Investing in dividend stocks with a high yield of more than 7% can significantly boost your portfolio’s income potential, especially in a low-interest-rate environment. However, targeting companies with sustainable dividend payouts is crucial, as these stocks are likely to maintain and increase their dividends over time.

Among the top dividend stock picks for 2025, Ares Capital (ARCC) and Vitesse Energy (VTS) appear attractive for their high yields of over 7% and focus on enhancing shareholder value. Moreover, these stocks have consensus “Strong Buy” ratings from analysts, reflecting confidence in their ability to deliver stable and reliable dividends. These attributes make them compelling investments.

With this background, let’s take a closer look at the payouts of these companies.

Dividend Stock #1: Ares Capital

Ares Capital (ARES) is a compelling high-yield stock. This business development company (BDC) provides direct loans and investments to private middle-market companies and returns higher cash to its shareholders.

With a focus on high-quality borrowers and a well-diversified balance sheet, Ares Capital has consistently delivered solid earnings and rewarded its shareholders through attractive dividend distributions. Further, as a BDC, Ares must distribute at least 90% of its income as dividends. ARCC’s high payout makes it an appealing option for income-focused investors.  

The company’s strategy of investing in less-cyclical industries provides stability and resilience during periods of economic uncertainty. Additionally, Ares Capital leverages its robust underwriting expertise, strong liquidity position, and access to diverse funding sources to capitalize on high-growth opportunities in the market.

Ares Capital is poised to benefit from increasing mergers and acquisitions (M&A) activity, particularly in sponsor-backed transactions. In recent quarters, direct lenders have significantly financed leveraged buyouts, accounting for a substantial portion of the loan volume in that space. With its solid partnerships with sponsors, Ares Capital is well-positioned to take advantage of this favorable environment. Its focus on transactions in defensive industries with secular tailwinds further enhances its competitive edge.

The company’s selective investment approach and reliance on its existing portfolio of companies also help mitigate risk. This strategy ensures strong credit performance and drives consistent returns. As the investing environment becomes more active in the coming quarters, Ares Capital will likely see higher transaction volumes, further bolstering its growth.

With its high-quality portfolio, solid credit performance, and the tailwinds of increased M&A activity, Ares Capital is well-positioned to deliver robust growth in 2025. Moreover, its ability to return cash to shareholders through dividends makes it a compelling choice for investors seeking steady income.

Wall Street analysts share this optimism, with a “Strong Buy” consensus rating on the stock. Moreover, Ares Capital offers a compelling dividend yield of 8.2%.

Dividend Stock #2: Vitesse Energy

Vitesse Energy (VTS) is another attractive high-yield stock. The company focuses on its financial interests in oil (CLH25) and gas (NGH25) wells drilled by leading U.S. operators. With high-quality, long-duration assets— over 80% of which are undeveloped — Vitesse Energy is well-positioned to generate robust cash flows to support its payouts.

The company prioritizes profitable acquisitions and applies strict return hurdles to ensure efficiency in all price environments. This approach enhances capital efficiency, allowing Vitesse to thrive in favorable market conditions while remaining resilient during downturns. By maintaining flexibility, the company can safeguard its dividend and capitalize on opportunities even when market conditions are challenging.

The company focuses on opportunistic acquisitions and is not bound by a fixed capital budget. Recently, it announced the acquisition of Lucero, a move that significantly bolsters its asset base. The integration of Lucero’s operations brings additional scale to Vitesse, opening the door to acquiring both operated and non-operated assets that will be accretive to its dividends. This acquisition supports its dividend payouts and enhances liquidity, paving the way for further strategic acquisitions.

Vitesse hedges a portion of its expected oil production to ensure financial stability and generate predictable cash flows. This risk management strategy strengthens the company’s ability to maintain its dividend while navigating volatile commodity prices.

Overall, the company’s focus on acquiring profitable companies to enhance its shareholder value and high yield of 7.8% make Vitesse a compelling income stock for 2025. Moreover, Wall Street analysts are bullish about VTS stock’s prospects and maintain a “Strong Buy” consensus rating.