Top Five Exceptional High-Dividend Shares to Invest in for 2025's Market
I dig everything about the phrase "extremely high-return dividend shares." Investing in stocks gives me a share in fantastic businesses. Dividends reward me for owning the shares. Contemplating dividends with incredibly high yields puts a grin on my face.
The new year offers an excellent chance for investors who share my enthusiasm for such stocks. Here are my top five favorite extremely high-return dividend shares to invest in for 2025 (listed alphabetically).
1. Ares Capital
Ares Capital (ARCC -1.25%) ticks multiple boxes for me. Its forward dividend yield of 8.72% is particularly appealing. I find Ares Capital's valuation appealing with shares trading at only 10 times forward earnings. I'm also a fan of the stock for outperforming the S&P 500 index over the long term based on total returns.
What I adore most about Ares Capital is its apparent strength to maintain its winning streak and continue paying those alluring dividends. Ares Capital ranks as the largest publicly traded business development company (BDC). The market for BDCs – and especially Ares – is growing due to increased demand for borrowing among middle-market companies and a continued shift towards private capital.
2. Enbridge
Enbridge (ENB -0.78%) yields a forward dividend of 6.44%. Even better, the company has increased its dividend for an impressive 30 consecutive years. I anticipate this streak to continue, with Enbridge projecting that its distributable cash flow will increase by a compound annual growth rate of around 3% through 2026 and by around 5% in subsequent years.
The company remains one of the top players in the midstream energy industry with pipelines across the U.S. and Canada. However, Enbridge has also become the largest natural gas utility in North America thanks to recent acquisitions. The markets it serves have growing populations and significant opportunities for supplying power to data centers.
3. Enterprise Products Partners
Another midstream leader, Enterprise Products Partners (EPD -0.69%), offers an even higher forward yield of 6.76%. The company's track record isn't far behind Enbridge's, with 26 consecutive years of distribution increases.
I suspect 2025 will be a great year for midstream energy shares with the incoming Trump administration's promise to "drill, baby, drill." Even if not, though, Enterprise Products Partners should generate solid cash flow to fund its distribution. The company has an exceptional history of durable cash flow during both good and bad conditions for the energy sector.
4. Honda Motor
Honda Motor (HMC -0.07%) failed to provide positive returns in 2024. However, the industrial giant pays a substantial dividend yielding 4.94%. It also rewarded shareholders through stock buybacks. And with a forward earnings multiple of only 6.75, Honda is cheap in a market overflowing with stocks priced at a high premium.
The company's business performs well overall, with solid year-over-year sales growth for its motorcycle, automobile, and financial services units. Honda is positioned to become even more competitive against Toyota and Chinese automakers with its pending acquisition of Nissan. This deal could particularly assist Honda in competing more effectively in the electric vehicle market. If the transaction isn't derailed, the merger of Honda and Nissan would create the world's third-largest automaker.
5. Pfizer
Pfizer (PFE -1.24%) was a poor performer in 2024, but I believe it could become a solid winner going forward. In the meantime, the big drugmaker offers an attractive forward dividend yield of 6.46%. Pfizer's management consistently prioritizes maintaining and growing the dividend – something income investors appreciate.
I fully acknowledge Pfizer's challenges, including a sharp drop in COVID-19 product sales and an approaching patent cliff. However, I view this pharmaceutical stock as a diamond in the rough. Pfizer has multiple newer products that should drive growth over the next few years. It's also a bargain, with shares trading below 9 times forward earnings and a super-low price/earnings-to-growth (PEG) ratio based on five-year growth projections of 0.2, according to LSEG.
After analyzing various investment options for the new year, I strongly consider incorporating the high-yield dividend stocks listed above into my portfolio. In particular, I am drawn to the finance sector and companies like Ares Capital, with its forward dividend yield of 8.72%, which is not only appealing but also trading at a reasonable valuation.
For those looking to invest in the energy sector, Enbridge's 6.44% forward dividend and 30-year dividend increase streak make it an attractive choice. Furthermore, the company's expansion into natural gas utilities presents significant growth opportunities.
