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You shouldn't significantly increase your position in a high-yield dividend stock without considering several factors. For example, it's not wise to buy so much of any given stock that it negatively impacts your overall portfolio diversification. You also need to evaluate the chances of a dividend cut in the near future.

That said, some high-yield dividend stocks are strong candidates for additional capital. Here are three you won't regret doubling up on right now.

Image source: Getty Images.

1. Enterprise Products Partners Enterprise Products Partners (EPD -0.26%) is a midstream energy leader that certainly checks off the high-yield box. The master limited partnership (MLP) pays a distribution yield of roughly 5.8%. Is this distribution safe? I think so.

For one thing, Enterprise has increased its distributions for 27 consecutive years. This track record underscores management's ability to navigate turbulence, given that the period includes the financial crisis of 2007 through 2009 and the COVID pandemic.

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I also like Enterprise Products Partners' rock-solid balance sheet. It's no coincidence that the MLP has the highest credit rating in the midstream energy industry. Enterprise also has a very manageable debt leverage ratio of 3.2x.

Why load up on this pipeline stock now? The Iran war shows no signs of ending soon. Enterprise Products Partners' more than 50,000 miles of pipeline are critical in U.S. oil and gas exports, which should remain high as long as the conflict continues. Even if hostilities cease, the surging demand for natural gas driven by data centers should serve as a nice tailwind for Enterprise for years to come.

2. Enbridge I'd put Enbridge (ENB +0.82%) in the same category as Enterprise Products Partners. It's also a midstream leader. Enbridge's forward dividend yield stands at roughly 5%. And its dividend looks quite safe, in my opinion.

Enbridge has an even more impressive streak of dividend hikes than Enterprise, having raised its dividend for 31 consecutive years. Its returns have trounced the S&P 500's (^GSPC +0.05%) since the turn of the century.

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The company's pipelines transport around 30% of the crude oil produced in North America and 20% of the natural gas consumed in the U.S. The same tailwinds that are helping Enterprise Products Partners also benefit Enbridge.

Importantly, though, Enbridge isn't just a pipeline operator. Thanks to key acquisitions, the company is also the largest natural gas utility in North America by volume. This business gives Enbridge added stability, which makes doubling up on the stock less scary.

3. Ares Capital Not all of the good high-yield dividend stocks to buy right now are in the energy sector. Ares Capital (ARCC +0.91%) is the largest publicly traded business development company (BDC).

If you're looking for an especially juicy dividend, you might love Ares Capital. Its forward dividend yield tops 10.2%. Ordinarily, such a lofty yield would make me nervous. However, I think this BDC will be able to keep dividends flowing at least at the current level.

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Ares Capital has consistently maintained or grown its dividend for 16 consecutive years. Its core earnings per share continue to exceed the dividends paid. What I really like is that Ares Capital has around $988 million of spillover income -- undistributed income that could be used to supplement future dividend distributions.

What about the concerns that software and services make up 22% of Ares Capital's portfolio and that artificial intelligence (AI) could disrupt software companies? Ares Capital has engaged a reputable consulting firm to perform an independent review of its software exposure. This evaluation found that the BDC's AI-related risk is "relatively limited." Around 85% of Ares Capital's software portfolio had a low risk of AI disruption.

There's one other reason I think doubling up on Ares Capital now could pay off. Futures reflect a probability of up to 91% of an interest rate hike by the end of this year. Ares Capital would benefit from higher rates, which would boost its net investment income.

When deciding whether to buy, sell, or hold a stock, investors often rely on analyst recommendations. Media reports about rating changes by these brokerage-firm-employed (or sell-side) analysts often influence a stock's price, but are they really important?

Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Ares Capital (ARCC - Free Report) .

Ares Capital currently has an average brokerage recommendation (ABR) of 1.67, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 15 brokerage firms. An ABR of 1.67 approximates between Strong Buy and Buy.

Of the 15 recommendations that derive the current ABR, nine are Strong Buy and two are Buy. Strong Buy and Buy respectively account for 60% and 13.3% of all recommendations.

Brokerage Recommendation Trends for ARCC

Check price target & stock forecast for Ares Capital here>>>

The ABR suggests buying Ares Capital, but making an investment decision solely on the basis of this information might not be a good idea. According to several studies, brokerage recommendations have little to no success guiding investors to choose stocks with the most potential for price appreciation.

Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.

This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock's future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.

With an impressive externally audited track record, our proprietary stock rating tool, the Zacks Rank, which classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), is a reliable indicator of a stock's near-term price performance. So, validating the Zacks Rank with ABR could go a long way in making a profitable investment decision.

Zacks Rank Should Not Be Confused With ABRAlthough both Zacks Rank and ABR are displayed in a range of 1--5, they are different measures altogether.

Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.

Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide.

In contrast, the Zacks Rank is driven by earnings estimate revisions. And near-term stock price movements are strongly correlated with trends in earnings estimate revisions, according to empirical research.

Furthermore, the different grades of the Zacks Rank are applied proportionately across all stocks for which brokerage analysts provide earnings estimates for the current year. In other words, at all times, this tool maintains a balance among the five ranks it assigns.

Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company's changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements.

Is ARCC Worth Investing In?Looking at the earnings estimate revisions for Ares Capital, the Zacks Consensus Estimate for the current year has declined 0.2% over the past month to $1.9.

Analysts' growing pessimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates lower, could be a legitimate reason for the stock to plunge in the near term.

The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #4 (Sell) for Ares Capital. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Therefore, it could be wise to take the Buy-equivalent ABR for Ares Capital with a grain of salt.

Posted by Defense World Staff on Jul 22nd, 2026

Ares Capital (NASDAQ:ARCC – Get Free Report) is anticipated to announce its Q2 2026 results before the market opens on Wednesday, July 29th. Analysts expect the company to post earnings of $0.47 per share and revenue of $770.6710 million for the quarter. Interested persons may visit the the company’s upcoming Q2 2026 earning report page for the latest details on the call scheduled for Wednesday, July 29, 2026 at 12:00 PM ET.

Ares Capital (NASDAQ:ARCC – Get Free Report) last announced its earnings results on Tuesday, April 28th. The investment management company reported $0.47 EPS for the quarter, missing analysts’ consensus estimates of $0.48 by ($0.01). The firm had revenue of $763.00 million for the quarter, compared to analysts’ expectations of $778.00 million. Ares Capital had a net margin of 37.30% and a return on equity of 9.85%. The business’s revenue was up 4.2% compared to the same quarter last year. During the same quarter last year, the business earned $0.50 earnings per share. On average, analysts expect Ares Capital to post $2 EPS for the current fiscal year and $2 EPS for the next fiscal year.

Ares Capital Stock Down 0.2% Shares of NASDAQ:ARCC opened at $18.95 on Wednesday. The company has a debt-to-equity ratio of 1.13, a current ratio of 1.40 and a quick ratio of 1.40. The firm has a market capitalization of $13.61 billion, a PE ratio of 11.63 and a beta of 0.56. The firm’s 50-day moving average is $18.66 and its two-hundred day moving average is $18.99. Ares Capital has a 1 year low of $17.40 and a 1 year high of $23.20.

Ares Capital Announces Dividend The firm also recently disclosed a quarterly dividend, which was paid on Tuesday, June 30th. Stockholders of record on Monday, June 15th were paid a $0.48 dividend. The ex-dividend date of this dividend was Monday, June 15th. This represents a $1.92 annualized dividend and a dividend yield of 10.1%. Ares Capital’s dividend payout ratio (DPR) is presently 117.79%.

Analyst Upgrades and Downgrades ARCC has been the subject of a number of research reports. JPMorgan Chase & Co. dropped their price objective on shares of Ares Capital from $19.00 to $18.50 and set an “overweight” rating for the company in a report on Thursday, July 2nd. Royal Bank Of Canada reduced their target price on shares of Ares Capital from $22.00 to $21.00 and set an “outperform” rating on the stock in a report on Wednesday, April 29th. Citizens Jmp decreased their price target on shares of Ares Capital from $23.00 to $22.00 and set a “market outperform” rating for the company in a research report on Wednesday, April 22nd. Truist Financial dropped their price target on shares of Ares Capital from $23.00 to $22.00 and set a “buy” rating for the company in a research note on Wednesday, April 29th. Finally, Keefe, Bruyette & Woods cut their price objective on Ares Capital from $22.00 to $21.00 and set an “outperform” rating on the stock in a research report on Thursday, April 16th. Eight research analysts have rated the stock with a Buy rating and three have given a Hold rating to the company’s stock. According to data from MarketBeat.com, Ares Capital currently has an average rating of “Moderate Buy” and an average target price of $20.60.

Check Out Our Latest Research Report on ARCC

Hedge Funds Weigh In On Ares Capital A number of institutional investors and hedge funds have recently made changes to their positions in the stock. First Citizens Bank & Trust Co. grew its holdings in shares of Ares Capital by 5.3% during the fourth quarter. First Citizens Bank & Trust Co. now owns 10,530 shares of the investment management company’s stock worth $213,000 after purchasing an additional 532 shares during the last quarter. PCG Wealth Advisors LLC increased its position in shares of Ares Capital by 3.4% during the third quarter. PCG Wealth Advisors LLC now owns 19,282 shares of the investment management company’s stock worth $394,000 after purchasing an additional 643 shares in the last quarter. Navis Wealth Advisors LLC lifted its holdings in shares of Ares Capital by 2.3% in the 3rd quarter. Navis Wealth Advisors LLC now owns 28,104 shares of the investment management company’s stock valued at $574,000 after purchasing an additional 643 shares during the last quarter. Empowered Funds LLC lifted its holdings in shares of Ares Capital by 2.1% in the 4th quarter. Empowered Funds LLC now owns 38,803 shares of the investment management company’s stock valued at $785,000 after purchasing an additional 780 shares during the last quarter. Finally, DCM Advisors LLC boosted its position in shares of Ares Capital by 4.0% in the 2nd quarter. DCM Advisors LLC now owns 23,348 shares of the investment management company’s stock valued at $471,000 after purchasing an additional 905 shares during the period. 27.38% of the stock is owned by institutional investors and hedge funds.

Ares Capital Company Profile (Get Free Report)

Ares Capital Corporation (NASDAQ: ARCC) is a publicly traded business development company (BDC) that specializes in providing debt and equity financing solutions to U.S. middle-market companies. As a BDC, Ares Capital offers investors access to a diversified portfolio of tailored credit investments, including senior secured loans, unitranche financing, mezzanine debt and equity co-investments. The firm’s flexible capital structures are designed to support companies seeking growth capital, refinancing or strategic acquisitions.

