According to the Chinese calendar, 2026 is the Year of the Fire Horse. With due apologies to fire horses across the world, I think income investors should go with a different moniker for the new year. What if we dub 2026 the Year of Making Reliable Passive Income?
It's quite possible for the new year to fulfill this ambitious name. Investing $122,100 in these three high-yield dividend stocks could make you $10,000 in reliable passive income in 2026.
Image source: Getty Images.
1. Ares Capital
Let's assume we take one-third of the initial $122,100, which amounts to $40,700, and invest it in Ares Capital (ARCC 1.08%). Based on the stock's forward dividend yield of slightly above 9.5%, you should be able to receive roughly $3,875 in dividend income in 2026.
But is that dividend income reliable? I think so. For one thing, Ares Capital is the largest publicly traded business development company (BDC). To be exempt from paying federal income taxes, BDCs must return at least 90% of their income to shareholders as dividends.
NASDAQ: ARCC
Key Data Points
Ares Capital has an impressive track record of paying dividends. The company has either grown or maintained its dividend for 65 consecutive quarters (16 years and counting).
The odds are also pretty good that you'll enjoy more than just dividend income with this stock. Ares Capital's total returns since its initial public offering in 2004 have trounced the S&P 500 (^GSPC 1.16%) and the S&P BDC Index.
2. Energy Transfer LP
Investing another one-third of the initial $122,100 in Energy Transfer LP (ET +0.19%) could also pay off handsomely. This limited partnership (LP) pays a distribution that yields nearly 8.2%. Energy Transfer could easily generate passive income of $3,325 in the new year.
I suspect the actual income total will be even higher, though. Energy Transfer has increased its distributions in every quarter since the third quarter of 2021. The midstream energy leader targets annual distribution growth of between 3% and 5%.
NYSE: ET
Key Data Points
Can Energy Transfer achieve this growth target? I think so. The LP's financial position is the strongest in its history. Energy Transfer also has a manageable debt load and a comfortable distribution coverage ratio.
The financial numbers could improve in 2026. Energy Transfer has multiple agreements in place to supply natural gas to data centers operated by cloud giant Oracle (ORCL 2.05%) and other companies. It's also opening new natural gas processing plants and expanding pipelines in the new year.
3. Pfizer
Finally, buying $40,700 of Pfizer (PFE 0.93%) stock could add another $2,800 in passive income in 2026, thanks to the big drugmaker's forward dividend yield of around 6.9%. Adding this amount to the income generated from investing in Ares Capital and Energy Transfer brings our total to the $10,000 threshold.
Pfizer has increased its dividend for 16 consecutive years. The company has paid dividends for 345 consecutive quarters – an impressive 86-year streak.
NYSE: PFE
Key Data Points
There is an elephant in the room, though. Pfizer's growth has stagnated. The pharma giant projects 2026 revenue of between $59.5 billion and $62.5 billion. The midpoint of that guidance range is below the $62 billion revenue figure the company expects to generate in 2025.
One challenge for Pfizer is that its COVID-19 product revenue will likely be lower than originally forecast. Another is that the company faces a patent cliff, with several key products losing patent exclusivity over the next few years.
Will all of this affect Pfizer's dividend in 2026? I don't think so. Pfizer continues to generate solid free cash flow. Management has also consistently emphasized its commitment to maintaining and growing the dividend over time.
