15 Best Dividend Stocks for Passive Income

Published on December 1, 2022 at 6:06 pm by Vardah Gill in Dividend Stocks, Hedge Funds, News

In this article, we discuss 15 best dividend stocks for passive income. You can skip our detailed analysis of dividend stocks and their performance over the years, and go directly to read 5 Best Dividend Stocks for Passive Income.

Growing inflation and recession risks this year have investors piling onto dividend stocks like Exxon Mobil Corporation (NYSE:XOM), The Procter & Gamble Company (NYSE:PG), and Johnson & Johnson (NYSE:JNJ). Dividend companies with solid dividend growth tracks have outperformed the broader index historically and dividends have shown significant growth during inflationary periods, according to a report by Fidelity.

According to a report by CME Group, dividend payouts grew by 12% and 116% during the high inflation decades of the 2000s and the 2010s, respectively. This gain is widely attributed to the growth in corporate profits during these decades.

Many reports have revealed the strong performance of dividend equities during inflationary periods, making investors turn toward them. Guinness Atkinson Funds reported that the S&P 500 surpassed the rate of inflation by over three times from December 1940 to April 2015. The report also mentioned that during 53 calendar years from 1962 through 2014, the market declined 15 times, but the inclusion of dividend payments for each year took the negative years to 11.

In view of these arguments, we will discuss the best dividend stocks for passive income.

Photo by Dan Dennis on Unsplash

Our Methodology:

The stocks mentioned below are reliable options for generating passive income as these companies pay regular dividends to shareholders. In addition to this, these companies have strong balance sheets and solid financial health.

Best Dividend Stocks for Passive Income

15. Brown & Brown, Inc. (NYSE:BRO)

Dividend Yield as of December 1: 0.77%

Brown & Brown, Inc. (NYSE:BRO) is a Florida-based leading insurance company that provides risk management solutions to its consumers and businesses. In October, RBC Capital maintained a Sector Perform rating on the stock with a $62 price target, following the company’s recent quarterly earnings. The firm also highlighted the company’s retail organic growth.

In Q3 2022, Brown & Brown, Inc. (NYSE:BRO) reported revenue of $927.6 million, which showed a 20.4% growth from the same period last year. The company had $580 million available in cash and cash equivalents and its total assets amounted to over $4.8 billion.

On October 19, Brown & Brown, Inc. (NYSE:BRO) announced a 12% hike in its quarterly dividend to $0.115 per share. This was the company’s 29th consecutive year of dividend growth, which makes it one of the best dividend stocks on our list. The stock can be added to dividend portfolios alongside popular dividend stocks like Exxon Mobil Corporation (NYSE:XOM), The Procter & Gamble Company (NYSE:PG), and Johnson & Johnson (NYSE:JNJ). The stock’s dividend yield of December 1 came in at 0.77%.

At the end of Q3 2022, 27 hedge funds tracked by Insider Monkey owned stakes in Brown & Brown, Inc. (NYSE:BRO), with a total value of over $1.55 billion. Select Equity Group was the company’s leading stakeholder in Q3.

14. Quaker Chemical Corporation (NYSE:KWR)

Dividend Yield as of December 1: 0.88%

Quaker Chemical Corporation (NYSE:KWR) is an American chemical company that has a presence in over 21 countries and 35 locations worldwide. In the third quarter of 2022, the company’s revenue showed a 9.6% year-over-year growth at $492.2 million. The company’s operating cash flow came in at $17.9 million and had $139 million in cash and cash equivalents.

Following the company’s strong Q3 earnings and its improving fundamentals, Deutsche Bank raised its price target on Quaker Chemical Corporation (NYSE:KWR) to $200 with a Buy rating on the shares.

Quaker Chemical Corporation (NYSE:KWR) holds a strong dividend history, paying uninterrupted dividends to shareholders for 50 years. In 2022, the company extended its dividend growth streak to 46 years, which makes it one of the best dividend stocks on our list. It pays a quarterly dividend of $0.435 per share for a dividend yield of 0.88%, as of December 1.

At the end of September, 11 hedge funds tracked by Insider Monkey reported owning stakes in Quaker Chemical Corporation (NYSE:KWR), compared with 13 in the previous quarter. The collective value of these stakes is over $258.2 million.

Carillon Tower Advisers mentioned Quaker Chemical Corporation (NYSE:KWR) in its Q1 2022 investor letter. Here is what the firm has to say:

“Quaker Houghton (NYSE:KWR) develops, produces, and markets formulated chemical specialty products. Rising input costs have pressured the company’s margins as of late, partly because a large portion of its raw materials are crude-oil based. The minor slowdown in steel production, as well as ongoing global semiconductor chip shortages, continue to limit production at the firm’s auto end-market customers, providing an additional headwind at the moment.”