Through its credit platform, Ares Capital focuses on originations, underwriting and portfolio management across a range of industries, with a particular emphasis on sectors such as healthcare, technology, industrials and business services.

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SummaryPrivate credit fears have caused a sector-wide sell-off in the BDC camp.Blue-chip BDCs like ARCC, OBDC, and MAIN report robust credit metrics, low non-accruals, and resilient NII, supporting distribution sustainability.Despite cautious sentiment, BDCs originate loans at attractive spreads, trade at massive discounts to book value, and are positioned to benefit from potential rate hikes.Looking for more investing ideas like this one? Get them exclusively at High Dividend Opportunities. Learn More » Erman Gunes/iStock via Getty Images

Co-authored with Hidden Opportunities

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Beyond Saving, Philip Mause, and Hidden Opportunities, all are supporting contributors for High Dividend Opportunities. Any recommendation posted in this article is not indefinite. We closely monitor all of our positions. We issue Buy and Sell alerts on our recommendations, which are exclusive to our members.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Ares Capital (ARCC +1.53%) currently yields nearly 10.2%. That's almost 10 times higher than the S&P 500 (over 1%). As a result, you can collect a lot of income from the business development company.

Here's a look at how much dividend income you could see by 2030 if you invested $2,000 into the BDC stock today.

Image source: Getty Images.

A big-time income stream Ares Capital currently trades at around $19 a share. At that price, you could purchase about 105 shares for $2,000. The BDC paid its most recent quarterly dividend of $0.48 per share on June 30th. If it maintains its current rate and historic dividend payment schedule, investors who buy today will receive two dividend payments this year (Sept. 30 and Dec. 30), collecting a total of $100.80 in dividend income.

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The BDC has paid a stable-to-growing dividend for more than 16 years. It has maintained its current quarterly rate of $0.48 per share since the end of 2022. To be conservative, we'll assume that Ares Capital continues to pay its current dividend rate. While the company's core earnings of $0.47 per share fell short of its dividend during the first quarter, it also recorded $0.15 per share of net realized gains, which, when combined with its core earnings, was well in excess of the dividend. Further, the company entered this year with ample spillover income from last year ($1.38 per share). These numbers suggest the current dividend level remains sustainable, though near-term growth seems unlikely.

Here's how much dividend income you could collect if we assume a stable payment through the end of the decade (and no dividend reinvestment):

Annual

Cumulative

2026

$100.80

$100.80

2027

$201.60

$302.40

2028

$201.60

$504.00

2029

$201.60

$705.60

Author's calculations.

That's a nice stream of dividend income. It's a lot more than you'd collect from a lower-yielding investment. While there's a higher risk that Ares Capital could cut its dividend, the company has an excellent dividend record and plenty of near-term cushion.

Matt DiLallo has positions in Ares Capital. The Motley Fool has positions in and recommends Ares Capital. The Motley Fool has a disclosure policy.

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Wages arrive on an employer’s schedule. Dividends arrive on a corporate board’s schedule and keep arriving whether markets are open or closed. That distinction defines income investing: cash flow that shows up in your brokerage account without negotiating a raise, selling an asset, or clocking in.

We screened our 24/7 Wall St. dividend equity research database and found a collection of companies that, combined, can generate over $7,000 a year in passive annual income if you invest $16,666 in each stock at the time of this writing.

Stock #6: Realty Income Yield: 5.10% Shares for $16,666: 261.36 Annual Passive Income: $850 Realty Income (NYSE:O | O Price Prediction) is a net-lease REIT trading at $63.77 with a $0.271 monthly payout that annualizes to $3.252 per share. Its portfolio of retail, industrial, and gaming properties runs at 98.9% occupancy, and REIT rules require it to distribute 90% of taxable income.

The company has raised its dividend for 114 consecutive quarters and paid 670 consecutive monthly dividends. Management raised 2026 investment guidance to $9.5 billion and formed a joint venture with Apollo, signaling continued deployment.

Stock #5: Enterprise Products Partners Yield: 5.94% Shares for $16,666: 441.74 Annual Passive Income: $989 Enterprise Products Partners (NYSE:EPD) is a Houston-based midstream MLP with a distribution just raised to $0.56 per quarter, or $2.24 annualized. As an MLP, EPD passes cash through to unitholders without entity-level tax, structurally supporting a higher payout than a C-corp peer.

The business runs NGL, crude oil, natural gas, and petrochemical pipelines under fee-based contracts, insulating cash flow from commodity swings. Q1 2026 adjusted EBITDA rose 10% to $2.69 billion, with $5.3 billion in growth projects under construction and a $5 billion buyback authorized. Insiders hold 32.98% of units, unusually high alignment for a company this size.

Stock #4: Altria Yield: 6.04% Shares for $16,666: 237.55 Annual Passive Income: $1,007 Altria (NYSE:MO) is the Marlboro-maker and a Dividend King, having lifted its quarterly payout to $1.06 in Q4 2025 from $1.02. Trailing 12-month dividends total $4.24 per share. Mature tobacco cash flows and declining reinvestment needs let management funnel earnings straight back to shareholders.

The stock returned 28.93% over the past year, and $1.8 billion in Q1 2026 dividends paired with a $2 billion buyback reflects Altria’s classic capital-return template.

Stock #3: Verizon Communications Yield: 6.66% Shares for $16,666: 392.43 Annual Passive Income: $1,111 Verizon Communications (NYSE:VZ) pays $0.7075 quarterly, or $2.83 annualized. The company closed its Frontier Communications acquisition on January 20, 2026, pushing fiber broadband connections up 41.9% year over year to roughly 10.8 million.

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Management raised 2026 guidance to adjusted EPS of $4.95 to $4.99 and free cash flow above $21.5 billion, with more than $3 billion earmarked for buybacks. Nineteen straight years of dividend increases make Verizon a rare high-yield telecom with an Aristocrat-caliber history (worth pairing with our Never Touch the Principal research).

Stock #2: Main Street Capital Yield: 8.10% Shares for $16,666: 313.93 Annual Passive Income: $1,350 Main Street Capital (NYSE:MAIN) is an internally managed BDC focused on lower middle-market lending and equity. It pays a $0.265 monthly regular dividend plus a $0.30 quarterly supplemental, driving the trailing 12-month total to $4.30 per share. BDCs distribute roughly 90% of taxable income to keep their tax status.

The June 2026 supplemental marked the 19th consecutive quarterly special payment. NAV per share edged up to $33.46, non-accruals sit at just 1.2% at fair value, and the internally managed structure keeps operating costs below externally managed BDC peers.

Stock #1: Ares Capital Yield: 10.22% Shares for $16,666: 887.00 Annual Passive Income: $1,703 Ares Capital (NASDAQ:ARCC) is the largest publicly traded BDC. Its $0.48 quarterly dividend annualizes to $1.92, and the payout has held steady for eight consecutive quarters. The portfolio is 73% first-lien senior secured with a weighted-average debt yield of 10.3%, matching the payout to underlying loan economics.

Non-accruals stand at 2.1% at amortized cost, well inside historical norms for middle-market credit.

The Combined Income Picture Combined, these six positions generate $7,010 in annual passive income on a $100,000 investment, a blended yield of 7.01%. Ares Capital contributes $1,703, Main Street Capital adds $1,350, Verizon delivers $1,111, Altria kicks in $1,007, Enterprise Products Partners pays $989, and Realty Income rounds out the portfolio with $850.

Ticker Annual Income Share of Total ARCC $1,703 24.3% MAIN $1,350 19.3% VZ $1,111 15.9% MO $1,007 14.4% EPD $989 14.1% O $850 12.1% Reinvesting these payments accelerates the math: at a 7% blended yield, dividends alone rebuild roughly one share of ARCC every couple of months without new capital. That is the quiet compounding engine income investors are buying, running on a schedule no employer controls.

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Ares Capital (ARCC - Free Report) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.

Shares of this private equity firm have returned +0.1% over the past month versus the Zacks S&P 500 composite's +1.3% change. The Zacks Financial - SBIC & Commercial Industry industry, to which Ares Capital belongs, has lost 2.6% over this period. Now the key question is: Where could the stock be headed in the near term?

While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.

Earnings Estimate RevisionsRather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.

We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

Ares Capital is expected to post earnings of $0.47 per share for the current quarter, representing a year-over-year change of -6%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.5%.

For the current fiscal year, the consensus earnings estimate of $1.9 points to a change of -5.5% from the prior year. Over the last 30 days, this estimate has changed -0.2%.

For the next fiscal year, the consensus earnings estimate of $1.93 indicates a change of +1.1% from what Ares Capital is expected to report a year ago. Over the past month, the estimate has remained unchanged.

With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #4 (Sell) for Ares Capital.

The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS

Projected Revenue GrowthWhile earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.

In the case of Ares Capital, the consensus sales estimate of $768.95 million for the current quarter points to a year-over-year change of +3.2%. The $3.12 billion and $3.18 billion estimates for the current and next fiscal years indicate changes of +2.2% and +2.1%, respectively.

Last Reported Results and Surprise HistoryAres Capital reported revenues of $763 million in the last reported quarter, representing a year-over-year change of +4.2%. EPS of $0.47 for the same period compares with $0.5 a year ago.

Compared to the Zacks Consensus Estimate of $768.96 million, the reported revenues represent a surprise of -0.77%. The EPS surprise was -2.08%.

Over the last four quarters, Ares Capital surpassed consensus EPS estimates times. The company topped consensus revenue estimates just once over this period.

ValuationWithout considering a stock's valuation, no investment decision can be efficient. In predicting a stock's future price performance, it's crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company's growth prospects.

Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.

As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

Ares Capital is graded D on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Bottom LineThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Ares Capital. However, its Zacks Rank #4 does suggest that it may underperform the broader market in the near term.

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Retirement planning fixates on depletion risk. The quieter problem is that a portfolio can hold its dollar value for thirty years and still leave a retiree poorer in real terms. The CPI-U rose from 308.417 in January 2024 to 335.123 in May 2026, while the 2026 Social Security COLA was 2.8%. Core PCE inflation reached 3.4% year over year in May 2026, another reminder that fixed income can lose ground even when the account balance does not move.

That reality reshapes how the standard yield math reads. Use $70,000 as a working retirement income target, a rounded figure above the 2024 average annual spending of $61,432 for consumer units age 65 or older, but still below the $78,535 average for all consumer units. The arithmetic is mechanical: target income divided by yield equals capital required. Three bands cover most realistic portfolios, and the gap between them is not just about how much capital you need.

