5 High-Yield Dividend Stocks for Decade-Long Passive Income

Investing in dividend-paying assets is a tried-and-true method for creating steady streams of passive income. Among the most reliable sources of such income are Real Estate Investment Trusts (REITs), Master Limited Partnerships (MLPs) and Business Development Companies (BDCs). Here, we look at five companies representing these categories that have proven track records as consistent dividend payers.

Firstly, Hercules Capital Inc., a BDC specializing in high-yield loans to start-ups within the technology, life sciences and renewable energy sectors. Despite inherent risks associated with start-ups, Hercules has shown its ability to carry out thorough due diligence before investing. The company's rise in net interest income evidences its strong performance over time and commitment to rewarding shareholders. Over the last decade alone, Hercules' total return was 275%, demonstrating both the benefits of reinvested dividends and long-term investment potential.

Second on our list is Ares Capital Corporation – another BDC but one which focuses primarily on overlooked lower middle market businesses rather than startups like Hercules does. In addition to providing conventional debt instruments such as term loans or revolvers, Ares offers more complex products including leveraged buyouts (LBOs). Currently trading at a price-to-book ratio of just 1.1 - essentially in line with its ten-year average - now could be an opportune moment for investors seeking long-term growth coupled with a yield of 9.3%.

Rithm Capital stands out among REITs thanks to their specialization in financial services including loan origination along with commercial real estate and single-family rentals. While Rithm’s exposure to broader real estate themes may appear risky given current inflation rates and borrowing costs affecting consumers, businesses as well homeowners or renters alike; it remains important not forget about long-term holding potential especially when considering current share prices below $11 offering yields around 9% depending upon macroeconomic conditions.

Next, we turn our attention to MLPs such as Energy Transfer LP. This type of investment structure offers a unique advantage since they pass income and losses directly to their investors. Despite the energy sector’s inherent volatility due to geopolitical issues, Energy Transfer is somewhat insulated thanks to long-term fixed fee contracts with customers which reduce exposure to commodity-based risk.

Finally, Enterprise Products Partners L.P., another MLP that has shown resilience in navigating economic downturns while consistently rewarding shareholders. Over the last 15 years--a period that included the Great Recession, a prolonged slump in oil prices and most recently the COVID-19 pandemic--Enterprise Product Partners' adjusted cash flow from operations (CFFO) rose from $1.29 per unit at end of 2009 to an estimated $3.70 by end of 2023.

In conclusion, investing in proven dividend-paying entities like BDCs, REITs or MLPs can be an effective way for generating passive income over time despite some associated risks depending upon specific sectors or market conditions at any given moment.