13. American Equity Investment Life Holding Company (NYSE:AEL)

Dividend Yield as of December 1: 0.89%

American Equity Investment Life Holding Company (NYSE:AEL) is an American insurance company that specializes in the sale of fixed index and fixed rate annuities. The company is one of the best dividend stocks on our list as it has been making regular dividends to shareholders since 2003. It currently offers a per-share dividend of $0.34 every quarter and has a dividend yield of 0.89%, as of December 1.

In Q3 2022, American Equity Investment Life Holding Company (NYSE:AEL) repurchased 4.2 million of its common shares, worth $154 million. The company’s net income available to stockholders came in at $301.7 million and its revenue stood at $673.4 million.

Piper Sandler lifted its price target on American Equity Investment Life Holding Company (NYSE:AEL) to $47 with an Overweight rating on the shares, presenting a solid stance on the insurance space.

The number of hedge funds tracked by Insider Monkey owning stakes in American Equity Investment Life Holding Company (NYSE:AEL) grew to 18 in Q3 2022, from 14 in the previous quarter. The collective value of these stakes is over $103.7 million.

First Pacific Advisors mentioned American Equity Investment Life Holding Company (NYSE:AEL) in its Q3 2022 investor letter. Here is what the firm has to say:

“American Equity Investment Life Holding Company (NYSE:AEL), a leading writer of fixed index annuities, has continued to transition to its AEL 2.0 business model. The plan’s main goals are to diversify the company’s assets into a broader array of investments, including private debt through strategic partnerships, and to increase its use of reinsurance to free up capital. We think this is an interesting, but somewhat aggressive plan. Thus far, the results have been impressive, but we continue to monitor the credit quality of their assets as they move toward achieving their target of having 40% of their portfolio invested in private assets, up from 15.4%.”

12. The Sherwin-Williams Company (NYSE:SHW)

Dividend Yield as of December 1: 0.96%

The Sherwin-Williams Company (NYSE:SHW) is an Ohio-based paint and coating manufacturing company that has business in over 109 countries. BMO Capital raised its price target on the stock to $251 in October with a Market Perform rating on the shares, appreciating the firm’s recent quarterly earnings and its Q4 guidance. The firm mentioned that the company has found its footing.

In the first nine months of the year, The Sherwin-Williams Company (NYSE:SHW) reported an operating cash flow of $1.28 billion and paid $1.2 billion to shareholders in dividends and shares repurchases. The company’s revenue for the third quarter came in at $6 billion and it had $130.5 million in cash and cash equivalents.

The Sherwin-Williams Company (NYSE:SHW), one of the best dividend stocks on our list, has been raising its dividends consistently for the past 43 years. The company pays a quarterly dividend of $0.60 per share for a dividend yield of 0.96%, as of December 1.

The Sherwin-Williams Company (NYSE:SHW) was a popular stock among hedge funds in Q3 2022, as 63 hedge funds tracked by Insider Monkey owned stakes in the company, up from 52 in the previous quarter. These stakes have a consolidated value of over $2.8 billion. D1 Capital Partners owned the largest stake in the company in Q3.

ClearBridge Investments mentioned The Sherwin-Williams Company (NYSE:SHW) in its Q3 2022 investor letter. Here is what the firm has to say:

“The third strategy is buying growth companies with idiosyncratic or stock-specific catalysts unrelated to the direction of the market like The Sherwin-Williams Company (NYSE:SHW). The stock is an example of a company we categorize in our cyclical bucket that should experience a step change in earnings over the medium to long term with solid execution and its ability to pass through price increases. While relative performance has been challenged by binary decisions around a handful of mega cap technology stocks, we’re entering a lower-growth period in which we’ve historically delivered strong relative results from our balanced approach.”

11. Applied Industrial Technologies, Inc. (NYSE:AIT)

Dividend Yield as of December 1: 1.03%

Applied Industrial Technologies, Inc. (NYSE:AIT) is an American company that specializes in power transmission products and provides flow control solutions. In fiscal Q1 2023, the company reported revenue of $1.1 billion, which showed a 23.4% growth from the same period last year. The company had $147.5 million available in cash and cash equivalents and its total assets amounted to $2.4 billion.

Applied Industrial Technologies, Inc. (NYSE:AIT) currently pays a quarterly dividend of $0.34 per share and has a dividend yield of 1.03%, as of December 1. The company is one of the best dividend stocks on our list as it has been raising its dividends consistently for the past 12 years.

As of the close of Q3 2022, 31 hedge funds tracked by Insider Monkey owned stakes in Applied Industrial Technologies, Inc. (NYSE:AIT), up from 24 in the previous quarter. The collective value of these stakes is over $113.3 million.

10. AmerisourceBergen Corporation (NYSE:ABC)

Dividend Yield as of December 1: 1.14%

AmerisourceBergen Corporation (NYSE:ABC) is an American drug wholesale company that provides drug distribution and consulting services to medical businesses. In November, Credit Suisse raised its price target on the stock to $182 with an Outperform rating on the shares, appreciating the company’s management.