The Conservative Tier: Buying Growth, Not Yield At a 3.5% blended yield, $70,000 requires roughly $2,000,000 in capital. The portfolio leans on dividend-growth equities, broad-market funds, and an inflation-protected Treasury sleeve. Schwab U.S. TIPS ETF (NYSEARCA:SCHP) tracks an index of inflation-protected U.S. Treasury securities and carries a 0.03% expense ratio. Ten-year TIPS real yields were near 2.2% on July 1, 2026, among the more generous levels of the past decade.

The growth case lives in the equities. NextEra Energy (NYSE:NEE) recently yielded about 2.9%, based on a share price near $86 and a $0.6232 quarterly dividend. The company raised that payout from $0.515 in 2024 to $0.6232 in 2026. A retiree starting near 2.9% who sees the distribution rise 8% annually would cross a 5% yield on original cost in about seven years.

The Moderate Tier: REITs With Built-In Escalators At a 6% blend, the capital requirement drops to roughly $1,167,000. This is REIT and preferred-share territory. Realty Income (NYSE:O) recently yielded about 5.3%, based on a share price near $61.82 and a $0.2705 monthly dividend. American Tower (NYSE:AMT) recently yielded about 3.9%, and many tower leases include contractual escalators, including inflation-linked provisions in some international markets. These structures can help pass through inflation, but they do not eliminate rate or valuation risk.

AMT shares have fallen meaningfully over the past year, a reminder that rate-sensitive REITs trade on duration as much as on rents.

The Aggressive Tier: High Yield, Static Income At 10%, the arithmetic is seductive. $70,000 divided by 0.10 requires just $700,000. Business development companies, mortgage REITs, and leveraged covered-call funds populate this band. Ares Capital (NASDAQ:ARCC) recently yielded about 10.3%, based on a $0.48 quarterly dividend and a share price near $18.66. The regular dividend has been held at $0.48 since 2023.

ARCC has paid the same $0.48 regular quarterly dividend for fourteen consecutive quarters while CPI rose meaningfully over the same window. Net asset value slipped from $19.94 at year-end 2025 to $19.59 at March 31, 2026. A retiree spending the distributions is not automatically selling shares, but a flat payout and a lower NAV can still leave the income stream and underlying capital exposed to inflation.

The Compounding Gap Most Retirees Miss Run both scenarios forward ten years on a $70,000 starting income. A 3.5% yield growing 8% annually doubles the income stream in roughly nine years; by year ten, the annual income would be about $151,000 if “year ten” means ten full years of growth, or about $140,000 if counted after nine increases. A 10% flat yield delivers $70,000 every year. At 3% average inflation, that $70,000 buys about $52,000 in today’s dollars after ten years.

The high-yield portfolio paid more dollars early. The dividend-growth portfolio had a better chance of preserving purchasing power. With the federal funds target range at 3.50% to 3.75% after the Fed held rates steady in June 2026, the spread between safer yields and aggressive yields is narrower than it was when cash yielded far less, which makes the growth differential harder to ignore.

Better Moves for the Next Portfolio Review Separate spending from salary. Replacement income is what you actually spend, not what you earned. Many retirees overshoot the target by anchoring on gross pay rather than household outflow, especially after payroll taxes, retirement contributions, and some work-related costs disappear. Stress-test each sleeve against a 3% inflation assumption. Project the income from your highest-yield holdings forward ten years at zero distribution growth, then deflate by CPI. The result is the conversation that should drive allocation.

Size inflation protection to non-discretionary spending. Groceries, utilities, and Medicare premiums can rise faster than a fixed income stream. A TIPS fund such as SCHP is one simple expression of that idea, though its market price can still fluctuate as real yields move. The risk that matters in retirement is not only running out of money. It is building an income stream that looks stable on a statement but slowly stops covering the life it was meant to fund. Yield can solve the first-year income problem, but growth is what keeps that income useful.

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The VanEck BDC Income ETF (NYSEARCA:BIZD) just delivered a jolt to income investors: its July distribution came in at $0.24 per share, roughly half the $0.48 paid in April. BIZD passes through the dividends of the business development companies it owns, so when the underlying BDCs strain, BIZD’s payout wobbles. With the fund down 14% over the past year and BDCs facing base-rate cuts and spread compression, the question is whether this distribution is a one-off dip or the start of something worse.

How BIZD Actually Pays You BIZD tracks the MVIS US Business Development Companies Index, holding a concentrated basket of publicly traded BDCs that lend to middle-market firms at floating rates over SOFR. When those loans pay interest, the BDCs distribute nearly all of it to shareholders to preserve their tax status, and BIZD passes that income through quarterly. Roughly 90% or more of BDC loan books are floating rate, which is why the Fed’s 75 basis point cut since September 2025, taking the target to 3.75%, hits BIZD’s income at the source.

The Four Holdings That Decide BIZD’s Fate Ares Capital (NASDAQ:ARCC | ARCC Price Prediction), the largest BDC by market cap at $13.48 billion, held its quarterly dividend at $0.48 for the eighth straight quarter. Q1 core EPS of $0.47 fell a penny short, but net investment income of $0.55 per share gives real cushion. Non-accruals ticked up to 2.1% from 1.8%, worth watching, but a $1.8 billion investment backlog and $6 billion in liquidity support the payout.

Blue Owl Capital (NYSE:OBDC) already made the cut official. On May 5, 2026, the board dropped the base dividend from $0.37 to $0.31, a 16% reduction in annualized payout. CEO Craig Packer cited “a more challenging earnings environment driven by lower base rates and tighter spreads.” Adjusted EPS of $0.31 now exactly matches the new dividend, meaning zero buffer. Shares are down 15% over the past year.

Blackstone Secured Lending (NYSE:BXSL) looks like the next domino. NII of $0.77 covered the $0.77 dividend at exactly 100%, down from 104% in Q4. New investments are being originated at 7.7% while assets rolling off yielded 9.1%, which mechanically compresses future income. Non-accruals jumped to 3.1% of fair value from 0.6% a quarter earlier. CEO Brad Marshall’s own words: “non-accruals increased during the quarter from historically low levels.” Another miss, and BXSL follows OBDC.

Main Street Capital (NYSE:MAIN) is the fund’s insurance policy. Distributable NII of $1.00 per share comfortably covers the $0.26 monthly regular plus a $0.30 quarterly supplemental, now paid for 19 consecutive quarters. NAV per share rose to about $33. MAIN’s lower-middle-market focus and equity co-investments generate returns other BDCs can’t match. Retail readers who like this profile may also want our 7 Monthly Dividend Stocks report.

Total Return Reality Check BIZD’s trailing 12-month distributions of $1.52 look generous against a roughly $13 share price, but the fund is down 6% year-to-date on top of last year’s decline. The forward annualized rate has reset to $0.96, so shoppers pricing this off the trailing yield are anchored to a payout that has already stepped down.

The Verdict BIZD’s distribution is at risk of further reduction. OBDC is done cutting for now, but BXSL is running on fumes at 100% coverage with rising non-accruals, and ARCC’s cushion is thinner than a year ago. MAIN is the anchor doing the heavy lifting. For investors who need a predictable check, MAIN offers more coverage than the blended pass-through. BIZD still makes sense for someone who wants diversified BDC exposure and can tolerate a variable payout that reflects whatever the underlying managers can actually earn each quarter.

Contact [email protected] for any questions or corrections.

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Replacing $7,500 a month with dividends is a math problem before it is anything else. The number you need to invest depends almost entirely on the yield you chase, and each yield tier carries a different set of tradeoffs that reveal themselves only after you own the position for a decade.

Across three broad approaches, the capital required to produce $90,000 a year ranges from roughly $1 million to over $2.5 million. That gap reflects the risks accepted at each tier, and some of those risks only surface years later.

The Conservative Path: Dividend Growers Around 3% to 4% At a blended 3.5% yield, generating $90,000 requires roughly $2,571,000 in capital ($90,000 divided by 0.035). This is the tier of dividend kings and aristocrats: healthcare, consumer staples, and diversified industrials that raise payouts every year.

Johnson & Johnson (NYSE:JNJ | JNJ Price Prediction) currently yields about 2% after a 67% one-year rally, with 64 consecutive years of increases and a fresh 3% hike in April. Procter & Gamble (NYSE:PG) yields near 3% and just extended its streak to 70 straight annual increases. Neither hits 3.5% alone, so this tier typically pairs blue chips with higher-yielding aristocrats, regulated utilities, and broad dividend-growth ETFs to lift the blended yield.

The tradeoff is straightforward: you tie up the most capital, but the income line grows every year without you touching it.

The Middle Ground: 5% to 7% From REITs and Hybrids At a 6% yield, the math shrinks to $1.5 million. This is the range of net-lease REITs, preferred shares, midstream energy partnerships, and high-dividend equity funds.

Realty Income (NYSE:O), the self-styled Monthly Dividend Company, yields about 5.1% and recently paid its 670th consecutive monthly dividend. Q1 AFFO per share grew 7% year over year, and management raised 2026 guidance to $4.41 to $4.44. The stock has returned 47% over a decade, well behind the S&P 500 but with far steadier income.

The tradeoff here is real. Dividend growth slows to the low single digits, price appreciation is modest, and rate-sensitive REITs move sharply with the 10-year Treasury, which sits at almost 4.5%.

The Aggressive Reach: BDCs and Double-Digit Yields At 9%, you need about $1 million. Business development companies dominate this tier. Ares Capital (NASDAQ:ARCC) yields roughly 10.4% on a $0.48 quarterly dividend that has held steady for six straight quarters. Main Street Capital (NYSE:MAIN) pays a $0.26 monthly base plus a $0.30 quarterly supplemental, pushing total annual payouts to roughly $4.32 per share.

The catch shows up in the fine print. ARCC absorbed $412 million in unrealized losses in Q1 and NAV per share declined. MAIN is down 10% year to date. BDC distributions are also taxed largely as ordinary income rather than qualified dividends, which materially raises the tax bill in most brackets.

Why the Slower Yield Often Wins JNJ’s quarterly dividend was $0.66 in 2013 and is $1.34 today, roughly doubling in 13 years. That is the point dividend-growth investors are buying: the starting yield may look modest, but the income stream can become much larger if the company keeps raising the payout. Price appreciation is a separate variable, and it should not be assumed just because the dividend grew.

