3 High-Yield Dividend Stocks to Power Your Income Stream in 2026
3 High-Yield Dividend Stocks to Power Your Income Stream in 2026
Keith Speights, The Motley FoolSun, February 22, 2026 at 11:05 AM UTC
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Key Points -
Ares Capital pays an ultra-high dividend yield of 10.1%.
Enbridge has increased its dividend for 31 consecutive years.
Realty Income offers a stable and growing dividend.
10 stocks we like better than Ares Capital ›
You may have heard that building multiple streams of income increases your financial flexibility and security. For most people, their jobs are their primary source of income. Some also generate passive income through real estate or other types of investments.
One of the best alternatives to real estate is to invest in stocks that pay attractive dividends. Here are three high-yield dividend stocks to power your income stream in 2026.
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1. Ares Capital
Ares Capital (NASDAQ: ARCC) is the largest publicly traded business development company (BDC). It manages a $29.5 billion portfolio, with over 600 portfolio companies.
This stock is an ideal choice for investors seeking passive income, in my opinion. Its forward dividend yield is an ultra-high 10.1%. Ares Capital has also paid consistent or growing dividends for over 16 years.
But is Ares Capital's dividend safe? I think so. The company continues to generate sufficient core earnings per share to cover its dividend at current levels. Even better, Ares has more than two quarters of taxable income spillover. It could use this money to fund dividends if any of its quarterly core earnings aren't sufficient.
Some investors are leery of BDCs because of concerns about lax criteria used by some direct lenders. Ares Capital, though, has a disciplined underwriting process. The company is highly selective about which transactions it closes. The proof is evident in its numbers. Ares Capital's loss rates on first lien loans are below 0.1%, while those on second lien and subordinated loans are below 0.2%.
2. Enbridge
Enbridge (NYSE: ENB) is a leading energy infrastructure company. It operates the world's longest pipeline system for oil and liquids. The company also ranks as the largest natural gas utility in North America based on volume.
Why is this stock an excellent source of income? For one thing, Enbridge's forward dividend yield is 5.5%. The company has increased its dividend for 31 consecutive years. It also expects to increase the dividend by up to 5% per year.
Enbridge's underlying businesses generate stable and predictable cash flows. Its distributable cash flow payout ratio is between 60% and 70%, a comfortable range that gives the company ample flexibility to continue growing its dividends.
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While Enbridge isn't likely to be a growth superstar, it does have solid growth prospects. Management has targeted around $50 billion of growth opportunities through the end of the decade, with nearly half of that total in its gas transmission business.
3. Realty Income
One way to obtain passive income from real estate without investing directly in real estate properties is to buy shares of a real estate investment trust (REIT). I view Realty Income (NYSE: O) as the best REIT stock on the market.
The company owns over 15,542 properties leased to 1,647 clients representing 92 industries. Those industries tend to be dependable ones, too. For example, roughly 10.8% of Realty Income's total annualized base rent comes from tenants in the grocery industry. Another 9.7% and 6.4% come from convenience stores and home improvement retailers, respectively.
REITs are known for their juicy dividends. Realty Income's forward dividend yield tops 4.9%. The company has increased its dividend for more than 30 consecutive years, with a compound annual growth rate of 4.2% since its 1994 listing on the New York Stock Exchange.
I like Realty Income's stability. The REIT has delivered positive total operational returns (the sum of annual funds from operations growth and dividend yield) for 29 consecutive years. I also like its growth prospects. Realty Income has particularly attractive opportunities in Europe, where the total addressable market is $8.5 trillion and competition from other REITs is limited.
Should you buy stock in Ares Capital right now?
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Keith Speights has positions in Ares Capital, Enbridge, and Realty Income. The Motley Fool has positions in and recommends Ares Capital, Enbridge, and Realty Income. The Motley Fool has a disclosure policy.
Source: “AOL Money”
