7.7% and 8.7% Yields: 2 Dividend Stocks I’m Looking to Buy and Hold Until 2035

Dividend stocks have always been a favorite for long-term investors. They pay us while we wait, and over time, those payouts can grow into something powerful. According to historical data, dividends have made up nearly 40% of total stock market returns over the past century. That shows us how important they are in building real wealth.

Today, high-yield opportunities are especially attractive because markets remain uncertain. Inflation, interest rates, and global slowdowns keep investors on edge. But steady dividends offer us a sense of stability. A 7.7% or 8.7% annual yield means our money is working hard, even if stock prices move sideways.

Let’s look at two such dividend stocks that we believe are worth buying and holding until 2035. They offer more than just high payouts; they come with strong businesses, proven cash flows, and the potential to keep rewarding patient investors for years.

Why 7%-9% yields make sense through 2035?

High yield does not have to mean high risk. The key is steady cash generation, reasonable leverage, and a record of paying investors first. Two names stand out today, around 7.7% and ~8.6%-8.7% yields: Energy Transfer (ET) and Ares Capital (ARCC). Each has different engines for income, which reduces single-sector risk over a long holding period.

Dividend stock #1: Energy Transfer (about 7.7% yield)

Energy Transfer runs pipelines and terminals that move natural gas, NGLs, crude oil, and refined products. Most revenue is fee-based, which helps cash flow stay steady in different price cycles. The current annualized distribution is $1.32 per unit, paid quarterly. Management declared the latest cash distribution in July for the June quarter.

Yield sits near 7.6%-7.7% based on recent prices. Several trackers peg ET’s forward or trailing yield in that range. This is not a one-off spike; ET restored its payout in recent years and has been nudging it higher.

Coverage looks healthy. Midstream investors watch distributable cash flow (DCF) coverage rather than GAAP payout ratios. Recent updates show coverage around ~1.7x in Q2 (third-party recap) and ~2.0x for Q1, which gives room for capex and debt reduction. Management has also guided to a 3%-5% annual distribution growth over time.

Balance sheet risk appears manageable for a capital-heavy business. ET has been refinancing at longer maturities and has scale across multiple basins. In short, cash flow diversity plus decent coverage supports a high yield through cycles. Still, midstream units can be sensitive to interest rates and regulatory delays.

Tax note. ET is a master limited partnership (MLP). Holders receive a Schedule K-1. A large part of distributions is often treated as return of capital, which lowers cost basis; taxes are due when units are sold. MLPs may generate UBTI in IRAs. Consider personal tax advice before buying.

Dividend stock #2: Ares Capital (about 8.6%-8.7% yield)

Ares Capital is the largest U.S. business development company (BDC) by assets. It lends to middle-market firms, often at floating rates, and pays out most of its income as dividends. The regular dividend is $0.48 per share quarterly, recently reaffirmed with the July 29, 2025, declaration. At recent prices, the yield runs about 8.5%-8.6%+.

Coverage is tight but adequate. Recent commentary shows the dividend roughly matched or slightly exceeded net investment income, with only a small cushion in the latest quarter. That argues for careful monitoring, but the long record of consistent payouts and scale gives support.

Risk differs from midstream. BDC earnings benefit when short-term rates are high because many loans are floating. Credit risk rises if the economy weakens. ARCC manages this with diversification, first-lien focus, and active workout capability, but credit cycles can pressure NAV and payouts.

Tax note. BDCs are regulated investment companies (RICs). They issue Form 1099 rather than K-1s. Portions of dividends can be ordinary income or sometimes qualified, depending on the year’s composition. Check the company’s annual tax notices.

Which looks safer?

Both Dividend stocks target stable, cash-rich niches. ET’s cash flows are anchored by long-term, volume-driven contracts and showed ~1.7x coverage recently. ARCC’s payout is covered by loan interest income, which moves with rates and credit conditions, and coverage has been close to the line lately. On pure payout safety, ET’s recent coverage looks stronger; ARCC’s yield is higher but more sensitive to the credit cycle and rate cuts.

Dividend Stocks: Growth drivers to 2035

ET plans modest annual distribution growth off a high base and benefits from LNG exports, petrochemical demand, and data-center-driven power needs that support gas and NGL throughput. New projects and debottlenecking add incremental volumes without outsized capex.

ARCC’s growth lever is origination in private credit. Even if rates drift down, private lending remains a large, growing market, and ARCC’s scale can support attractive net yields and fee income. The large pipeline of middle-market deals and disciplined underwriting help sustain earnings over time.

Valuation quick take

For ET, yield near ~7.7% plus coverage near ~1.7x compares well to large peers around the mid-6%-8% range. The market still discounts pipeline names for regulatory risk, which can be an entry point for long holders.

For ARCC, the ~8.6% yield prices in some recession and cut risk. Shares often trade around book value plus a modest premium when the market expects stable credit. Watching non-accruals and NII coverage will be key tells for valuation vs. risk. 

Risks to monitor

Energy Transfer faces rate policy, project permitting, and commodity-cycle volume swings. Rising rates can pressure unit prices even if cash flow holds. Keep an eye on leverage and project execution.

Ares Capital faces credit losses if defaults rise or if spreads compress while rates fall. The dividend could flatten if NII drops. Track non-accruals, realized losses, and guidance each quarter. 

Tax complexity is also a risk for ET due to K-1s and UBTI in retirement accounts. ARCC is simpler at tax time. Choose accounts accordingly.

Bottom line

A two-stock income core can blend ET’s ~7.7% yield with stronger coverage and ARCC’s ~8.6%-8.7% yield with higher credit sensitivity. Owning both spreads risk across energy infrastructure and private credit while keeping the income stream front and center.