In this article, we will take a look at the 10 Best Dividend Stocks to Buy for Passive Income.
Passive income has become an increasingly popular goal for investors looking to build wealth beyond their regular salaries. According to a recent Wall Street Journal report, about one in four Americans has a side hustle, based on a Bankrate poll conducted last year. Another survey by financial platform Cash App in March found that 44% of adults between 18 and 28 earn income from sources other than full-time or part-time jobs.
While passive income is not measured separately in government labor statistics, research suggests it is becoming more common. A 2022 working paper from the Boston Fed found that roughly one in 10 US workers earned money from what researchers described as “less labor-intensive” activities. It also included selling goods on eBay.
Many people are also turning to platforms that help them earn from assets they already own. Airbnb now has more than 5.5 million hosts worldwide, while around 140,000 people were renting out their vehicles through Turo as of 2024. Similar platforms make it possible to generate income from boats, RVs, swimming pools, and even unused garage storage.
For many, passive income is about more than earning extra money. It represents financial independence and the freedom to spend more time on what matters. The reality, though, is that building a dependable passive income stream often requires a great deal of work before it becomes truly hands-off.
The report also noted that Google searches for passive income have increased by about 50% during the 2020s. At the same time, a Reddit community dedicated to the topic now attracts around half a million visitors every week.
Dividend-paying stocks are another popular source of passive income. Investors receive regular cash payments simply for owning shares in dividend-paying companies. Depending on dividends instead of selling stocks to generate income can help reduce the risk of gradually shrinking an investment portfolio. Unlike rental properties and many other income-generating assets, dividend investing requires very little ongoing effort once the investment has been made.
Given this, we will take a look at some of the best dividend stocks for passive income.
Photo by Viacheslav Bublyk on Unsplash
Our Methodology:
For this article, we screened for companies that have consistent dividend histories, sound financials, and strong balance sheets. This consistent dividend growth shows that these companies can navigate challenging periods while continuing to provide passive income. We limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Insider Monkey’s quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
10. PPG Industries, Inc. (NYSE:PPG)
Number of Hedge Funds: 30
Dividend Yield as of June 26: 2.31%
On June 24, Citi raised its price recommendation on PPG Industries, Inc. (NYSE:PPG) to $125 from $114. It reiterated a Neutral rating on the stock. The firm updated its price targets across the specialty chemicals sector as part of its second-quarter earnings preview. Citi also named Ecolab as its top pick heading into earnings and initiated a pair trade, recommending an overweight position in Linde and an underweight position in Air Products.
Earlier, on June 15, BMO Capital raised its price goal on PPG to $140 from $135. It maintained its Outperform rating. Following the company’s detailed presentation on its aerospace business, the firm said it had gained greater confidence in the segment’s long-term growth prospects. Analyst John McNulty said in a research note that PPG is well-positioned across Commercial, Business, and Military aerospace markets, serving both the aftermarket and original equipment manufacturer (OEM) channels. He added that the company is expected to benefit from several growth trends across these segments.
PPG Industries, Inc. (NYSE:PPG) manufactures and distributes a wide range of paints, coatings, and specialty products. The company operates through three business segments: Global Architectural Coatings, Performance Coatings, and Industrial Coatings.
9. T. Rowe Price Group, Inc. (NASDAQ:TROW)
Number of Hedge Funds: 38
Dividend Yield as of June 26: 4.74%
On June 26, Morgan Stanley raised its price recommendation on T. Rowe Price Group, Inc. (NASDAQ:TROW) to $109 from $105. It reiterated an Equal Weight rating on the stock. The firm increased its second-quarter EPS estimates by an average of 7.5%. It also said it would be a buyer of traditional asset managers ahead of Q2 results, expecting broad-based earnings beats supported by a favorable market backdrop and improving fund flows.
Earlier, on June 10, the company reported its May results. Assets under management (AUM) increased to $1.89 trillion from $1.83 trillion in April. It also recorded net inflows of $3.3 billion during the month. This was helped by a large contribution to its target date retirement funds.
Growth came mainly from its equity and multi-asset strategies. Equity assets rose to $919 billion, while multi-asset assets increased to $691 billion. The firm’s target date retirement funds also grew to $623 billion, reflecting continued strength in its retirement-focused business.
