Yesterday’s 0.3% dip in GDP was more than a statistical blip; it was a warning shot. Investors are definitely feeling the chill, risk-off sentiment is rising, and the market’s appetite for stability is growing louder by the day.
In times like these, high-yield dividend stocks are not simply portfolio padding; they can be lifelines. Xerox (XRX), Ares Capital (ARCC), and Energy Transfer (ET) rank at the top of the list of high dividend yield stocks on TipRanks, and they may offer the ballast you need in this turbulent stretch.
Xerox (NASDAQ:XRX) | Sky-High Yield With Tightrope Risk
Let’s start with the elephant in the room. Xerox is sporting an eye-popping 20.5% dividend yield—$0.50 annually on a stock trading at just $4.41. It sounds like a yield chaser’s fever dream. But before you back up the truck, know what you’re buying. Xerox is a legacy name in transition, clawing its way out of a dismal 2023 that included a brutal earnings loss of $10.74 per share.
The company is trying to reinvent itself, pivoting from old-school printing to IT services and automation. It’s cutting costs, selling off non-core units, and leaning hard into higher-margin offerings. There’s real strategy at work, but also lots of uncertainty involved.
Is the dividend sustainable? For now, yes. In fact, Wall Street expects EPS of $0.94 for 2025, which would cover the $0.50 annual payout. But the runway isn’t endless. Xerox’s debt load is heavy ($3.64 billion against a $555 million market cap and $1.3 billion in total equity).
Further, if today’s efforts for a turnaround don’t bear fruit, that payout could be on the chopping block. Still, XRX offers a compelling mix of risk and potential reward for investors with a taste for high-stakes bets. If management pulls off a comeback, the upside on both capital and yield could be worthwhile. Just don’t mistake it for a sleep-at-night stock.
Is Xerox a Buy, Sell, or Hold?
Currently, only one Wall Street analyst is actively covering the stock—Ananda Baruah of Loop Capital Markets. He has issued a “Hold” rating, signaling a neutral stance on the company’s near-term prospects. Baruah has also set a 12-month price target of $4.50, which indicates a modest potential upside of about 2% from current levels. Still, such limited analyst coverage may reflect low investor interest or uncertainty surrounding the stock’s future performance.
Ares Capital (NASDAQ:ARCC) | Cash Flow King
On the other end of the risk spectrum is Ares Capital, yielding a hefty 9.3% via a $0.48 quarterly dividend. As the most prominent business development company (BDC) in the U.S., Ares lends to middle-market firms that are often too big for small banks and too small for big ones. These companies fuel much of America’s private-sector growth, and Ares has been in the trenches with them for over two decades.
What sets ARCC apart is its resilience. Even as GDP contracts and recession chatter swirls, ARCC’s portfolio (over 400 companies strong) is anchored by senior secured loans, which sit high in the capital structure. That matters when the economy turns south.
In fact, Ares’ real edge is set to shine amid a contracting GDP and tightening credit markets. Specifically, its floating-rate loan portfolio, with most of its debt investments structured to benefit from elevated interest rates, should prove a tailwind if the GDP contraction delays rate cuts. That, combined with Ares’ conservative leverage and a strong balance sheet, should provide management the flexibility to preserve income and weather volatility far better than peers chasing yield at the expense of discipline.
Is ARCC a Good Stock to Buy?
Ten analysts are offering price targets on ARCC stock via TipRanks. Today, the stock carries a Strong Buy consensus rating based on eight Buy and two Hold ratings over the past three months. Also, ARCC’s average price target of $22.50 implies a ~9% upside over the next twelve months.
Energy Transfer (NYSE:ET) | Pipe Dreams That Pay Off
Then there’s Energy Transfer, yielding a solid 7.4% and operating with the steady hum of a utility—if that utility spanned 44 states and moved a third of the nation’s energy. Notably, ET’s endless pipeline network transports natural gas, crude oil, and refined products, generating toll-like revenues through long-term contracts. That insulation from commodity price swings is a key strength in shaky markets.
Another factor that sets ET apart in today’s conditions is its prudent capital management and the notable deleveraging that has occurred in recent years, strengthening its balance sheet even as peers stretch for growth. With interest rates elevated and refinancing risk rising, ET’s lower debt burden and strong coverage ratios give it the staying power that most midstream players can’t match.
As for risks in ET’s patch, regulatory headwinds, including Canada’s newly introduced 10% energy export tariff, could clip margins. However, the company’s commendable dividend track record, recent dividend, and the fact that the payout ratio stands below 50% based on my estimate for distributable cash flow per share of approximately $2.70, suggest that investors can rely on ET and its high yield.
Is Energy Transfer a Good Stock to Buy Now?
Energy Transfer is currently covered by 11 analysts, with a rather bullish consensus. ET stock carries a Strong Buy consensus rating, based on 10 Buy and one Hold ratings over the past three months. ET’s average price target of $23.10 implies almost 40% upside potential over the next twelve months.
Finding Yield in a Trumpian Trade Warzone
In a market looking for shelter from Trump-era market gyrations, including tariffs, market intervention, and trade wars, XRX, ARCC, and ET each bring something different to the table. Xerox is the wildcard—high-risk, high-reward. Ares is the dependable lender with a fortified portfolio. Energy Transfer is the infrastructure stalwart, quietly printing checks while the market panics.
Each has its own baggage: Xerox’s turnaround risk, Ares’ cyclical exposure, ET’s regulatory shadow. But taken together, they reflect a broader truth: chasing yield is a common strategy in a low-growth, high-volatility world.
So, if you’re building for income in a market full of potholes, these three deserve a closer look. They’re not flawless but offer a rare mix of yield, potential, and resilience. Remember, even the sturdiest shelter creaks in a storm, so choose wisely and keep your umbrella handy.