Investing in Dividend Stocks: Methods and Top Annual Dividend Payers

Investing in Dividend Stocks: Methods and Top Annual Dividend Payers

Top U.S. Dividend Stocks Offer Attractive Yields and Sustainable Payouts

Investing in dividend stocks can be a lucrative strategy for those seeking regular income from their portfolio. These are shares of companies that regularly pay investors a portion of their revenue. Some dividend stocks pay out annually, semi-annually, or quarterly, while others offer monthly dividends.

However, it's essential to do due diligence before investing in dividend stocks. A too-high dividend yield can indicate that the payout is unsustainable. To look under the hood of a dividend stock, compare its dividend yield among its peers and evaluate its payout ratio.

In recent data from 2025, notable dividend payers with strong yields and potential for sustainable payouts include:

• Franklin Templeton (BEN): An asset management firm recognized as a top-performing dividend payer with healthy financials and consistent dividend growth.
• Scotts Company (SMG) and Hasbro (HAS): These companies also demonstrated strong dividend performance in Q2 2025.
• Prospect Capital Corporation (PSEC): A Business Development Company (BDC) offering a high yield (16.6%) focused on private debt.
• PennantPark Floating Rate Capital (PFLT): Another BDC with a high dividend yield (11.8%), though earnings recently missed estimates, indicating some risk in sustaining dividends.
• Ares Capital: A well-run BDC noted for good dividend support through diversified capital sources.
• Prudential (Financials, Life and Health Insurance): Offers a solid dividend yield around 5.0% with a safe dividend and a long streak signaling payout reliability.
• National Retail Properties (NNN): A retail Real Estate Investment Trust (REIT) with a 5.4% yield, featuring stable triple-net leases with low tenant and industry concentration risk.
• Gladstone Land (LAND): An agricultural REIT with a 5.4% yield, though classified as less safe currently due to industry challenges and a shift toward more variable rental agreements.

Low payout ratio stocks usually have dividend payouts supported by earnings and cash flow, reducing the risk of dividend cuts. While exact payout ratios are not specified in these summaries, BDCs and REITs typically focus on maintaining sustainable distributions combined with high yields.

For U.S. investors seeking top dividend stocks combining low payout ratios with high yields, focusing on well-managed BDCs like Franklin Templeton, Ares Capital, and Prudential, alongside diversified REITs such as National Retail Properties, offers a balance of yield and dividend safety in 2025.

However, it's important to note that high dividend yields above 10% often come with higher risk and may indicate higher payout ratios or recent earnings pressure. Always review company financials and payout sustainability carefully before investing.

To invest in dividend stocks, you need to have a brokerage account. Brokerage accounts are free to open and typically take about 15 minutes to set up. Building a portfolio of individual dividend stocks requires research into each stock to ensure it fits into your overall portfolio.

Investing in individual dividend stocks can offer a higher yield than a dividend fund. However, the ideal portfolio varies from person to person, based on individual goals and timelines. Reinvesting those dividends can increase your return on investment. Dividends typically increase the return of a stock or dividend fund by a few percentage points.

In conclusion, investing in dividend stocks can be a rewarding strategy for those seeking regular income. However, it's essential to do thorough research and consider the risks involved before investing.

1. To help with personal-finance decisions, consider using a financial calculator app or a comparison website to analyze the yields and payout ratios of various dividend stocks, such as Franklin Templeton, Scotts Company, Hasbro, Prospect Capital Corporation, PennantPark Floating Rate Capital, Ares Capital, Prudential, National Retail Properties, Gladstone Land, and others.
2. When reviewing company financials, look for low payout ratios in dividend stocks, as they generally indicate that the payout is supported by earnings and cash flow, reducing the risk of dividend cuts.
3. To better understand the tax implications of dividend income, consult with a certified tax professional or use a personal-finance app that provides tax calculations and advice.
4. Consider investing in a diversified mix of dividend stocks that offer a balance of yield and dividend safety, such as well-managed BDCs like Franklin Templeton, Ares Capital, and Prudential, alongside REITs like National Retail Properties.
5. Instead of investing in a single dividend stock, you might prefer to diversify your portfolio by investing in a dividend fund or ETF, which can provide a more stable and consistent return. However, make sure to weigh the higher yield from individual stocks against the added benefits of diversification in your personal-finance strategy.

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