Invest $11,400 in These 3 High-Yield Stocks to Earn an Additional $1,000 in Dividend Income by 2025.

When it comes to securing a stream of passive income to support your retirement dreams, there are various options available. While buying rental properties is a popular choice, it comes with day-to-day responsibilities that may not be appealing to most retirees. If you’re looking for a truly passive income stream, investing in dividend-paying stocks could be a better alternative.

Three stocks that offer high yields and the potential for long-term growth are Pfizer, PennantPark Floating Rate Capital, and Ares Capital. These stocks provide an average yield of 8.8% at recent prices, making them attractive options for generating annualized dividend income. With an investment of $11,400 spread evenly among them, you could set yourself up with $1,000 in annual dividend income.

Pfizer, as one of the world’s largest drugmakers, has a track record of raising its dividend payout for 15 consecutive years. Despite recent challenges, such as declining COVID-19 product sales and upcoming patent cliffs, Pfizer remains a solid investment option. The company has made strategic investments in new revenue streams, with promising results from its development pipeline.

PennantPark Floating Rate Capital is a business development company that lends to mid-sized businesses, offering an average yield of 11.5% on debt investments. With a history of maintaining its payout since 2011 and a strong underwriting team, this BDC provides convenient monthly payments and a reliable income stream.

Ares Capital, the largest publicly traded BDC, offers an 8.7% yield and a highly experienced underwriting team. With a portfolio more than 13 times larger than PennantPark’s, Ares Capital has a proven track record of success. Despite economic downturns, the company boasts a cumulative net realized loss rate of 0% on investments over the past two decades.

For investors looking for safety and long-term growth potential, adding shares of Ares Capital to a diversified portfolio could be a smart move. With an average annual return of 13% from 2004 through the present, this stock has outperformed the S&P 500 and offers a reliable income stream.

Before investing in Pfizer or any other stock, it’s essential to conduct thorough research and consider all factors. The Motley Fool Stock Advisor analyst team provides valuable insights and recommendations for investors, helping them identify the best stocks for potential growth and returns. By following their guidance and building a well-rounded portfolio, investors can maximize their investment opportunities and achieve their financial goals.

In conclusion, investing in high-yield dividend stocks like Pfizer, PennantPark Floating Rate Capital, and Ares Capital can provide a reliable source of passive income for retirement. With careful consideration and strategic planning, investors can build a diversified portfolio that generates consistent returns and supports their long-term financial objectives.