A 10% yield that never grows delivers $100,000 forever in nominal dollars. A 3% yield on $1 million that grows 7% annually passes $100,000 in about year 19 and keeps climbing if that growth continues. Static yield is a treadmill. Growing yield is a staircase, but only if the business can keep raising the payout.

What to Do With This Recalculate against your actual spending, not your salary. If retirement expenses run $6,000 a month instead of $7,500, required capital drops by roughly $360,000 at a 5% yield, and the conservative tier suddenly becomes reachable. Pull the 10-year total return of a dividend-growth basket against a BDC or mortgage REIT basket. The gap is usually larger than the headline yield differential suggests once compounding and NAV drift are included. Model taxes tier by tier. Qualified dividends from JNJ and PG cap at 20% federal for most investors, while REIT and BDC distributions are taxed as ordinary income, which under the 2026 brackets tops out at 37%. The Yield Solves the Math, Not the Risk A $7,500 monthly dividend target can be built with about $2.57 million at 3.5%, $1.5 million at 6%, or roughly $1 million at 9%. The lower capital number looks easier, but it usually comes with more credit risk, rate sensitivity, tax drag, or distribution risk. The question is not which yield gets you to $90,000 fastest. It is which income stream is most likely to still be there ten years from now.

Contact [email protected] for any questions or corrections.

Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?

Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Ares Capital (ARCC - Free Report) .

Ares Capital currently has an average brokerage recommendation (ABR) of 1.67, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 15 brokerage firms. An ABR of 1.67 approximates between Strong Buy and Buy.

Of the 15 recommendations that derive the current ABR, nine are Strong Buy and two are Buy. Strong Buy and Buy respectively account for 60% and 13.3% of all recommendations.

Brokerage Recommendation Trends for ARCC

Check price target & stock forecast for Ares Capital here>>>

While the ABR calls for buying Ares Capital, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.

Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.

This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock's future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.

With an impressive externally audited track record, our proprietary stock rating tool, the Zacks Rank, which classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), is a reliable indicator of a stock's near-term price performance. So, validating the Zacks Rank with ABR could go a long way in making a profitable investment decision.

ABR Should Not Be Confused With Zacks RankIn spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.

The ABR is calculated solely based on brokerage recommendations and is typically displayed with decimals (example: 1.28). In contrast, the Zacks Rank is a quantitative model allowing investors to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.

It has been and continues to be the case that analysts employed by brokerage firms are overly optimistic with their recommendations. Because of their employers' vested interests, these analysts issue more favorable ratings than their research would support, misguiding investors far more often than helping them.

On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.

Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company's changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements.

Is ARCC Worth Investing In?In terms of earnings estimate revisions for Ares Capital, the Zacks Consensus Estimate for the current year has remained unchanged over the past month at $1.91.

Analysts' steady views regarding the company's earnings prospects, as indicated by an unchanged consensus estimate, could be a legitimate reason for the stock to perform in line with the broader market in the near term.

The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Ares Capital. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

It may therefore be prudent to be a little cautious with the Buy-equivalent ABR for Ares Capital.

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Five hundred dollars a month is not enough to replace a paycheck, but it can cover a real bill: a used-car payment, a utility-heavy month, or a meaningful slice of grocery spending. This article builds around a $6,000 annual income stream produced entirely by a portfolio, with no planned withdrawals from principal. The capital required ranges from roughly $60,000 to more than $171,000, depending on how much yield you chase and how much risk you accept.

The 10-year Treasury recently sat near 4.4%, while the FDIC’s national average 12-month CD rate was 1.65%. That means every tier below should be measured against what an investor could earn without taking stock-market risk, even though Treasuries and CDs have their own limits. Past a certain point on the yield ladder, you may be renting income from your own principal.

The Conservative Tier: 3% to 4% Yield At a 3.5% blended yield, $6,000 of annual income requires roughly $171,000 in capital. This is the dividend-growth lane, populated by consumer staples, healthcare, and regulated utilities.

PepsiCo (NASDAQ:PEP | PEP Price Prediction) yields about 4.2% after a 4% dividend hike that marked its 54th consecutive year of increases. Johnson & Johnson (NYSE:JNJ) yields closer to 2.1% after delivering its 64th straight annual raise, lifting the quarterly payment from $1.30 to $1.34. NextEra Energy yields about 2.8% and has guided for roughly 10% annual dividend growth through 2026.

The tradeoff is capital intensity. You need the most money up front. What you get is a portfolio whose income stream may grow over time, often with less pressure to reach for fragile double-digit yields. The share prices can still fall, but the goal in this tier is dividend growth first and maximum current income second.

The Moderate Tier: 5% to 7% Yield At 6%, the same $6,000 requires about $100,000. This is the range of net-lease REITs, preferred shares, midstream energy partnerships, and high-dividend equity funds.

Realty Income (NYSE:O) yields roughly 5.1% and pays monthly, with 670 consecutive monthly dividends declared and 114 straight quarterly increases as of its recent company materials. The current monthly payout of about $0.2705 annualizes to roughly $3.25 per share.

The compromise is dividend growth. Realty Income’s dividends paid per share rose 1.8% in the first quarter of 2026 compared with the first quarter of 2025. The income record is unusually steady, but recent raises have not been large enough to outrun a serious inflation spike.

The Aggressive Tier: 8% to 12% Yield At 10%, $60,000 of capital produces $6,000 in income. Business development companies, mortgage REITs, and leveraged option-income funds live here.

Ares Capital (NASDAQ:ARCC) yields roughly 10.6% at a recent price of about $18, with a quarterly payout of $0.48. Main Street Capital yields about 6.2% on its regular monthly distribution, with supplemental dividends that can push the effective yield higher when they are declared.

The risk is principal. BDC shares can fall even when distributions continue, and their payouts depend heavily on the credit performance of middle-market borrowers. In a recession, income, market price, and net asset value can come under pressure at the same time.

Why The Lowest Yield Often Wins Johnson & Johnson’s quarterly dividend is now $1.34 after its 2026 increase, and the company has raised its dividend for 64 consecutive years. That is the power of dividend growth: the starting yield may look modest, but the income can compound if the business keeps raising its payout. A 10% yielder that holds its distribution flat for decades may deliver more income today but lose purchasing power over time.

The aggressive tier delivers more income today on less capital. The conservative tier delivers less income today, but some companies in that group have a long record of raising payouts. NextEra, for example, has guided for roughly 10% annual dividend growth through 2026 and 6% annual growth from year-end 2026 through 2028.

Before You Chase the Yield Price your actual spending, not your salary. If $500 covers a car payment, a utility bill, or a cluster of recurring household costs, that is your replacement number. Do not pad it with a round figure pulled from a retirement calculator.

Run a side-by-side total return comparison. Pull 10-year total returns for a dividend-growth name like JNJ against a high-yield name like ARCC, including reinvested dividends. The income gap may narrow once you account for price appreciation, dividend growth, and drawdowns.

Match the tier to the account. Many BDC and REIT distributions are taxed as ordinary income, which can reach a 37% top federal marginal rate before any applicable state taxes or surtaxes. Qualified dividends from companies such as PEP or JNJ can receive lower long-term capital gains tax rates. That makes tax-advantaged accounts especially useful for higher-yield holdings when the account type fits the investor’s broader plan.

A Better Test Than Yield Alone A $500 monthly income stream is not one portfolio. It is a tradeoff. The safest-looking income usually requires the most capital, while the highest yield often comes with the greatest risk to principal and future payouts. The right answer is not the largest percentage on the screen. It is the mix of yield, dividend growth, account placement, and risk that can keep the income useful after inflation and market stress have had their say.

Contact [email protected] for any questions or corrections.

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Most spending benefits the person doing the spending. Charitable giving is different. People give because they believe in a cause, want to help others, improve their community, honor a loved one, or simply because generosity brings satisfaction. Many religious traditions encourage giving as well. In the Judeo-Christian tradition, a 10% tithe has been a longstanding standard. However, plenty of people without a religious commitment approach giving through philanthropy, civic responsibility, gratitude, or a desire to leave the world better than they found it. Whatever the motivation, the question is worth asking: how much capital would it take to fund that level of giving year after year?

Giving While You’re Alive Many people spend decades building wealth with the intention of helping others someday. A dedicated giving portfolio creates an opportunity to see the impact firsthand. You can watch the scholarship get funded, the church project completed, the family helped through a crisis, or the local animal shelter expand its work. For some donors, seeing the results becomes more rewarding than leaving a larger estate after they are gone.

The Tax Advantage of Giving Retirees who itemize deductions may receive a charitable deduction for cash gifts. Donating appreciated stock can be even more efficient, allowing the donor to avoid capital gains tax while still receiving a deduction for the full fair-market value. For retirees over age 70½, qualified charitable distributions (QCDs) from an IRA can satisfy charitable goals without increasing taxable income and may reduce future required minimum distributions.

Timing matters as well. Some donors bunch several years of contributions into a single year to maximize deductions, then make grants gradually through a donor-advised fund. Others use unusually high-income years, such as after a business sale or Roth conversion, to offset part of the tax impact with charitable deductions. A well-structured gift can lower taxes, increase retirement cash flow, and direct more money to the causes the donor cares about.

What 10% Actually Looks Like in Dollars Per capita disposable income hit $68,359 in Q1 2026, while the personal savings rate slid to nearly 4%. Against that backdrop, here is what a tithe looks like at three common household income levels:

Household A ($50,000 income): $5,000 annually, or about $417 per month Household B ($100,000 income): $10,000 annually, or about $833 per month Household C ($150,000 income): $15,000 annually, or about $1,250 per month People obsess over the percentage. Few ever calculate the capital required to write those checks indefinitely.

The Self-Funding Giving Portfolio A dedicated giving portfolio flips the equation. Instead of donating from earned income, you donate from a pool of assets that generates income. The principal stays intact. The dividends do the giving. Done well, the portfolio outlives you and keeps funding causes for decades, which is the difference between a single donation and an endowment.

Three Giving Levels at Four Yield Tiers The math is mechanical: target divided by yield equals capital required.

Giving Goal 3.5% yield 5% yield 7% yield 10% yield $5,000 / yr $142,857 $100,000 $71,429 $50,000 $10,000 / yr $285,714 $200,000 $142,857 $100,000 $15,000 / yr $428,571 $300,000 $214,286 $150,000 The 3.5% tier is dividend-growth territory: blue-chip pharma like Johnson & Johnson (NYSE:JNJ | JNJ Price Prediction), yielding 2.2% with 64 consecutive years of increases, and regulated utilities like NextEra Energy (NYSE:NEE), where management is targeting roughly 10% dividend growth through 2026. The 5% to 7% tier brings in net-lease REITs such as Realty Income (NYSE:O), yielding about 5.3% after its 670th consecutive monthly dividend, alongside preferred shares and high-dividend equity. The 10%-plus tier is business development companies like Ares Capital (NASDAQ:ARCC) at roughly 10.6%, and mortgage REITs like AGNC Investment (NASDAQ:AGNC) near 14%. With the 10-year Treasury at about 4.5%, every tier above it carries a risk premium.

