A little money can go a long way. This is especially the case when you invest in stocks that are worth owning.
I mean, of course, stocks with dividends. There are many great stocks that offer attractive dividends and don’t cost too much. Here are my picks for the smartest dividend stocks to buy with $100 right now.
You can take part Ares Capital (NASDAQ: ARCC) for about $23 at the current price. I think it could be one of the best investments you can make, especially if you’re looking for income.
Ares Capital’s forward dividend yield is 8.4%. Why is the yield so high? Ares Capital is a business development company (BDC). To be exempt from federal income tax, BDCs must return at least 90% of their earnings to shareholders as dividends. And this one brings great profit to its shareholders.
The key reason is the nature of the company’s business. Demand for direct lending offered by BDCs is growing due to several factors, including speed of closing deals and reliable access to capital during volatile periods. The total addressable market for direct lending is about $3 trillion for the traditional middle market of US companies with annual revenues between $100 million and $1 billion. It jumps to $5.4 trillion if companies with annual revenues over $1 billion are included.
Also, Ares Capital stands head and shoulders above its peers. It is the largest publicly traded BDC and has deep market relationships. It has also delivered higher dividend growth per share and total returns over the past 10 years than its main rivals.
Another $34 or so will buy you a share of Enterprise Products Partners (NYSE: EPD). Technically, you’ll get a unit of the middle power leader rather than a stock, because it is limited partnership (LP). Investing in an LP comes with certain tax issues, but I think Enterprise Products Partners is worth the extra work.
Enterprise’s forward distribution yield was recently over 6.35%. Want even better news? LP has increased its distribution for 26 consecutive years.
I like that Enterprise Products Partners’ business has held up well during recessions and turbulent times. Inflation doesn’t have much of an impact on this because roughly 90% of its long-term contracts contain price escalation clauses. The company’s cash flow also does not ebb and flow with oil and gas price fluctuations; charges the same amount to use its pipelines regardless of commodity prices.