T. Rowe Price Group, Inc. (NASDAQ:TROW) is a financial services holding company that provides global investment advisory services. It offers a wide range of investment solutions across equity, fixed income, multi-asset, and alternative strategies, serving individual investors, financial advisors, institutions, and retirement plan sponsors.
8. Essex Property Trust, Inc. (NYSE:ESS)
Number of Hedge Funds: 40
Dividend Yield as of June 26: 3.51%
On June 26, Raymond James upgraded Essex Property Trust, Inc. (NYSE:ESS) to Outperform from Market Perform. It set a $320 price target on the stock. The firm believes Essex is the residential real estate company best positioned to benefit from the Bay Area’s strong economic growth. According to the analyst, the AI-driven increase in wealth and housing demand is continuing to push rents higher across Northern California.
Earlier, on June 18, Scotiabank raised its price recommendation on ESS to $290 from $282. It reiterated an Outperform rating on the shares. The firm said real estate investment trust valuations appear less attractive after the sector’s strong performance earlier this year. It also adjusted its subsector positioning based on its “relative valuation-versus-growth framework.”Scotiabank remains most positive on seniors housing. It also upgraded its outlook on self-storage and net lease to Overweight from Marketweight. At the same time, it lowered its views on industrial and shopping centers to Marketweight from Overweight, citing relative valuations.
Essex Property Trust, Inc. (NYSE:ESS) is a self-administered and self-managed real estate investment trust. The company acquires, develops, redevelops, and manages apartment communities in selected residential markets across the West Coast of the United States.
7. Mid-America Apartment Communities, Inc. (NYSE:MAA)
Number of Hedge Funds: 47
Dividend Yield as of June 26: 4.36%
On June 25, Morgan Stanley raised its price recommendation on Mid-America Apartment Communities, Inc. (NYSE:MAA) to $155 from $150. It reiterated an Overweight rating on the shares. Analyst Adam Kramer said apartment REITs “started to work, but the rally faded.” He believes “the setup is even better than pre-rally” following the recent pullback.
Earlier, on June 18, Scotiabank raised its price goal on MAA to $129 from $120. It maintained an Underperform rating on the stock. Analyst Nicholas Yulico said real estate investment trust valuations have become less attractive after the sector’s strong start to the year. Scotiabank adjusted its subsector positioning based on its “relative valuation-versus-growth framework.” The firm remains most positive on seniors housing and upgraded its outlook on self-storage and net lease to Overweight from Marketweight. It also lowered its views on industrial and shopping centers to Marketweight from Overweight, citing relative valuations.
Mid-America Apartment Communities, Inc. (NYSE:MAA) is a multifamily-focused, self-administered, and self-managed real estate investment trust. The company owns, operates, acquires, and selectively develops apartment communities, primarily across the Southeast, Southwest, and Mid-Atlantic regions of the United States.
6. Nucor Corporation (NYSE:NUE)
Number of Hedge Funds: 59
Dividend Yield as of June 26: 0.94%
On June 24, KeyBanc upgraded Nucor Corporation (NYSE:NUE) to Overweight from Sector Weight. It also set a $274 price target on the stock. The firm expects real carbon steel demand to grow 2% year over year in 2026, while finished steel imports are projected to decline 15% compared with 2025. Analyst Samuel McKinney said steel buyers continue to face tight supply conditions because of a “virtually non-existent” spot market and limited contract allocations. KeyBanc also views Nucor shares as “compelling” following the stock’s 10% decline over the previous six trading days. The firm believes the “historically tight domestic supply situation” will support hot-rolled coil pricing through September.
Earlier, on June 22, Morgan Stanley raised its price recommendation on Nucor to $258 from $227. It reiterated an Equal Weight rating on the shares. The firm increased its steel price forecasts to reflect the extended supply-driven rally. Even so, it believes the expectation of higher steel prices is already reflected in the valuations of stocks across the sector. Analyst Carlos De Alba added that Commercial Metals (CMC) remains Morgan Stanley’s only Overweight-rated steel stock in North America, as the firm believes concerns about new rebar supply are overly discounted in the shares.
Nucor Corporation (NYSE:NUE) manufactures steel and steel products and operates facilities across the United States, Canada, and Mexico. The company also produces and procures ferrous and non-ferrous materials, primarily for use in its steel manufacturing business.
While we acknowledge the potential of NUE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than NUE and that has 100x upside potential, check out our report about the cheapest AI stock.
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