The Legacy Multiplier A one-time $10,000 gift funds one year of generosity. A $200,000 portfolio yielding 5% funds that same $10,000 every year, potentially for decades. Over 25 years, the second approach delivers $250,000 in giving from capital that still exists at the end. That is the legacy multiplier: the gift keeps giving long after the donor stops working, or stops living.

Why Lower Yield Often Wins Long Term Consider Household B funding $10,000 in giving. A 3.5% portfolio with 7% annual dividend growth roughly doubles its payout every decade, so within 10 years the same capital funds about $20,000 of charity. A 10% portfolio with no growth still pays $10,000, but inflation erodes its real value, and principal can drift lower. For a giving portfolio, growing income often matters more than maximizing current yield. A charity receiving $20,000 a year ten years from now may benefit more than one receiving $10,000 forever.

When This Strategy Does Not Fit A dedicated giving portfolio is not for everyone.

Retirees living on a fixed nest egg may need that capital for healthcare and housing, not charity. Donors with appreciated stock often capture better tax outcomes by gifting shares directly through a donor-advised fund rather than selling and donating cash. Some causes are best served by a single large gift that funds a building or scholarship rather than a $5,000 annual drip. Three Moves to Make This Week Match the cadence. If you tithe monthly, weight the portfolio toward monthly payers like Realty Income and AGNC so dividends arrive when checks go out. Run the 10-year comparison. Pull total returns for a dividend-growth name against a high-yield name to see how compounding diverges from current yield. Use a QCD or donor-advised fund. If you are over 70.5, qualified charitable distributions from an IRA can fund giving pre-tax, stretching every dividend further. Contact [email protected] for any questions or corrections.

, /PRNewswire/ -- Ares Capital Corporation ("Ares Capital") (NASDAQ: ARCC) announced today that it will report earnings for the second quarter ended June 30, 2026 on Wednesday, July 29, 2026 prior to the opening of the Nasdaq Global Select Market. Ares Capital invites all interested persons to attend its webcast/conference call at 12:00 p.m. (Eastern Time) on the same day to discuss its second quarter ended June 30, 2026 financial results.

All interested parties are invited to participate via telephone or the live webcast, which will be hosted on a webcast link located on the Home page of the Investor Resources section of our website at www.arescapitalcorp.com. Please visit the website to test your connection before the webcast. Domestic callers can access the conference call toll free by dialing +1 (800) 245-3047. International callers can access the conference call by dialing +1 (203) 518-9765. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected and to reference the conference ID ARCCQ226. For interested parties, an archived replay of the call will be available approximately one hour after the end of the call through August 29, 2026 at 5:00 p.m. (Eastern Time) to domestic callers by dialing toll free +1 (800) 839-3736 and to international callers by dialing +1 (402) 220-2978. An archived replay will also be available through August 29, 2026 on a webcast link located on the Home page of the Investor Resources section of Ares Capital's website.

ABOUT ARES CAPITAL CORPORATION

Founded in 2004, Ares Capital is a leading specialty finance company focused on providing direct loans and other investments in private middle market companies in the United States. Ares Capital's objective is to source and invest in high-quality borrowers that need capital to achieve their business goals, which often leads to economic growth and employment. Ares Capital believes its loans and other investments in these companies can generate attractive levels of current income and potential capital appreciation for investors. Ares Capital, through its investment manager, utilizes its extensive, direct origination capabilities and incumbent borrower relationships to source and underwrite predominantly senior secured loans but also subordinated debt and equity investments. Ares Capital has elected to be regulated as a business development company ("BDC") and was the largest publicly traded BDC by market capitalization as of June 30, 2026. Ares Capital is externally managed by a subsidiary of Ares Management Corporation (NYSE: ARES), a publicly traded, leading global alternative investment manager. For more information about Ares Capital, visit www.arescapitalcorp.com.

CONTACT

Ares Capital Corporation
Carl G. Drake or John Stilmar
(888) 818-5298
[email protected]

SOURCE Ares Capital Corporation

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Most parents approach a wedding as a bill. Save the money, write the checks, and move on. Investors can look at it differently. Instead of asking how much the wedding will cost, ask how much capital would be required to generate that amount from portfolio income. The answer reveals something interesting: the wedding lasts one day, but the asset that funded it can keep working for decades.

Why Weddings Feel Different Unlike many large expenses, weddings are rarely controlled by a single decision-maker. The parent funding the event often has to balance competing expectations from a spouse, a daughter, a future son-in-law, extended family, new in-laws, and a culture that constantly showcases elaborate celebrations. Social media and friends’ weddings create reference points that may bear little resemblance to the family’s actual financial situation.

In theory, a wedding budget is a choice. In practice, many parents feel significant pressure to provide a memorable event for their children. That emotional reality helps explain why families often spend more on weddings than they originally intended and why planning for the expense years in advance can be so valuable.

What Weddings Actually Cost in 2026 The industry benchmark for an average US wedding sits near $33,000, and persistent inflation is pushing it higher. CPI rose to 334.0 in May 2026, the high end of its 12-month range, and venue and catering categories run hotter than headline CPI. A rough cost map looks like this:

Venue and catering: typically 40% to 50% of the budget, scaling directly with guest count. Photography and video: 10% to 15%, often the second-largest line item. Flowers, entertainment, and rentals: 15% to 20% combined. Attire, rings, and travel: the remaining 20% to 30%, highly variable by region. A modest local ceremony can land at $15,000. A destination wedding with 200 guests can push past $60,000.

The Wedding Fund Versus The Wedding Portfolio The default approach: save cash, write the check, start over. The alternative: build a portfolio large enough that its annual income covers the bill across a multi-year savings window, leaving principal intact for whatever comes next.

Assume the wedding is three years out. The annual income each budget needs, and the capital required at four yield levels, looks like this:

Budget Annual income 3.5% yield 5% yield 7% yield 10% yield $15,000 $5,000 $143,000 $100,000 $71,000 $50,000 $35,000 $11,667 $333,000 $233,000 $167,000 $117,000 $60,000 $20,000 $571,000 $400,000 $286,000 $200,000 Where the Yield Comes From The conservative tier (roughly 2% to 4%) is dividend-growth territory. Johnson & Johnson (NYSE:JNJ | JNJ Price Prediction) yields 2.2% but just declared its 64th straight annual increase, lifting the payout to $1.34 per quarter. NextEra Energy (NYSE:NEE) yields 2.7% and guides to roughly 10% annual dividend growth through 2026.

The moderate tier (5% to 7%) covers net-lease REITs and high-dividend equity. Realty Income (NYSE:O) pays monthly, currently yielding 5.3%, with 670 consecutive monthly dividends declared. Altria (NYSE:MO) yields 6.1% and raised the quarterly payout to $1.06 earlier this year.

The aggressive tier (10%+) brings BDCs and mortgage REITs. Ares Capital (NASDAQ:ARCC) yields 10.6%. AGNC Investment (NASDAQ:AGNC) yields roughly 14%, but tangible book value fell 5.6% in Q1 2026. Compare for context: the 10-year Treasury sits at 4.5% and the average 12-month CD pays just 1.7%.

The Income Growth Advantage Wedding inflation does not stop on the engagement day. A 3.5% yield that grows at 8% annually doubles in nine years. A 14% yield with eroding principal will not. JNJ returned 157.6% over the past decade and NextEra 261.2%, while AGNC returned 84.5% over the same span despite a far higher headline yield.

The Second Wedding Problem If you don’t have just one child, the decisions made for the first wedding often create expectations for the second and third. If one daughter receives a $35,000 wedding, parents may feel obligated to provide something similar for her siblings, both for reasons of fairness and family harmony. The fairness question applies to sons as well as daughters. Parents who contribute substantially to one child’s wedding often feel pressure to provide something comparable for siblings, whether that takes the form of a wedding contribution, a honeymoon fund, help with a first home, or another major life milestone.

This is where a dedicated portfolio becomes particularly valuable. A portfolio that funds one wedding without touching principal may continue generating income for the next wedding, the next child, or even the next generation. Instead of starting from zero after every celebration, the same pool of capital can support multiple family milestones over time.

Many parents would rather watch their assets create memories than simply transfer through an estate. The portfolio approach offers the possibility of doing both. The income funds today’s wedding while the principal continues compounding for tomorrow’s opportunities and obligations.

The Counterargument This approach is not for everyone. Many couples now cover part or all of their own wedding expenses. Parents nearing retirement may have more urgent priorities, particularly healthcare and long-term care planning. A modest wedding can often be funded through a high-yield savings account without building a dedicated portfolio. If the wedding is less than three years away, sequence risk and the tax drag of higher-yield investments can make the portfolio approach less attractive than simply saving cash.

There is also a conversation worth having before anyone writes a check. Parents sometimes assume their children want the largest wedding possible, but that is not always true. Some couples would gladly trade a larger reception for help with a down payment on a home, paying off student loans, starting a business, or building an emergency fund. Others may prefer a small ceremony or even an elopement if it means beginning married life with greater financial security.

The goal is not simply to fund a wedding. It is to help launch the next stage of your child’s life. Sometimes the most valuable gift is not a bigger event, but greater freedom and opportunity after the honeymoon ends.

What to Do Next Decide whether you are funding a one-time event or a recurring family-milestone income stream. The math, and the tier you target, hinge on that answer. Run a side-by-side total-return comparison of a dividend-growth name against a high-yield name over the same decade before committing capital. Model the tax bracket impact of each tier if the wedding is within five years. Qualified dividends and BDC distributions are taxed very differently. Contact [email protected] for any questions or corrections.

Ares Capital (ARCC - Free Report) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.

Over the past month, shares of this private equity firm have returned -2.9%, compared to the Zacks S&P 500 composite's -2.9% change. During this period, the Zacks Financial - SBIC & Commercial Industry industry, which Ares Capital falls in, has lost 0.9%. The key question now is: What could be the stock's future direction?

Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.

Revisions to Earnings EstimatesRather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.

