Turn $100K Into $7,740 In Passive Income With These 3 Dividend Stocks

If you have $100,000 to spare and you’re making the wise decision to use that money to generate passive income, you could get up to $7,740 per year and do so with relatively good safety. It’s a 7.74% annual yield, which is near the upper end of what many would consider safe.

Most quality growth stocks are priced for perfection at the moment, and a rotation back into dividend stocks can happen soon. The August 1 tariff deadline could be the catalyst that triggers it. In the coming months, interest rate cuts could also dramatically increase inflows into dividend stocks as Treasury yields go lower and investors pile into stocks for yield.

Here are the three dividend stocks to look into. They have good upside, with sustainable cash flows that comfortably cover dividends. The average yield for all three dividend stocks is 7.74%.

Ares Capital (ARCC)

Ares Capital (NASDAQ:ARCC) is the largest publicly traded business development company (BDC) in the U.S. It acts like a private credit arm for investors and lends between $20 million and $400 million to middle-market firms that are too big for local banks and too small to access the high-yield bond market without complications.

Most of the deals are first-lien senior secured loans, which means ARCC is first in line to get paid if something goes wrong.

Revenue for the trailing twelve months sits at roughly $3 billion, up 4.4% year-over-year, while net income is historically high at $1.3 billion. Net investment income came in at $0.54 per share for Q1 and above the quarterly distribution. Operating margin remains solid at 93.3%, and the company has $635 million in cash.

Better yet, non-accrual loans have dropped to just 0.9% of the portfolio, down from almost 3% in 2023. This shows that fewer borrowers are missing payments. Management has not cut the dividend since the global financial crisis, and instead has been raising it.

Interest rate sensitivity is the one variable worth watching. Around 70% of ARCC’s loans float with benchmark rates, so if the Fed lowers rates later this year, interest income could come lower. Offsetting that risk is the fact that ARCC borrows at fixed rates, which means its own cost of capital will not rise. Analysts currently expect a slight dip in earnings per share from $2.44 in 2024 to about $2 in 2025, but even under that scenario, the dividend remains covered.

The dividend yield is 8.32%. The forward payout ratio is 96.53%.

Dine Brands (DIN)

Dine Brands (NYSE:DIN) is the franchisor behind two of America’s most recognizable sit-down chains, Applebee’s and IHOP. The company does not flip pancakes or grill riblets. Instead, it collects royalties, franchise fees, and advertising dollars from nearly 3,600 restaurants that do the heavy lifting.

That franchise structure means capital requirements stay low and free cash flow stays. This has allowed the firm to return most of what it earns directly to shareholders.

Revenue in 2024 came in at $812 million, down from $831 million in 2023. Still, the underlying profit engine is humming. Operating margins have remained around 20% thanks to disciplined cost control and higher same-store sales at both brands.

Admittedly, the stock is down over 68% from its 3-year high, but this doesn’t mean the dividends are unsustainable. Rather, it’s a good opportunity to lock in the yield by buying more shares. The decline should reverse as interest rates come down, since Dine Brands posted $72.1 million in net interest loss last year. The same year, net income was $64.9 million.

Even with that debt servicing burden, the forward payout ratio is just 39.73%. The stock comes with a 7.87% forward dividend yield.

Suburban Propane Partners LP (SPH)

Suburban Propane Partners (NYSE:SPH) is an energy distribution company that specializes in propane, fuel oil, and related products. It is a publicly traded master limited partnership. The company has spent nearly a century building the largest propane distribution footprint.

Suburban posted Q2 net income of $137.1 million, or $2.11 per common unit, up from $111.5 million, or $1.73 per unit, in the year-ago quarter. Adjusted EBITDA surged 19.1% to $175 million, driven by a 15.5% jump in retail propane gallons sold.

SPH has consolidated and done quite well in the past five years, up 39.1%. Net interest loss here was $74.6 million, which was a significant portion of its $171.3 million operating income last year. But again, it still managed to post enough in profits to cover dividends and then some. Rate cuts could lead to 50%-plus upside in the coming years.

The dividend yield here is 7.03%, with a payout ratio of 71.04%.

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