Cory Renauer, The Motley Fool

Mon, Jun 30, 2025, 2:49 AM5 min read

• Ares Capital is a giant business development company that offers an eye-popping dividend yield.

• W.P. Carey is a REIT that offers a yield above 5%, and it raises its payout every quarter.

• Realty Income offers a yield above 5% and monthly payments.

• 10 stocks we like better than Ares Capital ›

I'm not getting any younger. These days, I'm thinking more and more about retiring and the stream of passive income that will allow me to thrive instead of merely surviving.

I'm attracted to high yields like everybody else, but there are more important factors to consider. Ares Capital (NASDAQ: ARCC), W.P. Carey (NYSE: WPC), and Realty Income (NYSE: O) have been hovering at the top of my list of dividend stocks to buy because they do more than just offer a high yield.

All three of these stocks have remarkable track records when it comes to maintaining and raising their payouts. At the moment, they offer yields that are more than triple the average yield you'd receive from the average dividend payer in the S&P 500 index. Put it together, and they're hard to ignore.

Ares Capital is the largest business development company (BDC) with shares that trade publicly. These specialized entities fill in the private lending gap created by American banks that no longer lend directly to midsize businesses. Starved for capital, midsize businesses are willing to borrow at very attractive interest rates. The weighted average yield on Ares Capital's $27 billion portfolio was 9.8% at the end of March.

Ares Capital isn't shy about sharing its investment income with shareholders. Just about every penny earned is paid out to a quarterly dividend that offers an 8.7% yield at recent prices. The BDC has a tendency to make extra dividend payments in times of plenty rather than commit to a permanent payout increase. Investors seeking a reliable income base will be glad to know its quarterly payout has been rising, or at least stable, since 2009.

Direct lending to midsize businesses can be risky, but Ares Capital's enormous footprint in the asset management space means it has plenty of excellent borrowers to choose from. The BDC is externally managed by a subsidiary of Ares Management, a leading global alternative investment manager with around $546 billion in assets under management.

Members of Ares Capital's underwriting team have over 25 years of experience on average, and it shows. At the end of March, just 0.9% of Ares Capital's total investment portfolio was on nonaccrual status.

If you're willing to accept a smaller yield upfront in exchange for frequent payout increases, consider W.P. Carey. Shares of this diversified real estate investment trust (REIT) have been under pressure since it spun off its office building portfolio in 2023 and lowered its dividend accordingly.