Buying and holding high-yield dividend stocks can be a smart way to generate passive income. Moreover, companies with consistent dividend payments and sustainable payouts often have solid financials and a strong earnings base. Their financial stability supports distributions and positions them to deliver steady capital gains over time.

In this context, Ares Capital (ARCC) and Vitesse Energy (VTS) look compelling because of their high yields of over 8.5%. Moreover, analysts have rated these stocks as “Strong Buys,” indicating that they are confident about their prospects.

Dividend Stock #1: Ares Capital 

Dividend Yield: 8.6%

Ares Capital (ARCC) focuses on providing direct loans and investments to private middle-market companies in the U.S. This segment of the market offers solid growth, as financing options are often limited, and the sector is often overlooked by traditional financing sources. This creates a strong demand for specialty finance companies like Ares to fill the gap.

The company’s well-diversified investment portfolio, multiple funding sources, and strong underwriting capabilities help it maintain consistent earnings. Additionally, its focus on companies operating within less cyclical industries and solid balance sheets provide stability, even in uncertain market conditions, and drive its payouts.

Thanks to its solid financials, Ares has been paying or increasing its quarterly dividends for over 15 consecutive years. Moreover, management expects that the company will have $922 million or $1.37 per share available for distribution in 2025. This adds visibility to its payouts.

Looking ahead, Ares Capital stands to benefit from robust demand in its core market. The increasing shift toward private capital investments and a large addressable market position it for continued growth. The company’s liquidity remains strong, with nearly $6.7 billion available for new investments and portfolio expansion, further strengthening its ability to reduce debt while capitalizing on growth opportunities.

Overall, Ares Capital is well-positioned to reward its shareholders with steady dividend payments. Wall Street analysts are bullish about ARCC stock and have a “Strong Buy” consensus rating. ARCC pays a quarterly dividend of $0.48 per share. Moreover, Ares offers a high yield of 8.6%.

Dividend Stock #2: Vitesse Energy

Dividend Yield: 9.1%

Vitesse Energy (VTS) operates in the oil and gas sector, specializing in acquiring financial interests in energy assets as a non-operator. By partnering with top-tier energy producers, Vitesse gains exposure to high-potential projects without the operational risks and capital burdens typically associated with direct ownership. This strategy allows the company to maximize its returns while maintaining financial flexibility.

A key advantage of Vitesse’s model is its ability to allocate resources selectively to the most profitable opportunities. The company can adjust its investments to align with market conditions without being tied to specific drilling schedules, ensuring optimal capital deployment.

Additionally, Vitesse focuses on accretive acquisitions, lowers its debt, and hedges its portfolio to protect its production from volatile market swings. This strategy ensures that Vitesse remains resilient, even in times of commodity price downturns.

Recently, Vitesse raised its quarterly dividend by 7%. Moreover, it completed the acquisition of Lucero Energy. This acquisition is expected to be accretive to the company’s financial performance and will help support further dividend increases. With a strong operational and financial foundation, Vitesse has ample liquidity to pursue additional acquisitions that will continue to drive growth and bolster its dividend payouts.

Wall Street analysts are optimistic about Vitesse’s prospects, giving its stock a “Strong Buy” rating. Its annualized dividend of $2.25 per share translates into a high dividend yield of 9.1%, making Vitesse a compelling income stock.

Final Thoughts

Ares Capital and Vitesse Energy are attractive investments for income-focused investors. With high yields, solid financials, and analyst confidence, these stocks provide an opportunity to earn consistent dividends while benefiting from long-term growth potential.