dependable recurring dividends four times a year.

We screened our 24/7 Wall Street dividend stock database and found five top companies that are too cheap to ignore any longer. All are rated Buy at the top Wall Street firms we cover and are major players in their respective sectors. Many investors are buying these companies hand over fist to secure their 7% and higher dividends.

Why do we cover dividend stocks?

Dividend stocks provide investors with reliable streams of passive income. Passive income is characterized by its ability to generate revenue without requiring the earner’s continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.

Altria

This tobacco company offers value investors a great entry point and a rich 7.25% dividend. Altria Group Inc. (NYSE: MO) manufactures and sells smokable and oral tobacco products in the United States through its subsidiaries.

The company provides cigarettes primarily under the Marlboro brand, as well as:

• Cigars and pipe tobacco, principally under the Black & Mild and Middleton brands
• Moist smokeless tobacco and snus products under the Copenhagen, Skoal, Red Seal, and Husky brands
• on! Oral nicotine pouches
• e-vapor products under the NJOY ACE brand

It sells its tobacco products primarily to wholesalers, including distributors and large retail organizations, such as chain stores.

Altria used to own over 10% of Anheuser-Busch InBev, the world’s largest brewer. Last year, the company sold 35 million of the 197 million shares through a global secondary offering. That represents 18% of its holdings but still leaves 8% of the outstanding shares in its back pocket. Altria also announced a $2.4 billion stock repurchase plan, partially funded by the sale.

Bank of America has a Buy rating and a $65 target price.

Ares Capital

This high-yielding business development company (BDC) pays a massive 8.45% dividend. Ares Capital Corp. (NASDAQ: ARCC) 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, health care products and services, and information technology service sectors.

The fund will also consider investments in industries such as:

• Restaurants
• Retail
• Oil and gas
• Technology sectors

Ares Capital typically invests between $20 million and $200 million and a maximum of $400 million in companies with an EBITDA between $10 million and $250 million. 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 finds the purchase of stressed and discounted debt positions.

Ares Capital prefers to be an agent and lead the transactions it invests in. The fund also seeks board representation in its portfolio companies.

J.P. Morgan has an Overweight rating and a $24.50 target price.

Energy Transfer

This top master limited partnership is a safe way for investors looking for energy exposure and income, as the company pays a massive 7.05% distribution. Energy Transfer L.P. (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all of the major domestic production basins.

The company is a publicly traded limited partnership with core operations that include:

• Complementary natural gas midstream, intrastate, and interstate transportation and storage assets
• Crude oil, natural gas liquids (NGL), and refined product transportation and terminalling assets
• NGL fractionation
• Various acquisition and marketing assets

After purchasing Enable Partners in December 2021, Energy Transfer owns and operates more than 114,000 miles of pipelines and related assets in 41 states, covering all major U.S. producing regions and markets. This further solidifies its leadership position in the midstream sector.

Through its ownership of Energy Transfer Operating, formerly known as Energy Transfer Partners, the company also owns Lake Charles LNG Company, the general partner interests, the incentive distribution rights, and 28.5 million standard units of Sunoco, and the public partner interests and 39.7 million standard units of USA Compression Partners.

Barclays has an Overweight rating with a Wall Street high $25 target price.

LyondellBasell

This blue-chip chemical giant offers a very dependable 7.30% dividend. LyondellBasell Industries N.V. (NYSE: LYB) operates as a chemical company in:

• the United States
• Germany
• Mexico
• Italy
• Poland
• France
• Japan
• China
• the Netherlands
• Internationally

The company operates in six segments:

• Olefins and Polyolefins-Americas
• Olefins and Polyolefins-Europe, Asia, International
• Intermediates and Derivatives
• Advanced Polymer Solutions
• Refining Technology

It produces and markets olefins and co-products, polyethylene and polypropylene, propylene oxide and derivatives, oxyfuels and related products, and intermediate chemicals, such as styrene monomer, acetyls, ethylene oxide, and ethylene glycol.

In addition, the company produces and markets compounding and solutions, including:

• Polypropylene compounds
• Engineered plastics, masterbatches
• Engineered composites, colors, and powders
• Advanced polymers, including catalloy and polybutene-1
• Refines heavy, high-sulfur crude oil, other crude oils, and refined products, including gasoline and distillates

Further, it develops and licenses chemical and polyolefin process technologies; manufactures and sells polyolefin catalysts; and serves food packaging, home furnishings, automotive components, and paints and coatings applications.

Royal Bank of Canada has an Outperform rating with a $90 target price.

The 5 Highest-Yielding Monthly Dividend Stocks Deliver Gigantic Passive Income Streams

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