I have invested in dividends for over 10 years, and these 5 dividend stocks are my ride-or-die picks

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A foremost concern for many retirees is for their retirement portfolios to be able to generate sufficient income to maintain their lifestyles during their golden years. Of course, risk tolerance is a major variable, and the compromise between risk tolerance and investment goals is the perpetual grey area facing most investors and portfolio managers. 

Portfolios that are designed for a long-term income requirement need to contain two (2) essential components: a steady income stream base and a growth component to stay ahead of inflation and expand its business so its corporate viability can be sustained and increased. An ideal portfolio should have certain core securities that have solid track records for stability, steady growth, and consistent dividend income, ideally with a dividend growth component as well. Additionally, the portfolio should have something that avails the portfolio of high growth exposure in technology or a comparably aggressive sector – if it can deliver dividend income as well, all the better. 

The following tentpole stocks, unsurprisingly, are in dependably crucial industrial sectors, such as real estate, business finance, energy, and resource mining. The fifth is a pedigreed closed end fund on the cutting edge of technology, including AI, that also provides a very high dividend. Quotes are based on market price at the time of this writing. Dividends are predicated on a $10,000 investment for ease of calculation. 

Realty Income Corporation

Realty Income Corporation (NYSE: O)

Yield: 5.39%

Shares for $10,000: 166

Annual Dividend Income: $539.00

San Diego headquartered Realty Income Corporation was founded in 1969, and has paid monthly dividends from the very beginning, attaining Dividend Aristocrat (25 consecutive annual dividend increases) status. It is a traditional type of Real Estate Investment Trust (REIT), and manages a huge brick and mortar real estate portfolio of 15,600 properties and AUM valuation of over $58 billion, with 1,500 tenant clients across all 50 states, as well as in the UK, Ireland, Germany, Italy, France, Spain, and Portugal. Its business model operates under the following parameters:

• Property Type – preference is for retail and industrial properties with strong visibility and high density population for average minimum 10-year net lease; – triple net lease terms comprise the majority of Realty Income’s leases.
• Retail Clients should have a low price point component to their business to ensure financial stability;
• Non-retail clients should be Fortune 1000 or investment grade equivalent;
• Acquisitions should be either all cash, mortgage assumption, or operating partner unit issuance (REIT shares).

Realty Income has an impressive catalog of well known and successful tenant corporations. They are well known throughout the US and some even internationally. Among the more notable ones are:

• MGM (Bellagio)
• Chipotle
• 7-Eleven
• CVS Pharmacies
• Walgreens
• Treasury Wine Estates
• Lowe’s
• Dollar General
• FedEx
• L.A. Fitness
• Sainsbury’s
• Dollar Tree
• Sam’s Club/Walmart
• BJ’s Wholesale Clubs

Realty Income’s intensive preparation research and financial wherewithal is amply demonstrated in a breakdown of its lease-buyback deal for the Wynn Encore Boston Harbor Resort and Casino in 2022. 

• Realty Income researched gaming laws for MA, which opened in 2022.
• The Wynn Encore held only 1 of 3 gaming licenses granted by the state of MA.
• Location-wise, the Wynn Encore is the only casino in the metropolitan Boston area, and is within 5 miles of Harvard University, Fenway Park, and Boston Logan International Airport. 
• Built in 2019, the Wynn Encore is LEED platinum certified, with 3.1 million square feet, 10,000 square feet of retail space, 670 luxury rooms, and 2,700 slot machines.
• Realty Income bought the property for $1.7 billion with a 5.9% cash cap rate at a discount to replacement cost..
• Rent is triple net leased for 30 years with rent escalators linked to the Consumer Price Index.

Unlike higher yielding REITs with lower overhead costs that deal solely with mortgage backed securities (MBS), Realty Income’s dividend is relatively inured from interest rate fluctuations, since its income is derived from contractual rent rolls. Of course, interest rate changes do affect new property acquisition finance costs, but those impact overall earnings profits rather than dividends. 

Vale S.A.

