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.
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