Are you ready to increase your passive income? 3 dividend stocks you can’t go wrong with
Investing in the stock market can help you create long-term wealth, but it can take years or even decades to generate substantial returns.
However, with dividend-paying stocks, you will not only get long-term returns on your investment, but you will also receive dividend payments every year or quarter. Each time you receive a dividend, you can either reinvest that money to buy more shares, or cash it out to create asource of passive income.
When choosing dividend stocks, it is important to invest wisely. Not all stocks are the same, and some investments are better than others. While each of these three companies have experienced setbacks, they consistently pay high dividends, making them a smart choice for many investors.
AbbVie (NYSE: ABBV) is a biopharmaceutical company with a good track record for paying dividends. It is part of the Dividend Aristocrats group, which is a group of S&P 500 stocks, each of which has increased its dividend for at least 25 consecutive years.
AbbVie has been a favorite among dividend investors for many years, as it is known for its high dividend yield and consistent dividend increase. One potential worrying signal is that its top-selling drug Humira is losing US exclusivity in 2023, which could lead to a sharp drop in Humira sales. However, the company already has several other drugs providing significant revenue growth that could offset potential losses from Humira. For this reason, AbbVie is still in a strong position and should continue to increase its dividend.
The stock pays relatively high annual dividends of $ 1.30 per quarter, which is $ 5.20 per year. At the time of this writing, it is also priced at around $ 106 per share. If you invested, say, $ 5,000 in AbbVie shares, that’s roughly 47 shares. In this scenario, you will be earning about $ 244 per year in dividends.
Of course, $ 244 a year is hardly enough to pay the bills. But keep in mind that investing is a long term strategy. The more you invest, the more you earn. If you reinvest your dividend into buying more shares, it can speed up the dividend payout.
IBM (NYSE: IBM) has been paying dividends since 1913, making it one of the longest-paying dividend stocks in existence. Although the company went through a difficult quarter in late 2020, it is expected to recover this year, focusing more on its cloud-based software solutions. This is a good sign for long-term investors who are willing to wait it out because such a restructuring could lead to more upside potential.
The company also boasts a huge quarterly dividend payout of $ 1.63 (or $ 6.52 per year) and is currently trading at $ 120 per share. If you invested $ 5,000 in IBM stock now, you would have about 41 shares. With a dividend of $ 6.52 per year, this investment will net you about $ 267 per year in dividend payments.
Also, keep in mind that as companies increase their dividends, it also increases your annual payout – even if you don’t put in more money. By investing in strong companies that increase their dividends every year, you can increase your passive income effortlessly.
ExxonMobil (NYSE: XOM) is another member of Dividend Aristocrats that has increased its dividend annually for 37 consecutive years. It has a slightly lower dividend payout of $ 0.87 per quarter ($ 3.48 per year), but at the time of this writing, it also has a lower share price at just $ 53 per share.
This stock is riskier as the company has had a tough year as oil prices plunged in 2020. In the past, ExxonMobil has struggled to protect its dividend by deciding to take on more debt to avoid cutting its dividend payout. But if the company continues to fight, dividends could be at stake.
However, the company is currently under pressure to focus more on renewables and is reportedly considering changing its board of directors and increasing investments in sustainable energy. This could lead to stronger long-term growth, which is a good sign for investors.
Currently, by investing $ 5,000 in ExxonMobil, you will buy 94 shares. With a dividend of $ 3.48 per share, you will be earning $ 327 per year in dividend payments. If you are not a risk investor, this stock may not be the best option. But if you’re willing to gamble on the return of the company, this could potentially be a profitable decision.