Vale, S.A.  (NYSE: VALE)

Yield: 10.49%

Shares for $10,000: 868

Annual Dividend Income: $1,049.00

The surge in commodity prices has become global. As a result, companies in the metals mining industries have all risen accordingly. Brazil’s Vale, S.A. is a mining company with a number of other key assets, both in infrastructure and geopolitics, that protect its viability.

As one of the most resource rich nations on the planet, Brazil has a number of multinational companies that handle the cultivation, development, production and sales of those raw materials and commodities. With a $49 billion market cap, Rio De Janeiro’s Vale S.A. is one of Brazil’s top conglomerate entities.

Vale S.A. has several divisions, which often work in conjunction with one another as part of the supply chain. These infrastructure assets protect it from sole dependency on commodity prices. 

• Mining – Vale is involved with mining of iron ore, copper, nickel, manganese, gold, silver, platinum, cobalt, manganese, and coal. It is one of the top 3 global iron ore producers, along with Rio Tinto and BHP. A separate spinoff Vale business from nitrates and fertilizers has become an outgrowth of the raw material mining operations.
• Land Logistics and Transportation – Vale owns (3) Brazilian railroads: Vitória a Minas, Carajás, and Ferovia Central-Atlântica. These railroads utilize Vale’s 800 locomotives and 35,000 railcars in transportation of commodities, in addition to other cargo and passengers.
• Maritime Logistics and Shipping – Vale controls several dams in Brazil, as well as a number of maritime port terminals throughout Brazil and in Perak, Malaysia. Additionally, Vale owns a fleet of 35 VLOC (Very Large Ore Carrier) bulk carriers, which each span about 1,200 feet and are 400,000 DWT (Dead Weight Tons) rated.
• Hydropower Energy – through control of its dams, Vale handles and distributes hydroelectric power through 8 power plants, predominantly in Minas Gerais, which is Brazil’s second most populated area.

The huge amount of energy required to power AI and the proliferation of data centers needed to operate AI means that the corresponding electrical infrastructure must grow commensurately. As such, this has led to copper electrical wire demand beginning to soar with no end in sight for the forthcoming future. This overwhelming power demand is also a part of what is fueling the return to oil and gas, since wind and solar power sources are proving inadequate for the task.

Singaporean commodity trading titan Trafigura estimates that the combined needs of cumulative growth in AI, electricity demand, and EVs will create an added demand of 10 million pounds of copper over the next 10 years. Vale S.A. ‘s Salobo copper mines are the largest in Brazil. The company. has already budgeted $3.3 billion to expand its copper production to 500,000 MT per year by 2030 from its 348,200 high of 2024. 

Geopolitically, Brazil is a founding member of the BRICS coalition. (Brazil, Russia, India, China, South Africa). As such, they trade among each other and other member nations in their own currencies, and are not dependent on the US dollar for cross-border transactions. This protects Vale S.A. to a large degree from the ramifications of increased US tariffs. 

Ares Capital Corporation

Ares Capital Corporation (NASDAQ: ARCC)

Yield: 9.64% 

Shares for $10,000: 501

Annual Dividend Income: $964.00

The Business Development Corporation (BDC) industry was a niche financing sector of roughly 20 registered companies and $30 billion in size prior to the 2008 subprime mortgage banking meltdown. The ensuing bank consolidations wound up financially stranding millions of small and medium sized corporations that were deemed insufficiently large to retain as clients. As a result, Business Development Companies stepped up to fill the void, providing essential revolving credit lines, receivables finance, acquisition finance, and other services.  The sector now stands at over 150 companies and $400 billion.

Ares Capital Corporation is the Business Development Company BDC) of alternative asset management titan Ares Management. It operates throughout the US regionally from its New York, Chicago, or Los Angeles offices. Its $14 billion market cap and $28 billion AUM portfolio rank it as one of the largest US BDCs on the market.

Ares typically makes combined debt and equity investments between $20 million and $200 million, with a maximum of $500 million per deal. Qualifying companies with an EBITDA between $10 million and $250 million. It makes sole debt investments between $10 million and $100 million. 

