If you're trying to get a passive income stream to support your retirement dreams, there are several ways to achieve this. Buying rental properties is an easy-to-understand option that you're probably already familiar with. Unfortunately, owning a rental property comes with daily responsibilities that most retirees would prefer to avoid.
If you want to create a truly passive income stream, it's probably best to buy dividend-paying stocks and hold them for the long term. Pfizer (NYSE:PFE), PennantPark Capital Variable Rate (NYSE:PFLT)And Ares Capital (NASDAQ:ARCC) offer ultra-high yields averaging 8.8% at recent prices. With such a high average yield, an investment of $11,400 spread evenly between them is enough to provide you with an annualized dividend income of $1,000.
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If there's one thing income-seeking investors can count on, it's the growing demand for prescription drugs. As one of the world's largest drugmakers, Pfizer has already increased its dividend payout for 15 consecutive years. At recent prices, it offers a yield of 6.7%.
Pfizer's stock price fell in 2023 in response to rapidly falling sales of COVID-19-related products. It remained depressed because some of its main sources of revenue, such as the oral anticoagulant Eliquis, could lose an exclusivity protected by patent over the coming years.
Upcoming patent breaches will put pressure on Pfizer's dividend growth rate over the coming decade. However, with many new revenue streams coming online, they likely won't stop the company from increasing its payouts for another 15 years.
Pfizer has made many investments with its COVID-19 vaccine, and many are succeeding. In the first nine months of 2024, sales of its COVID-19 vaccine fell 66% to $2.0 billion. Despite this loss, total revenue increased 3% year over year.
The FDA has approved nine new drugs from Pfizer's productive development pipeline in 2023. In the United States, where these new drugs are already driving growth, product sales soared 27% year-over-year in the first nine months of 2024.
PennantPark Floating Rate Capital is a business development company (BDC), which means it lends to medium-sized businesses. U.S. banks have been less inclined to lend directly to businesses for decades.
Mid-sized businesses are hungry for capital borrowing at rates that might surprise you. The average return on debt investments in this BDC's portfolio was 11.5% at the end of September.
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