We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

Ares Capital is expected to post earnings of $0.47 per share for the current quarter, representing a year-over-year change of -6%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

For the current fiscal year, the consensus earnings estimate of $1.91 points to a change of -5.1% from the prior year. Over the last 30 days, this estimate has remained unchanged.

For the next fiscal year, the consensus earnings estimate of $1.93 indicates a change of +1% from what Ares Capital is expected to report a year ago. Over the past month, the estimate has remained unchanged.

With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Ares Capital.

The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS

Revenue Growth ForecastWhile earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.

In the case of Ares Capital, the consensus sales estimate of $776.52 million for the current quarter points to a year-over-year change of +4.2%. The $3.14 billion and $3.2 billion estimates for the current and next fiscal years indicate changes of +3% and +1.9%, respectively.

Last Reported Results and Surprise HistoryAres Capital reported revenues of $763 million in the last reported quarter, representing a year-over-year change of +4.2%. EPS of $0.47 for the same period compares with $0.5 a year ago.

Compared to the Zacks Consensus Estimate of $768.96 million, the reported revenues represent a surprise of -0.77%. The EPS surprise was -2.08%.

Over the last four quarters, Ares Capital surpassed consensus EPS estimates times. The company topped consensus revenue estimates just once over this period.

ValuationWithout considering a stock's valuation, no investment decision can be efficient. In predicting a stock's future price performance, it's crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company's growth prospects.

While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.

The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an A is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

Ares Capital is graded D on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Bottom LineThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Ares Capital. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.

In the latest close session, Ares Capital (ARCC - Free Report) was up +1.11% at $18.19. This change outpaced the S&P 500's 0.05% loss on the day. Meanwhile, the Dow lost 0.09%, and the Nasdaq, a tech-heavy index, lost 0.24%.

Shares of the private equity firm have depreciated by 4.36% over the course of the past month, underperforming the Finance sector's gain of 2.3%, and the S&P 500's loss of 1.42%.

The investment community will be closely monitoring the performance of Ares Capital in its forthcoming earnings report. The company is expected to report EPS of $0.47, down 6% from the prior-year quarter. Meanwhile, the latest consensus estimate predicts the revenue to be $776.52 million, indicating a 4.23% increase compared to the same quarter of the previous year.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $1.91 per share and revenue of $3.14 billion, indicating changes of -4.98% and +2.98%, respectively, compared to the previous year.

Investors might also notice recent changes to analyst estimates for Ares Capital. These recent revisions tend to reflect the evolving nature of short-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the business and profitability.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.

The Zacks Rank system, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. Ares Capital presently features a Zacks Rank of #3 (Hold).

With respect to valuation, Ares Capital is currently being traded at a Forward P/E ratio of 9.43. This represents a premium compared to its industry average Forward P/E of 7.92.

The Financial - SBIC & Commercial Industry industry is part of the Finance sector. At present, this industry carries a Zacks Industry Rank of 211, placing it within the bottom 14% of over 250 industries.

The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow ARCC in the coming trading sessions, be sure to utilize Zacks.com.

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SummaryAres Capital is upgraded to "Strong Buy" due to its attractive valuation and near-11% dividend yield.ARCC trades at a 9% discount to book value, with a well-diversified $29.5 billion portfolio and low nonaccruals supporting downside protection.Risks from AI-related software exposure exist, but ARCC's prudent underwriting and scale offer resilience in a volatile market.Looking for a portfolio of ideas like this one? Members of iREIT®+HOYA Capital get exclusive access to our subscriber-only portfolios. Learn More »Sitewide Sale 2026: Get 20% Off Vivek Vishwakarma/iStock via Getty Images

I love a good bargain and call them as I see them. When combined with a high yield, these investments can turn out to be long-term winners with downside protection. This fits with the classic example of heads I win, tails I don’t lose

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of ARCC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I am not an investment advisor. This article is for informational purposes and does not constitute as financial advice. Readers are encouraged and expected to perform due diligence and draw their own conclusions prior to making any investment decisions.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Sixty thousand dollars a year is the income many retirees are actually trying to replace. It is enough to support a comfortable lifestyle in much of the country, especially for households that have paid off their mortgage and eliminated other major debts. The challenge is not simply generating that income today. It is generating it in a way that preserves purchasing power tomorrow. The question this article answers is straightforward: How much capital does it take to produce $60,000 a year, and which income strategy leaves you with more money ten years down the road?

The three yield tiers, in dollars The math is unforgiving. Income target divided by yield equals capital required.

Conservative (3% to 4%): At a 3.5% yield, the capital required lands in the dividend growth zone of blue-chip payers like Johnson & Johnson (NYSE:JNJ | JNJ Price Prediction) yielding 2.3%, Procter & Gamble (NYSE:PG) at about 3%, Coca-Cola (NYSE:KO) at 2.7%, and broad dividend-growth equity funds. Highest capital required, lowest risk of income disruption. Moderate (5% to 7%): At a 7% yield, the capital needed drops sharply. Preferred shares, equity REITs, covered-call equity funds, and high-dividend value funds live here. Growth slows or stalls, and upside is often capped. Aggressive (8% to 14%): At a 12% yield, capital required drops the most. This is Ares Capital (NASDAQ:ARCC) at 10.2%, AGNC Investment (NASDAQ:AGNC) near 14%, leveraged covered-call funds, and high-yield credit. Lowest capital today. Highest risk that distributions get cut and principal erodes. How $60,000 becomes $125,000 Yield is a snapshot.

Dividend growth is the movie. Johnson & Johnson has raised its dividend for 64 consecutive years, increasing its quarterly payout from $0.375 in 2006 to $1.34 in 2026. Coca-Cola and Procter & Gamble have also spent decades steadily increasing their distributions, rewarding investors who prioritized growth over headline yield.

Now consider the math. A dividend income stream growing at 7% annually roughly doubles every ten years. That means a portfolio generating $60,000 today could be producing nearly $120,000 a decade from now and substantially more after that. This is the core appeal of dividend-growth investing: accepting a smaller paycheck today in exchange for a much larger one later. Over a long retirement, the portfolio that starts behind can ultimately finish far ahead.

What inflation does to a flat check A flat income stream is not really flat. Inflation steadily erodes purchasing power, even when the dollar amount never changes. At 3% annual inflation, a $60,000 income stream buys significantly less after 10 years and dramatically less after 20. The high-yield investment that looks generous in year one may not feel nearly as generous a decade later if the payout fails to grow alongside the cost of living.

Investor A versus Investor B Investor A starts with a higher income stream that remains largely unchanged. Investor B starts with less income but increases that income by 7% per year. Over time, the growing stream catches and eventually surpasses the flat one. Given a long enough horizon, the lower-yield, higher-growth portfolio can produce both greater annual income and greater cumulative income, despite starting far behind.

When current yield wins anyway Dividend growth works best when time is on your side. Investors with shorter time horizons may reasonably prefer current income over future income growth. Someone in their late seventies who depends on portfolio income today may benefit more from a larger check now than a potentially larger check fifteen years from now. In those situations, higher-yield investments can make a great deal of sense.

The key variable is time. A retiree with twenty or thirty years ahead may be well served by accepting a lower starting yield in exchange for decades of dividend growth. A retiree with a much shorter horizon may reach the opposite conclusion. Neither approach is inherently right or wrong. The best choice depends on whether you have enough time for compounding to matter.

What now? Calculate your actual spending, not your salary. The replacement number is often well below gross income because payroll taxes and savings contributions disappear in retirement. Compare the 10-year total return of a dividend-growth fund against a high-yield fund, including reinvestment. The gap is rarely closed by yield alone. If you are within five years of needing the income, model a blended portfolio: aggressive-tier yield on the dollars you need in years 1 to 5, dividend growth on the dollars you need in years 10 and beyond.

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A $2 million dividend portfolio may appear straightforward on paper, but the amount investors actually get to spend depends heavily on taxes. In California, the gap between gross portfolio income and after-tax cash flow can be substantial. Federal dividend tax rates, the net investment income tax, state income taxes, and the classification of each distribution all influence how much money ultimately reaches a retiree’s bank account.

That distinction is often overlooked in income comparisons. Two portfolios can produce the same headline yield while delivering very different amounts of spendable income. In some cases, a lower-yield portfolio built around qualified dividends can generate more after-tax cash than a much higher-yield portfolio whose distributions are taxed as ordinary income. Yield is only the starting point. What matters is how much of that income survives the tax bill.

The Conservative Tier: Qualified Dividends from Blue Chips Consider Johnson & Johnson (NYSE:JNJ | JNJ Price Prediction) as the anchor. The current yield sits at 2.3%, and the company just raised its quarterly payout to $1.34 per share, extending a 64-year streak of annual increases. Build a diversified dividend-growth sleeve around it and a 3.5% blended yield is reasonable.

On $2 million at 3.5%, gross income is $70,000. These are qualified dividends. For a high-bracket California couple, the stack is roughly 20% federal + 3.8% NIIT + 13.3% state, or about 37% combined. Net spendable income: roughly $44,100.

The trade-off is that JNJ’s dividend grew from $0.54 per quarter in 2010 to $1.34 in 2026. That compounding is the whole point of this tier.

The Moderate Tier: REITs and Utility CEFs Stepping up to 5% to 7% yield brings in real estate and closed-end utility funds. Realty Income (NYSE:O) yields 5.4% and pays monthly, with 670 consecutive monthly distributions and a current payment of $0.2705 per share. Reaves Utility Income Fund (NYSE:UTG) pushes the yield closer to 7% through $0.20 monthly distributions.

At a 6% blended yield, $2 million produces $120,000 gross. Here the tax math turns ugly. REIT distributions are pass-through ordinary income, though the 20% qualified business income deduction softens the federal bite. UTG mixes qualified dividends with return of capital. Assume a blended effective rate near 40% for a top-bracket Californian. Net spendable: about $72,000.

The income jumps. The growth slows. Realty Income’s monthly raise from $0.27 to $0.2705 is the cadence to expect: real, but small.

The Aggressive Tier: BDCs and Leveraged Bond Funds Ares Capital (NASDAQ:ARCC) yields 10.2% with a steady $0.48 quarterly distribution that has held for eight consecutive quarters. PIMCO Dynamic Income Fund (NYSE:PDI) pays a flat $0.2205 monthly, pushing distribution yield into the 13% to 14% range.

A 50/50 split would yield roughly 12%, or $240,000 on $2 million. BDC and leveraged CEF distributions are almost entirely ordinary income. In California, the top federal rate of 37%, plus 3.8% NIIT, plus 13.3% state can exceed 50%. Net spendable: roughly $120,000.

