When the Federal Reserve raised its benchmark interest rates in 2022 and 2023, many income-oriented investors shifted their focus from dividend stocks to risk-free CDs and T-bills. Yet in 2024 and 2025, that trend reversed as the Fed cut its rates six consecutive times.
So if you're looking for a stable place to invest $10,000 and generate some passive income, you should start with the top blue chip dividend stocks instead of fixed-income plays. You should also stick with the stocks that have high yields, low valuations, and wide moats. These three stocks fit the bill: Altria (MO +2.19%), Verizon (VZ +2.08%), and Ares Capital (ARCC +1.93%).
Image source: Getty Images.
Altria
Altria is the largest tobacco company in America. Its flagship Marlboro brand controls over 40% of the domestic cigarette market, and it also sells snus, e-cigarettes, and nicotine pouches. It still generates most of its revenue from cigarettes, so it might seem like a risky stock to own as adult smoking rates in the U.S. drop to their lowest level in more than six decades.
NYSE: MO
Key Data Points
However, Altria has been offsetting that pressure by raising its cigarette prices, increasing its investments in smokeless products, reducing costs, and repurchasing more shares. Those strategies are boosting its earnings per share (EPS) even as its revenue growth stalls out.
That's why it raised its dividend 60 times over the past 56 years. It pays a forward dividend rate of $4.24 per share, which translates to a substantial forward yield of 7.1%. Analysts expect it to easily cover that payout by growing its adjusted EPS by 6% to $5.44 in 2025 and by 3% to $5.59 in 2026.
At $61 per share, Altria still appears to be a bargain at 11 times its forward earnings per share. Its high yield and low valuation should limit its downside potential, which makes it an easy way to generate stable income even if the broader market swoons.
Verizon
Verizon, which serves 146.1 million wireless customers, is one of the largest telecom companies in America. Over the past several years, it struggled to gain new wireless subscribers as its top competitors ramped up their promotions and bundling strategies. Its business wireline segment also withered as more companies shifted toward cloud-based communications solutions.
NYSE: VZ
Key Data Points
Those headwinds make Verizon appear to be a shaky investment. However, it's been expanding its higher-growth broadband business (which includes its Home Internet and FiOS fiber plans), and it expects to add over 2.2 million new fiber subscribers by acquiring Frontier Communications (FYBR +0.38%) this year. It's also bundling more wireless services with its broadband plans, integrating additional AI features into its 5G networks to attract enterprise customers, and utilizing its own AI tools to streamline customer support and network deployment services.
Verizon has raised its dividends annually for 19 consecutive years. As its turnaround efforts kick in, analysts expect its adjusted EPS to rise 2% to $4.59 in 2025 and another 2% to $4.69 in 2026. Those estimates easily cover its forward dividend rate of $2.76 per share, which equals a forward yield of 7.1%. At $40, it trades at less than nine times next year's earnings.
Ares Capital
Ares Capital is the world's largest business development corporation (BDC), with a $28.7 billion portfolio of investments in 587 companies. BDCs provide financing to "middle market" companies, which struggle to secure larger loans from conventional banks because they're considered higher-risk clients. In exchange for taking on that risk, BDCs charge higher interest rates than traditional banks. It primarily serves companies that generate between $10 million and $250 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) annually.
NASDAQ: ARCC
Key Data Points
For Ares to thrive, the Fed's benchmark rates need to remain in a "Goldilocks" zone. If they're too high, its net interest income will rise, but its portfolio companies will suffer. If they're too low, its portfolio companies will thrive, but its net interest income will decline.
Analysts expect its EPS to decline 14% to $1.99 in 2025 and dip 2% to $1.95 in 2026, but it should still easily cover its forward dividend rate of $1.92 per share. Ares doesn't raise its dividend every year, but it currently pays a massive forward yield of 9.4%. At $21, it also appears to be a bargain at 11 times forward earnings. Its earnings should grow again as interest rates stabilize, and its low valuation and high yield should make it a safe investment.
