$100,000 in These 2 Dividend Stocks Could Pay Over $10,000 a Year
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Retirees living on Social Security and a 401(k) usually judge an investment by one thing: how much cash comes each quarter. Business development companies (BDCs) answer that question more directly than most of the market. A BDC loans to and invests in mid-sized private companies. To keep its pass-through tax status, it has to pay out most of its taxable income to shareholders, which is why the group’s yields often reach double digits.
Below is what a $100,000 stake would generate if it were split equally between two of the biggest BDCs, with $50,000 in each. At current forward yields, the pair makes more than $10,000 in annual passive income.
Taxable accounts face one catch. BDC distributions are mostly taxed as ordinary income. Federal law lets shareholders count only the portion a regulated investment company reports as qualified dividend income toward the lower qualified rate (26 U.S.C. § 854(b)(1)(B))[1], and lending-focused BDCs report very little of that.
Ares Capital
- Stock #2: Ares Capital (NASDAQ:ARCC | ARCC Price Prediction)
- Yield (forward): 10.02%, based on a $1.92 annualized regular dividend and a $19.17 share price
- Shares for $50,000: 2,608.24
- Annual Passive Income: ~$5,007.82
Ares Capital is the largest publicly traded BDC. Its portfolio covers over 636 companies backed by 271 private equity sponsors and consists mostly of senior secured loans to U.S. middle-market borrowers. The weighted average yield on its debt rose to 10.6%[2] at amortized cost, up from 10.3% at year-end 2025.
Dividend coverage is tight. Third-quarter net investment income was $328 million, or $0.46 per share[2], compared with a $0.48 regular dividend. Non-accruals rose to 2.4%[2] from 1.8%, and leverage was 1.15x[3] in the second quarter. Even so, the regular dividend has stayed at $0.48 every quarter since 2023. Chief executive Kort Schnabel said higher yields and the pending MidCap Financial (NASDAQ:MFIC) acquisition reinforce “our confidence in the current level of our regular quarterly dividend.”[3]
Credit is the main risk. NAV per share slipped to $19.31[2] from $19.94, and the third quarter included $52 million[3] of net realized losses. In a slowdown, more loans going non-accrual would widen the shortfall. Ares also refinanced 2.150%[3] notes with $750 million of 6.250% notes, which raises interest costs. On the other side, its backlog has grown to about $2.5 billion[2].
Blue Owl Capital Corp.
- Stock #1: Blue Owl Capital Corp. (NYSE:OBDC)
- Yield (forward, base dividend only): 11.14%, based on a $1.24 annualized base dividend and an $11.13 share price
- Shares for $50,000: 4,492.36
- Annual Passive Income: ~$5,570.53
Blue Owl makes direct loans to U.S. middle-market companies. Its portfolio has a fair value of $15.1 billion across 233 companies. First-lien senior secured loans make up 73.1% of the book, and about 95.5% of its debt investments are floating rate.
Blue Owl cut its base dividend to $0.31 from $0.37 in 2026 to align it with earnings power. The forward yield above uses that new base. Coverage is now solid: third-quarter adjusted NII was $0.33 per share. Chief executive Craig W. Packer said, “Earnings continued to cover the base dividend comfortably, and NAV increased 40 basis points.”[4] Non-accruals were 2.9% at cost, and net debt-to-equity was 1.13x. The $0.01 supplemental payment is excluded from the income figures.
The main risk is interest rates. Three-month SOFR has risen to 4.08% from 3.73%, but if short-term rates fall again, income on the floating-rate book shrinks. Management bought back $35 million of stock below NAV in the third quarter.
Income Breakdown at a Glance
| Name | Yield | Annual Dividend Income |
|---|---|---|
| Ares Capital | 10.02% | $5,007.82 |
| Blue Owl Capital Corp. | 11.14% | $5,570.53 |
| Total | 10.58% | $10,578.35 |
What $100,000 in BDCs Produces
Together, these two positions make $10,578.35 of passive income each year on a $100,000 investment, a combined yield of 10.58%. Ares Capital brings $5,007.82, and Blue Owl adds $5,570.53.
Reinvesting that income speeds up the compounding. Each quarterly payment buys more shares, and those shares pay their own distributions (we outlined a full plan for turning a mid six-figure balance into reliable monthly income in a free report here). In the future, watch Ares’s dividend coverage, the MidCap deal’s closing, Blue Owl’s non-accruals, and SOFR.
Contact [email protected] for any questions or corrections.
Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
