Top Dividend Shares to Invest in With a $150 Budget at Present
Top Dividend Shares to Invest in With a $150 Budget at Present
If you're pinching pennies, you might have to cut corners with some purchases. Maybe you opt for fast food over dining out at high-end restaurants. Or perhaps you settle for used furniture instead of new.
But frugality shouldn't be a part of your investing strategy, even if your budget is limited. There are plenty of solid stocks out there, many of which offer generous dividends. Here are my top picks for the finest dividend stocks to invest in with just $150:
1. Ares Capital
For less than $44, you can bag two shares of Ares Capital (ARCC 1.18%). This stock is a worthwhile investment, offering you a lot of value for your money.
Ares Capital is a standout business development company (BDC), offering financing to mid-sized businesses, which generally generate annual revenue between $100 million and $3 billion.
As a BDC, Ares legally needs to return at least 90% of its earnings to shareholders in the form of dividends to avoid income tax on its profits. The company has a reliable track record of steady or growing dividends for 15 straight years. Currently, its forward dividend yield stands at a near 9%.
Ares Capital has consistently produced the highest total returns and dividend growth among large publicly traded BDCs over the past 10 years. Since its launch in 2004, the company has delivered a staggering cumulative total return of over 1,000%, compared to approximately 674% for the S&P 500.
2. Enbridge
Two shares of Enbridge (ENB 1.62%) won't fit within your initial $150 budget, but $45 is enough for one share. By investing in Enbridge, you'll gain partial ownership of one of North America's top midstream energy companies.
Enbridge isn't just about pipelines and natural gas storage facilities in the U.S. and Canada these days. Thanks to recent acquisitions, the company is now the largest natural gas utility in North America and is expanding its renewable energy operations.
Dividends are a major draw for Enbridge investors. The company has increased its dividend for an impressive 29 consecutive years. Its forward dividend yield is a substantial 6.2%.
Investors can also count on steady dividends from Enbridge in the future. Around 98% of the company's cash flows are locked into contracts or cost-of-service agreements, which reduce volatility. Enbridge has minimal exposure to commodity price fluctuations. This dependable dividend payer is well-positioned to thrive in both bull and bear markets.
3. Realty Income
After investing in two shares of Ares Capital and one share of Enbridge, you'll still have some change left (more than $60). Use that fortune to buy one share of Realty Income (O 1.99%), the seventh-largest global real estate investment trust (REIT).
Realty Income shares something in common with Ares Capital and Enbridge: As a REIT, it's required to return at least 90% of its profits to shareholders as dividends. Realty Income also boasts an impressive track record of dividend increases, just like Enbridge, with a whopping 30 consecutive years of increases.
Although Realty Income's forward dividend yield of 5.58% isn't as eye-catching as the yields of Ares and Enbridge, the REIT provides an additional perk for income investors by sending dividends monthly instead of quarterly.
You don't need to worry about the sustainability of Realty Income's dividend. Around 90% of its rental income is quite resilient during economic downturns. Realty Income's real estate portfolio is also diverse, with over 1,550 clients spanning 90 industries.
Plus, Realty Income has great growth prospects. The REIT possesses a significant opportunity to further consolidate the U.S. net lease market. It's also targeting expansion in Europe, which boasts a total addressable market of $8.5 trillion.
Even with a limited budget for investing, there are still high-dividend stocks like Ares Capital and Enbridge that offer solid returns. For instance, Ares Capital's shares (ARCC) offer a forward dividend yield of nearly 9%, making it a worthwhile investment for a BDC that finances mid-sized businesses.
If you're looking to diversify your portfolio, Realty Income, the seventh-largest global real estate investment trust, is an option to consider. Despite having a lower forward dividend yield of 5.58%, it sends out dividends monthly instead of quarterly and offers stability due to a resilient rental income and a diverse real estate portfolio.