Living off the profits produced by your investment portfolio is the dream of many investors. But it doesn't have to be just a fantasy. There are intelligent steps you can take right now to start earning more passive income.

Well-chosen, dividend-paying stocks are a great way to receive recurring cash payments. Read on to learn about two excellent high-yield investments with particularly sizable payouts. Both of these companies are committed to paying hefty dividends to their shareowners quarter after quarter and year after year.

AT&T 

AT&T (T -1.86%) is popular among income-focused investors. It's not hard to understand why. The telecommunications titan is currently offering you a mouth-watering 7.7% dividend yield.

People are spending more time online than ever before. AT&T is helping them do so. The company's blazingly fast 5G wireless and broadband internet services are proving popular among consumers. 

Customer gains and cost cuts have AT&T on track to generate at least $16 billion in free cash flow in 2023, up from $14.1 billion in 2022. That's more than enough cash to cover its roughly $8 billion in projected dividend payments to shareholders.

AT&T's bountiful cash production should also allow it to continue to lighten its debt load. Aided by asset sales and the divestiture of its Warner Media business, AT&T has paid down its debt by about $20 billion over the past three years. 

The wireless giant is reportedly also considering a sale of its 70% stake in satellite TV provider DirecTV, according to Bloomberg. DirecTV was last valued at about $16 billion in 2021. So a sale, which could occur as soon as August 2024, would bring in a significant amount of cash that AT&T could use to slash its debt further.

Best of all, with its shares currently trading for less than 6.5 times its forecasted free cash flow, AT&T's stock can be had today for a bargain price.

Ares Capital

If you'd like to earn even more passive income, take a look at Ares Capital (ARCC -0.66%). With its 10.1% dividend yield, this leading business development company (BDC) sports one of the largest cash payouts available in the stock market.

Ares Capital provides loans and other financing solutions to closely held businesses in the U.S. It focuses on what's known as the middle market. This includes companies with sales of $10 million to $1 billion. 

A prudent, diversified investment strategy helps to reduce risk for Ares Capital and its shareholders. As of June 30, its $21.5 billion portfolio held positions in 475 companies with stable cash flows and experienced leadership. 

As a BDC, Ares Capital must pay out at least 90% of its income to its investors to avoid tax penalties. It does so by passing the interest it receives from loan payments to its shareholders via bountiful cash distributions.

With annualized returns of 12% since its initial public offering (IPO) in 2004, Ares Capital is a time-tested wealth-builder that should continue to reward its investors in the coming years.