Two further problems hide inside that number. ARCC trades around $19, just below its roughly $20 NAV, and is down about 6% over the past year. PDI’s flat distribution since 2020 has been supported by periodic special year-end distributions that effectively returned capital. High yield, eroding base.

The Tax Trap Hidden Inside Portfolio Income Two portfolios can generate the same $120,000 in annual income and leave their owners with very different amounts of spendable cash. The difference often comes down to taxes. Income from qualified dividends generally receives more favorable tax treatment than REIT distributions, closed-end fund payouts, bond interest, or business development company distributions. In high-tax states such as California, that distinction can translate into thousands of dollars of additional after-tax income each year.

That advantage compounds over time. A portfolio built around companies with a history of dividend growth not only benefits from favorable tax treatment but also has the potential to generate a larger income stream in the future. Dividend increases help offset inflation and reduce the need to reach for ever-higher yields. Investors who focus exclusively on headline income can miss the fact that the most valuable dollar is often the one they actually get to keep.

The long-term effect becomes even more pronounced when income growth enters the equation. A company that steadily raises its dividend can turn a modest yield today into a much larger income stream a decade from now. Higher-yield investments still have a place, particularly for investors who need income immediately, but the combination of tax efficiency and dividend growth can make lower-yielding portfolios surprisingly competitive over a full retirement.

Today’s “To Do” List Pull your actual California marginal rate and federal bracket, then recalculate each tier using your real combined rate rather than the top-of-stack assumption used here. California’s cost of living index near 111 compresses purchasing power further. Compare 10-year total return, not yield, between a qualified-dividend grower and a high-yield BDC or bond CEF. Add reinvested distributions on both sides before deciding. Benchmark every yield against the 4.5% 10-year Treasury. If a position pays you 5% pre-tax of ordinary income, the after-tax spread over Treasuries may be negative for a top-bracket Californian.

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The average federal student loan borrower leaves school owing roughly $38,000, though balances of $50,000 or more are common among graduate students and many private-college graduates. Depending on interest rates and repayment terms, that debt can create a substantial monthly obligation just as a young adult is trying to rent an apartment, buy a first home, start a family, or begin saving for retirement.

Helping a child carry $50,000 of student loan debt typically costs a parent about $600 a month, or $7,200 a year, for a decade. That money has to come from somewhere: wages, Social Security, retirement savings, or portfolio income. A different approach is to build a portfolio whose dividends cover the payment, allowing the underlying capital to remain invested while the income stream does the work.

Why Parents Might Pay Off Their Child’s Student Loans Many parents already carry education debt of their own through private loans or Parent PLUS loans used to help fund a child’s education. Those obligations are separate from student loans in the child’s name, which often come with lower interest rates and more flexible repayment options.

For some families, helping with those student loans is about more than generosity. A lower debt burden can help a young adult qualify for a mortgage, move into their own place, start saving, and build financial stability sooner. In that sense, paying down student debt may be viewed not just as a gift, but as an investment in a child’s independence.

Parents in this situation may also be giving their children the gift of a stronger credit profile. When the loans are in the child’s name, consistent payments help build a positive payment history, while a declining loan balance improves the borrower’s overall debt picture. A stronger credit record can translate into better borrowing terms in the future, potentially lowering the cost of mortgages, auto loans, and other forms of credit.

Here are three tiers to reach the goal of funding $600 monthly payments on a $50,000 student loan debt.

The 3.5% Tier: Blue-Chip Dividend Growth This is the “sleep at night” range populated by dividend kings and regulated utilities. Johnson & Johnson (NYSE:JNJ | JNJ Price Prediction) yields about 2.2% after raising its quarterly payout to $1.34, extending a six-decade streak of annual increases. Southern Company (NYSE:SO), the Atlanta utility serving millions of customers across the Southeast, yields about 3.2% and has lifted its quarterly dividend from $0.64 in 2021 to $0.74 recently. A blended 3.5% basket is diversified and is the most likely to appreciate, but it takes the largest check upfront.

The 5% Tier: REITs and Mature Telecom Realty Income (NYSE:O), the net-lease REIT known for its 670+ consecutive monthly dividends, yields about 5.2%. Mature telecom names guiding to strong free cash flow round out this tier with similar payouts. The tradeoff at this tier is slower dividend growth and a payout that tracks, but does not lead, inflation.

The 7% Tier: Hybrid Income Reaching 7% generally means blending REITs with preferred shares, investment-grade corporate bond funds yielding above the 4.5% 10-year Treasury, and selective covered-call equity strategies. Capital drops to about $102,900, but the income stream stops compounding meaningfully.

The 10% Tier: BDCs and Mortgage REITs Ares Capital (NASDAQ:ARCC), the largest publicly traded business development company, yields nearly 10% at its $0.48 quarterly rate. AGNC Investment (NASDAQ:AGNC) yields about 14%, but its dividend has fallen from $1.50 quarterly in 2009 to $0.12 monthly, and tangible book value declined last quarter. High current income, frequent principal erosion.

Check vs. Portfolio Writing the check from wages or a 401(k) withdrawal locks the family’s cash flow to the loan schedule. A portfolio paying $600 in dividends preserves the principal, can be re-tasked to other needs once the loan is gone, and steps the parent off the monthly treadmill. The tradeoff is the capital itself: if that $144,000 came from a brokerage account, it is no longer available for an emergency.

Why Lower Yield Often Wins A 3.5% portfolio that grows its payout 7% a year delivers about $14,160 of annual income after 10 years and roughly $27,860 after 20. A 10% portfolio with a flat or declining payout still produces $7,200 in year one but is generating the same nominal dollars two decades later, while CPI has risen to 334.0 and counting. JNJ illustrates the compounding: its quarterly payout grew from $0.80 in 2016 to $1.34 today.

When Paying Off the Loans Is the Better Investment A dividend portfolio is not automatically the right answer. When student loans carry high interest rates, especially variable-rate private loans or newer Parent PLUS loans with rates in the upper single digits, paying off the debt may provide a better risk-adjusted return. Eliminating a loan charging 8% or more is effectively a guaranteed return that many income portfolios cannot match after taxes and volatility.

The type of loan matters as well. If the debt is in the child’s name, the obligation remains with the child even if the parent helping with payments passes away. Parent PLUS loans work differently. Because the debt belongs to the parent borrower, the remaining balance is generally discharged upon the parent’s death. For some families, that makes directing extra dollars toward the child’s loans a higher priority, since those balances could otherwise follow the child for many years.

Direct payoff is also the stronger choice for households approaching retirement without a substantial emergency fund or for investors who know they would struggle to stay invested during a market downturn. Income strategies only work if the investor can hold through the inevitable periods of volatility.

Three Actions Pull the loan’s actual interest rate and amortization schedule. Anything above 7% fixed is hard to beat with dividends after tax. Compare a 10-year total-return chart of a 3.5%-yield dividend grower against a 10%-yield BDC or mortgage REIT before committing capital to either tier. Decide whether the goal is covering the payment for 10 years or building a permanent income stream. The answer dictates which tier fits.

A Super Bowl weekend is one of the most in-demand and expensive recurring trips in American life. Tickets, airfare, hotels, meals, and ground transportation commonly run $8,000 to $15,000 per couple, so a realistic annual budget lands near $12,000. Can your portfolio can pay for one every February without ever touching principal? That is the work a $650,000 portfolio can do, and the path you choose to get there matters more than the headline yield.

The Math Behind the Annual Ticket The underlying math is straightforward: divide the annual income target by the portfolio yield to estimate the capital required. Generating $12,000 per year requires approximately $400,000 at a 3% yield, $300,000 at 4%, $200,000 at 6%, $120,000 at 10%, and $100,000 at 12%.

A $650,000 portfolio would comfortably exceed the $12,000 annual income goal across all of those yield levels. The more important question is not whether the target can be reached, but how much excess income you want, how much dividend growth you expect over time, and how much risk to principal and income stability you are willing to accept in pursuit of a higher yield.

Conservative Tier: 3% to 4% Dividend Growers This is the dividend-aristocrat lane: large-cap consumer staples, healthcare, and regulated utilities. Yields are modest, but distributions tend to grow faster than inflation.

Johnson & Johnson (NYSE:JNJ | JNJ Price Prediction) yields about 2.3% after 64 consecutive years of increases, with the latest hike lifting the quarterly payout to $1.34. Procter & Gamble (NYSE:PG) yields around 3% and just delivered its 70th consecutive annual raise, with FY26 plans for roughly $10 billion in dividends and $5 billion in buybacks.

At a 3.5% blended yield, $650,000 throws off roughly $22,750 a year. That covers a couple’s Super Bowl trip with almost $10,000 left over for off-season travel, and the income stream itself is engineered to compound.

Moderate Tier: 5% to 7% REITs and Utilities For true moderate yield, Realty Income (NYSE:O) pays a monthly $0.2705, yielding about 5.4% after 114 consecutive quarterly increases and 670 straight monthly payments. Regulated utilities in the Southeast offer a similar profile, leaning on data center demand across the Southeast.

A $650,000 sleeve at a 6% blended yield generates roughly $39,000 in annual income. The trip is funded three times over. The tradeoff is slower distribution growth and more sensitivity to long Treasury yields, which currently sit near 4.5%.

Aggressive Tier: 8% to 14% BDCs and Mortgage REITs Ares Capital (NASDAQ:ARCC) yields roughly 10% on a $0.48 quarterly payout, backed by a portfolio earning 10% on debt investments at amortized cost. A leading mortgage REIT yields about 14% on a $0.12 monthly dividend, but Q1 2026 brought a $0.17 per share net loss and a 6% drop in tangible book value to $8.38.

At a 10% blended yield, $650,000 produces $65,000 a year. That funds a Super Bowl trip, a cruise, and a European vacation. AGNC has cut its dividend twice in six years, falling from $0.18 to $0.12 monthly, and its shares still trade near $10. High current yield, real principal risk.

The Compounding Insight The cost of the trip will not remain $12,000 forever. Inflation steadily raises the price of airfare, hotels, meals, tickets, and other travel expenses. Even if general inflation moderates, travel-related costs often rise faster than the headline rate.

That is why dividend growth can matter more than starting yield. A portfolio yielding 3.5% today that increases its distributions by 6% to 8% annually could potentially double its income within a decade. By contrast, a portfolio yielding 12% that produces little growth, or experiences dividend cuts, may generate more income today but struggle to keep pace with rising costs over time. The goal is not simply to fund this year’s trip. It is to create an income stream that can continue funding future trips without losing purchasing power.

