5 High-Yield Stocks to Anchor Your Portfolio for Half a Decade

There’s no better way to generate passive income than dividend stocks. If a stock has a dividend yield higher than the common benchmark, such as the S&P 500, it could be a worthwhile investment. The dividend yield of the S&P 500 averages 1.2%, nearing its record low. 

Fortunately, there are several dividend stocks with a higher yield and a solid history of increasing dividend payouts. You must consider the cash flow, balance sheet, and the company’s ability to sustain the dividends. Here are five high-yield stocks that can help anchor your portfolio for half a decade. 

Bristol-Myers Squibb Company

Biopharmaceutical company Bristol Myers Squibb Co. (NYSE: BMY) is a global giant that discovers, develops, and delivers innovative medicines. BMY is a strong dividend stock with a yield of 5.66% and has remained a solid pharmaceutical giant for many years. It has increased dividends for 16 consecutive years. 

Bristol Myers Squibb is committed to delivering transformative medicines for patients in areas such as immunology, oncology, cardiovascular disease, hematology, and neuroscience. Its portfolio includes Orencia, Opdivo, Opdivo Qvantig, and Reblozyl. 

The stock is exchanging hands for $43 and is down 22% year-to-date, offering a great entry point for investors. The stock is nearing its 52-week low and looks cheap to me. Despite the drop in value, Bristol Myers Squibb is a great buy for its portfolio. It has a lineup of new treatments that could offset the losses from losing exclusivity on two drugs- Eliquis and Revlimid. 

In the second quarter, the company reported a revenue of $12.3 billion. Its growth portfolio revenue jumped 18%, while the legacy portfolio revenue was down 14% due to the loss of exclusivity. The sales of Breyanzi, a cell-based cancer treatment, more than doubled in the quarter. 

The management has raised the revenue guidance for the year to $46.5 billion-$47.5 billion. Bristol Myers Squibb has enough liquidity to keep growing the dividends for at least another decade. 

Pfizer Inc. 

Another pharmaceutical giant, Pfizer (NYSE:PFE) is a popular name across the globe. While it gained massive revenue and investor interest during the pandemic, it is time investors look beyond its Covid vaccine. 

With a yield of 6.95%, Pfizer is one of the top dividend stocks to anchor your portfolio. As of writing, the stock is trading for $24 and is down 6.95% year-to-date. The company managed to ink a deal with the U.S. government and has agreed to make capital investments in the country to avoid tariff issues. Besides that, it has also inked a deal to buy Metsera to boost its drug pipeline. This will help generate higher revenue in the long term and allow the company to be a part of the weight loss market.  

The stock has a payout ratio of 90%, which is high. While there are no signs of a dividend cut, even if the management cuts the dividend by half, it’ll continue to remain higher than the S&P 500’s yield. And if the dividend holds, there’s nothing better than that. It also has a massive drug pipeline with 28 candidates in phase 3. 

The management has already raised the full-year outlook and plans to cut $4 billion in costs to offset the revenue dip. Considering the company’s cash flow and 2025 outlook, the dividend looks sustainable. 

Ares Capital Corporation

Ares Capital Corp. (NASDAQ: ARCC) provides financial solutions in the middle market and is a business development company in America. The company specializes in acquisition, restructuring, recapitalization, leveraged buyout transactions of middle-market companies, and rescue financing. 

It invests in companies engaged in growth manufacturing, healthcare products, and consumer products across the Northeast, Mid-Atlantic, Southeast, and Southwest regions from the New York office. The fund also considers third-party-led senior debt financing and discounted debt positions. The company has a juicy dividend yield of 9.56% and is exchanging hands for $20. 

A well-respected business development company in the industry, Ares Capital Corporation is good at what it does, and it has remained resilient over the past few years. Since the company makes loans to smaller companies, it is a risky business, and Ares Capital has handled the market uncertainty well. 

For the second quarter, it reported a revenue of $745 million, down 1.3% year-over-year. It announced a dividend of $0.48 for the quarter. 

Even if there’s a recession, the company will be around for the next few years. ARCC stock is down 10% year-to-date, and this is a solid buying opportunity. Many believe that the company will cut its dividend, but even a small cut will lead to an attractive dividend for retail investors.

Realty Income

A high-yield stock, Realty Income (NYSE:O) is a Real Estate Investment Trust (REIT) that has increased its dividend every single year since the public listing in 1994. It enjoys a dividend yield of 5.29% and has paid monthly dividends 132 times. The REIT owns over 15,000 properties across different countries and continues to expand the portfolio. The management aims to invest $5 billion in new acquisitions this year. 

It enjoys occupancy as high as 98%, reflecting confidence in the business and resilience of the tenant base, despite market slowdowns. It is called “The Monthly Dividend Company” for a reason, and the dividends are highly sustainable.

The company invests in single-tenant commercial properties and has long-term net lease agreements with well-known commercial clients. Realty Income manages to keep the operating expenses low, achieving higher income. The REIT has seen higher funds from operations per share over the past decade. Since the business is impacted by interest rates, a rate cut could benefit the business, lowering the REIT’s borrowing costs and enhancing the share price. 

Realty Income has a payout ratio of 75% of the funds from operations and an impressive balance sheet. It is an ideal stock for growth and income seekers. 

Enterprise Products Partners

Enterprise Products Partners L.P. (NYSE: EPD) is a midstream natural gas and crude oil company headquartered in Houston. It engages in the gathering, processing, storing, and transporting of natural gas and natural gas liquids. The company has four business segments, including crude oil pipeline and services, petrochemical services, natural gas pipelines and services, and NGL pipelines and services. Since it works as a midstream company, its revenue is fairly reliable. It has one of the strongest balance sheets in the midstream sector. 

Enterprise Products Partners has a dividend yield of 7.03%, and the stock is exchanging hands for $31. The massive yield makes it one of the top dividend stocks to own. The company has shown steady growth throughout history, and it expects to complete $6 billion in growth capital projects by the end of 2025. Enterprise Products Partners has increased the distribution for 27 straight years and is growing at a solid rate. It recently completed the $580 million acquisition of a natural gas gathering affiliate from Occidental Petroleum (NYSE:OXY), which could boost the cash flow in the coming years. 

It aims to spend about $2 billion to $2.2 billion next year to complete the construction of capital projects. This will give the company more potential to grow its cash flow and increase distribution. 

The expansion plans and juicy dividend make it a solid stock to own.