Dividend stocks offer a steady stream of income to their owners each year. The best are the dividend aristocrats – companies that have increased their dividends for at least 25 consecutive years.
Table of Contents
The Best Dividend Stocks for Passive Income
Dividend stocks offer a steady stream of income to their owners each year. The best are the dividend aristocrats – companies that have increased their dividends for at least 25 consecutive years. As a result, these companies are an ideal hunting ground for passive income investors. Here are the 10 best dividend stocks for passive income in 2023:
- Johnson & Johnson
- Consolidated Edison
- Altria Group
- Exxon Mobil
- Stanley Black & Decker
Each of these stocks offers a solid starting yield, making them excellent dividend picks for passive income investors.
Johnson & Johnson
Johnson & Johnson is a company with a 200-year history dating back to 1823, and its dividend yield is currently 2.61 with an annual payout of 4.52 cents. It’s one of the most resilient companies during a recession due to its diversified portfolio of businesses. The company has paid a dividend for the last 57 consecutive years, with an increase in dividend every year since 1978.
Edison and Consolidated Edison
Edison and Consolidated Edison have a storied history dating back to 1823, making them great choices for dividend investors. Consolidated Edison is one of the largest producers of renewable power in America, with a history of installing new large-scale solar capacity. The company’s dividend yield is around 75.05 percent, with analysts believing that the dividend payout ratio will come in around 75 percent in 2022. Edison is also strong in diversifying its portfolio of businesses, allowing it to be strong even during a recession.
Altria Group is a tobacco giant that offers investors a nearly five times S&P 500 index dividend yield. The company enjoys unparalleled brand recognition in the states, and its brand power continues to push revenue and earnings upward over time.
Hershey is known around the world for its deep bench of brands, including the eponymous Hershey chocolate brand and Twizzlers licorice brand. The company’s nongaap adjusted diluted earnings per share is expected to compound at 4.2% annually over the next five years.
Exxon Mobil is America’s largest energy company and is a rock-solid operator in the space. The company has kept making money and offering an ever-increasing dividend throughout decades of war, inflation, booms, and busts. Exxon Mobil is trading at less than 8x forward earnings while offering a 3.3 percent dividend yield.
Stanley Black & Decker
Stanley Black & Decker has a dividend yield of 1.8 percent, just above the S&P 500 index’s yield of 1.7 percent. The dividend payout ratio is poised to come in just under 47 during this fiscal year, and doubledigit annual dividend growth should persist in the future. The stock is trading at less than 8x forward earnings while offering a 3.4 percent dividend yield.
These companies all demonstrate strong financials, diverse portfolios, and compelling dividends, making them ideal choices for passive income investors.
Potential Dividend Stocks to Add to Your Portfolio
1. Stanley Black and Decker (SWK)
SWK is a dividend aristocrat, making it an excellent choice for passive income in your portfolio
SWK’s normal level of earnings would lead to a stock price target of $117, which is significantly higher than the current share price of $78
2. Clorox (CLX)
CLX went from record profitability to earnings per share today that fall well short of the company’s pre-2020 levels
VF Corporation (VFC)
- VFC is a large apparel company that owns more than a dozen different brands and trademarks, including Vans, The North Face, Dickies, Timberland, and Jansport
- VFC stock has lost a stunning 70% of its value from its peak in 2013
- Vans is seeing strong momentum, while VFC is struggling
- VFC stock has been losing a stunning 80% of its earnings since the pandemic, while The North Face is seeing strong momentum
4. Medtronic (MDT)
MDT is a large medical devices company known for its products in cardiology, but it has expanded over the years and now serves a wide variety of other medical conditions, such as neurology and diabetes
Medical devices field sees some weakness continuing into mid-2023; however, over the longer term, medical devices remain a highly attractive market expected to reach nearly one trillion dollars of total annual revenues in 2030
5. Realty Income (O)
O is a real estate investment trust dedicated to triple net leases
The firm’s relative strength in 2022 versus the rest of the market goes to show the value of its conservative business model and high-quality roster of tenants
- Shares currently yield 4.6%
- The firm goes for just 15 times forward earnings