Three Moves to Make This Week Price your actual trip. Build a real budget for tickets, flights, and four hotel nights in the host city. Most readers overestimate or underestimate by thousands. Compare 10-year total returns. Run a dividend-growth basket against a high-yield basket over the last decade. The growth side usually wins on total return, even when starting yields look unimpressive. Open a dedicated “experience” account. Route distributions from a specific sleeve into one brokerage account used only for travel. When the cash is there, the trip stops feeling like a splurge.

Ares Capital (ARCC +1.00%) currently pays a $0.48-per-share quarterly dividend. At its recent stock price of around $19, the business development company (BDC) yields more than 10%. That's about 10 times the S&P 500's yield, which currently sits around 1%.

Investors are running out of time to lock in the financial stock's currently sky-high yield. Here's why you might want to act fast.

Image source: Getty Images.

Two reasons timing matters Ares Capital announced its second-quarter dividend payment at the end of April when it reported its first-quarter financial results. The BDC will pay that dividend on June 30th. However, an investor would need to be a shareholder before the market closes on June 15. An investor who buys after that date wouldn't receive their first dividend until the third-quarter payment, which Ares has historically paid on the last day of September.

Waiting to buy also risks locking in a lower yield. The REIT's share price has fallen about 8% this year, pushing its yield to around its highest level in the last five years:

ARCC Dividend Yield data by YCharts

However, the share price has already bounced off its recent bottom, and could continue rallying, which would steadily lower the yield. While shares have fallen over the past year due to concerns about the private credit market and falling interest rates, Ares is in a strong position to navigate both headwinds.

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The current dividend rate remains sustainable Ares Capital has paid a stable-to-growing dividend for 67 consecutive quarters. The BDC expects to continue delivering dividend sustainability going forward.

While its core earnings dipped in the first quarter, falling to $0.47 per share (from $0.50 per share in both the fourth quarter and the first quarter of last year) and below the current dividend rate, its payout remains on a solid footing. Ares Capital also booked $0.15 per share in net realized gains in the first quarter, which, when added to its core earnings, resulted in total earnings well in excess of the dividend. That provides "a strong underlying foundation for current distributions," stated CEO Kort Schnabel on the first-quarter conference call.

The CEO went on to note that the "foundation is further supported by ample spillover income, modest leverage, a more stable rate environment, and credit performance that aligns with our historical track record." Ares Capital carried forward $1.38 per share of excess taxable income from last year for distribution in 2026. The company also stress-tested its software-oriented portfolio to assess the AI risk of its portfolio companies, finding that 85% are at low risk. Meanwhile, only 1% of those companies are at high risk, representing about 0.3% of its total portfolio, and 14% are at medium risk, accounting for only 3% of its total loan portfolio. These factors drive the company's continued belief that the "current dividend approximates the long-run underlying earnings power of our business," the CEO stated on the call.

Buy soon to lock in the next dividend Ares Capital will pay its next dividend at the end of the month. However, investors need to hold shares by market close on the 15th to receive that payment and lock in its current yield of more than 10%. The BDC should continue paying its current rate for the foreseeable future, making it an enticing stock for those seeking a lucrative income stream.

The main reason most investors own Ares Capital (ARCC +1.00%) is its massive 10% dividend yield. For reference, the S&P 500 index (^GSPC +0.50%) has a yield of just 1.1%. Before you buy this business development company (BDC), however, you need to step back and make sure you understand just how risky the dividend is.

The ugly truth about Ares Capital's dividend If you are looking for a stock with a stable or even slowly growing dividend, you will be highly disappointed with Ares Capital. The dividend history here is very clear: Ares Capital's dividend rises and falls over time. There is zero reason to expect that to change in the future, with the stock generally following the dividend higher and lower. It all relates back to the company's core business model.

Image source: Getty Images.

As a business development company, Ares Capital makes loans to smaller businesses that lack access to cheaper capital. In the first quarter of 2026, the average interest rate on its loans was a massive 10.3%. That's how it supports such a huge dividend, but there are negatives to consider here.

For example, interest rate changes will impact the rates it can charge. In fact, many of its loans carry variable rates, so they will adjust higher and lower fairly quickly. That increases dividend risk in a falling-rate environment. Ares Capital benefits when rates rise, but there's a risk here, too. Smaller companies may have difficulty covering rising interest costs. And if there is a recession, well, financial stress could easily lead to payment troubles among Ares Capital's customers. In fact, the dividend was trimmed during each of the last two economic downturns.

There is a canary in this coal mine Ares Capital is basically a public business that invests in private credit. It is designed to pass income on to shareholders, so the dividend will likely be sizable all of the time. However, it will be variable, rising and falling along with the business environment. If you need the income from your portfolio to cover living expenses, it probably won't be a good fit. But if you can accept some dividend volatility, it is a well-respected BDC.

Understanding this nuance is very important right now. The business news is filled with stories about private credit funds limiting withdrawals, including Blackstone (BX +1.58%), which is doing so for its flagship fund. That's not an indication the sky is falling, noting that Ares Capital's non-accrual loans stood at a reasonable 2.1% of its portfolio at the end of the first quarter. There's really no reason to believe the dividend is at risk right now.

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However, the uptick in withdrawal requests from private credit funds indicates that investors are worried about smaller, often higher-risk businesses with high-interest rate loans. Investors usually try to get ahead of potential losses from defaults by withdrawing assets before the problem becomes widespread. Limiting withdrawals allows private credit funds to control the impact and limit the need to sell assets in a rush. While that's not a dynamic that impacts Ares Capital, since the only option for investors is to sell the stock, you shouldn't ignore the withdrawal limits being imposed by private credit funds. This could be a leading indicator of dividend risk at Ares Capital.

Ares Capital isn't a bad investment if you understand it If there is a recession, which some on Wall Street fear could be in the cards, the types of companies that Ares lends to could find it harder to cover their interest costs. Trimming its dividend is how Ares Capital handles such situations. It will keep paying a dividend, but just at a lower rate for a while until business conditions improve. The negative headlines about private credit markets are a sign that dividend investors should prepare for a possible dividend cut, even if one doesn't happen this time around, because history shows that the dividend will eventually be cut.

Twelve thousand dollars a month in dividend income sounds simple enough until you start doing the math. Many investors assume they can reach that number with a seven-figure portfolio and a handful of high-yield stocks. In reality, the capital required ranges from about $1.4 million to more than $4 million, depending on the yield you target, the risks you are willing to accept, and how much future dividend growth you are willing to sacrifice for income today.

Before sizing the portfolio, size the goal. Twelve thousand dollars a month works out to $144,000 a year, which is roughly what a senior engineer, experienced attorney, or successful small-business owner might earn. But replacing a salary and replacing a lifestyle are not the same thing. Once payroll taxes, retirement contributions, commuting costs, and other work-related expenses disappear, many households need substantially less money than their gross income suggests. The capital required to replace your spending can be 25% to 35% lower than the capital required to replace your paycheck. Run that number first. Then decide how much risk you are willing to take to get there.

The Conservative Tier: 3% to 4% Yield At a 3.5% yield, generating $144,000 takes roughly $4.1 million in invested capital. At 4%, the figure drops to $3.6 million. This is the range for dividend-growth blue chips and broad equity income funds.

Johnson & Johnson (NYSE:JNJ | JNJ Price Prediction) yields 2.3%, a touch below the tier but with 64 consecutive years of dividend increases. The board lifted the quarterly payout to $1.34 in May 2026, up from $0.285 back in 2005. Procter & Gamble (NYSE:PG) yields 3.0% and just delivered its 70th consecutive annual dividend increase. Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) charges 6 basis points and holds names like Merck, Chevron, Lockheed Martin, and Coca-Cola, giving you sector breadth in one ticket.

The tradeoff is obvious. You need the most capital. The payoff is principal that tends to appreciate and an income stream that historically outpaces inflation.

The Moderate Tier: 5% to 7% Yield At 6%, the required capital falls to $2.4 million. This range is where REITs, preferred shares, covered-call ETFs, and high-dividend equity funds live.

Realty Income (NYSE:O) pays monthly and yields 5.4%, putting the capital requirement near $2.7 million. The triple-net REIT has logged 114 consecutive quarterly dividend increases and 670 consecutive monthly payments, with portfolio occupancy at 99% and 2026 AFFO guidance of $4.41 to $4.44 per share. Outside REITs, covered-call income ETFs and preferred-stock funds round out the tier.

Dividend growth slows in this band. Realty Income raised the monthly payment from $0.27 to $0.2705 earlier this year, a meaningful but measured bump. Covered-call funds cap your upside in rallies. You trade a slice of long-term appreciation for current cash.

The Aggressive Tier: 8% to 12% Yield At 10%, the math becomes seductive: $1.4 million generates $144,000. Ares Capital (NASDAQ:ARCC), the largest publicly traded business development company, yields 10.2% with a $0.48 quarterly distribution that has held steady for 8 consecutive quarters. The portfolio earns a weighted average yield of 10.3% and is 72% floating rate. Mortgage REITs, leveraged covered-call funds, and high-yield bond funds occupy similar ground.

Read the price chart with eyes open. ARCC shares are down about 6% over the past year and trade below book value at almost $20. The income is high; the principal moves.

The Compounding Trap Most Income Investors Miss Johnson & Johnson’s quarterly dividend grew from $0.285 in 2005 to $1.34 in 2026, roughly a fivefold increase. Ares Capital’s quarterly payout rose from $0.40 in 2020 to $0.48 today and has been flat for the past two years. That difference highlights the tradeoff between yield and growth.

A portfolio generating $144,000 annually from dividend-growth stocks may produce substantially more income a decade from now. A high-yield portfolio starts with a larger check, but that check may barely grow at all. Meanwhile, inflation keeps reducing its purchasing power. The danger is focusing so heavily on today’s yield that you overlook what your income stream might look like ten or fifteen years down the road.

Three Moves That Matter Audit your actual spending against your salary. The national savings rate has fallen to 3.7%, which means most paychecks are fully consumed, but pre-retirement expenses like commuting and retirement contributions still disappear at the finish line. Blend the tiers. A portfolio that is 60% conservative, 25% moderate, and 15% aggressive can land near a 5% blended yield with meaningful growth, cutting capital required to roughly $2.9 million without parking everything in BDCs. Place high-yield holdings inside an IRA or Roth. Ordinary-income distributions from BDCs and mortgage REITs are taxed at your marginal rate; qualified dividends from JNJ or PG are not. Asset location can be worth a full percentage point of after-tax yield.