The financings and investments can take the standard variety of equity and debt manifestations, but Ares is also more adventurous, innovative and risk tolerant than its peers. For example, Ares will sometimes deploy revolving credit lines for financing its client companies. Additionally, Ares will consider third-party senior and subordinated debt financings and heavily discounted distressed debt, which carries commensurately higher risk. Ares is also not a passive investor. It prefers to be the primary agent or lead on any deal in which it commits to, and will demand proportional board representation once engaged. 

59.2% of the company’s portfolio are First Lien senior secured loans, with Second Lien senior secured loans at 5.1%. Industry-wise, Software and Services is the largest sector with 23.5%, followed by Healthcare at 12.9% and Commercial & Professional Services at 9.9%.

Energy Transfer

Energy Transfer (NYSE: ET)

Yield: 7.88%

Shares for $10,000: 591

Annual Dividend Income: $788.00

In much the same way as the broadband industry’s wireless networks are the infrastructure conduits for digital data transmissions, midstream companies provide the networks of physical storage and transport of hydrocarbons from drilling source through refining to distribution and to the retail outlets. These include pipelines, maritime and land tanker transport, conversion of natural gas to LNG, and various storage configuration facilities. 

Starting with 200 miles of natural gas pipeline in East Texas back in 1996, Dallas, Texas based Energy Transfer has built a solid business for itself in the past 29 years by providing storage and transport of crude oil, natural gas, natural gas associated liquids (NGL), and refined products. At present Energy Transfer is the fourth largest US midstream company by market cap size. Its supply chain network spans Texas, New Mexico, West Virginia, Pennsylvania, Ohio, Oklahoma, Arkansas, Kansas, Montana, North Dakota, Wyoming, and Louisiana. Energy Transfer also exports hydrocarbons to 80 different countries and territories. With over 140,000 miles of continental US infrastructure under its auspices, Energy Transfer’s business structure and forward thinking strategy situates it very advantageously going forward. 

Energy Transfer is a Limited Partnership with several wholly owned divisions, and large institutional ownership stakes in to other publicly trading companies:

• Sunoco LP (NYSE: SUN) – 100% interest in incentive distribution rights and 21% interest in the general partnership.
• Sunoco Logistics Partners Operations LP – 100%
• USA Compression Partners (NYSE: USAC) – 39.4% general partnership interest.
• Lake Charles LNG – 100%
• LNG Export Project – 100%

Midstream companies in general benefit from the following trends:

• Stronger Pipeline Demand: As high energy demand has caused a shift away from unreliable wind and solar power and back towards hydrocarbons, explorers and producers will likely ramp up upstream activities. More new products and power requirements from data centers will increase  demand for crude transportation pipelines of midstream players.
• Stabilized Fee-Based Revenues: Long term shipping contracts will mitigate storage and pipeline fee volatility. This will allow analysts’ forecast and revenue estimates to be more reliable, which will bolster their track records.
• Increasingly Attractive Yields: Yields from midstream MLPs generally pay higher yielding dividends than their affiliates in the overall energy sector. The increased supply will boost midstream stock dividend payouts, again bolstering the analysts’ prognostications and track records. 

Energy Transfer has (5) projects already in-progress that will substantially boost its bottom line and market share:

• Nederland Terminal – New Flexport refrigeration plant facilities at Nederland will increase Energy Transfer’s butane storage capacity by 33% and propane storage capacity by 100%. This will expand Energy Transfer’s current exports of over 700,000 barrels per day of NGLs from Nederland Terminal. 
• Natural Gas Processing Capacity – On top of the added capacity from the 2023 Crestwood acquisition, Energy Transfer is expanding 200 million cubic feet per day of natural gas processing capacity in West Texas. A separately recently completed South Texas facility upgrade has ramped up an extra 60 million cubic feet per day. The company expects to add 400 MMcf/d more through new builds and upgrades by 2026
• Marcus Hook Terminal – Energy Transfer is expanding its Marcus Hook Terminal operations to incorporate new ethane refrigeration and storage capacity, as well as a fractionator.
• Lone Star Express and Gateway – To eliminate pipeline bottlenecks from its latest acquisitions, Energy Transfer is adding 90,000 barrel per day capacity to its Lone Star Express pipeline and when the Gateway Pipeline overhaul is completed, 1.3 million extra barrels per day in total will be deliverable to Mont Belvieu. A new 165,000 bpd fractionator (Frac IX) is being built at Mont Belvieu, scheduled for service in Q4 2026.
• New Infrastructure Sectors – Energy Transfer is in the midst of developing transport and storage of natural gas and CO2 to ammonia and sequestration sites. It is also experimenting with deep-water marine loading for its Nederland and Lake Charles sites.

Over the last few years, Energy Transfer has built pipelines to connect to over half of all of the power plants in Texas. Low corporate taxes in Texas have attracted a large migration of tech companies, including Tesla (NASDAQ: TSLA) and others. The popularity of AI is also driving significant corporate relocation to Texas, especially in Dallas and Austin. As a result, Goldman Sachs anticipates that new data centers in Texas will hike power demand by 160%. 

BlackRock Science and Technology Term Trust

BlackRock Science and Technology Term Trust (NYSE: BSTZ)

Yield: 11.98%

Shares for $10,000: 472

Annual Dividend Income: $1,198.00

The technology sector is the hottest industry in the market. Thanks to Artificial Intelligence (AI), the Magnificent 7 have elevated the S&P 500 to stratospheric heights and multi-trillion dollar net cap valuations for Apple, Microsoft, Alphabet, Amazon, Meta Platforms, Tesla, and Nvidia. The growth component of tech exposure for a portfolio cannot be underestimated. However, dividends from tech stocks are usually minimal, at best, if they exist at all, since growth is the sector’s overwhelming priority. However, closed end funds and exchange traded funds in the tech sector can sometimes resolve the gap.

The BlackRock Science and Technology Term Trust is among the best of choices on the menu. Created as a Closed End Fund specializing in technology, it was originally designed to have a 12-year lifespan, but is now subject to renewal and potential perpetuity. During that time, it has been  tasked to not only deliver strong returns through savvy technology investments, but also provide a solid income stream for its shareholders. With the BlackRock $15 trillion AUM imprimatur of financial invincibility, BSTZ combines the potential exponential gains of private equity technology opportunities with a covered call options strategy to create dividends – a popular practice that companies like YieldMax are best known for using.. 

BSTZ’s covered call strategy generates call premiums that are derived against roughly 30–40% of the portfolio, i.e. its publicly traded stocks –  at any given time. Since inception, BSTZ has been distributing $12.20 in dividends per share annually, payable monthly.  However, unlike a number of the YieldMax ETFs, BSTZ has continued to steadily increase its NAV, as opposed to having to frequently dip into NAV to make up for income shortfalls. 

BSTZ’s private equity portfolio contains some of the most popular, cutting edge technology companies. At present, BSTZ owns shares in China’s Bytedance (parent of Tiktok), Klarna, Databricks, PsiQuantum, and GrubMarket.  All of them are privately owned, although Klarna is working its way towards a projected 2026 IPO. That said, the vast majority of individual investors have zero access to stock in these companies, which are only usually available to private equity institutions. However, BSTZ has the deep pockets to not only invest in these companies, but even into venture capital development stage companies if BlackRock’s analysts see multiple on capital ROI at the end of the day.

An added plus is that the level of disclosure required by the SEC for publicly traded entities is overwhelmingly more comprehensive than with the average private equity fund. As such, BlackRock not only gives quarterly updates on BSTZ, but goes in depth with the impact of the private companies’ performance effect on the overall portfolio and updated news on upcoming products and services that those companies are launching. 

As the tentpoles of a solid growth and income portfolio, the above stocks certainly represent a solid foundation. While there are others that could probably be swapped out and be equally serviceable, these are five combine many of the qualities that should ensure consistency and dependability over the long-haul. 

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