In fiscal Q4 2022, AmerisourceBergen Corporation (NYSE:ABC) reported revenue of $61.1 billion, which showed a 3.8% growth from the same period last year. The company’s cash and cash equivalents at the end of September came in at $3.38 billion, compared with $2.5 billion in the prior-year period.

On November 4, AmerisourceBergen Corporation (NYSE:ABC) declared a 5.4% hike in its quarterly dividend to $0.485 per share. This marked the company’s 18th consecutive year of dividend growth, which makes it one of the best dividend stocks on our list. The stock’s dividend yield on December 1 stood at 1.14%.

At the end of Q3 2022, 47 hedge funds in Insider Monkey’s database owned stakes in AmerisourceBergen Corporation (NYSE:ABC), growing from 36 in the previous quarter. These stakes are valued at $604 million collectively.

9. Ecolab Inc. (NYSE:ECL)

Dividend Yield as of December 1: 1.36%

Ecolab Inc. (NYSE:ECL) is a Minnesota-based chemical company that develops and offers related services to its consumers. The company holds one of the strongest dividend records as it has been paying regular dividends to shareholders for the past 85 years. Moreover, it has raised its payouts consistently for the past 30 years. Its current quarterly dividend stands at $0.51 per share and has a dividend yield of 1.36%, as of December 1.

Ecolab Inc. (NYSE:ECL) reported revenue of $3.6 billion in Q3 2022, which showed a 10.5% growth from the prior-year period. The company had $113 million available in cash and cash equivalents and its total assets amounted to over $5 billion. Its operating income also showed a 4% year-over-year growth at $483 million.

In October, Seaport Global upgraded Ecolab Inc. (NYSE:ECL) to Buy with a $190 price target, appreciating the company’s recent quarterly report. The firm expects the company to outperform in the upcoming quarters.

As of the close of Q3 2022, 42 hedge funds in Insider Monkey’s database owned stakes in Ecolab Inc. (NYSE:ECL), compared with 43 in the previous quarter. These stakes are collectively worth over $1.5 billion. Among these hedge funds, Bill & Melinda Gates Foundation Trust owned the largest stake in the company.

ClearBridge Investments mentioned Ecolab Inc. (NYSE:ECL) in its Q3 2022 investor letter. Here is what the firm has to say:

“We have focused our valuation discipline to reduce exposure to higher-multiple stocks most at risk of multiple compression in the current environment. Along these lines, while we remain constructive on the high returns on invested capital Ecolab Inc. (NYSE:ECL) earns in its core business, over the years its diversification has diluted this segment’s importance, and we feel less comfortable defending the position at current valuations.”

8. Apogee Enterprises, Inc. (NASDAQ:APOG)

Dividend Yield as of December 1: 1.82%

Apogee Enterprises, Inc. (NASDAQ:APOG) is a California-based software company that deals in audio interfaces and audio converters. On October 6, the company declared a quarterly dividend of $0.22 per share, which fell in line with its previous dividend. The company has been raising its dividends consistently for the past nine years. As of December 1, the stock has a dividend yield of 1.82%.

In fiscal Q2 2023, Apogee Enterprises, Inc. (NASDAQ:APOG) reported revenue of $372 million, which shows a 14.2% growth from the same period last year. The company’s operating cash flow came in at $27.8 million and had $22.1 million in cash and cash equivalents. Year-to-date, it returned $84 million to shareholders in dividends and share repurchases.

As per Insider Monkey’s Q3 2022 database, 12 hedge funds owned stakes in Apogee Enterprises, Inc. (NASDAQ:APOG), worth $17.8 million collectively. Millennium Management was the company’s largest stakeholder in Q3.

7. PPG Industries, Inc. (NYSE:PPG)

Dividend Yield as of December 1: 1.83%

PPG Industries, Inc. (NYSE:PPG) is an American chemical industry company that supplies paints, coatings, and other specialty materials. The company has operations in 70 countries. Following the company’s solid quarterly earnings, Deutsche Bank reiterated its Buy rating on the stock in October.

PPG Industries, Inc. (NYSE:PPG) is one of the best dividend stocks on our list as it has been raising its payouts consistently for the past 51 years. The company has a solid payout ratio of 52.2%. It currently pays a quarterly dividend of $0.62 per share and has a dividend yield of 1.83%, as of December 1.

At the end of Q3 2022, 34 hedge funds in Insider Monkey’s database owned stakes in PPG Industries, Inc. (NYSE:PPG), jumping from 22 a quarter earlier. These stakes have a total value of over $455.7 million.

ClearBridge Investments mentioned PPG Industries, Inc. (NYSE:PPG) in its Q1 2022 investor letter. Here is what the firm has to say:

“While commodities-exposed areas of the materials sector such as mining and steel fared well in the quarter, we tend to have less direct exposure to commodities across our portfolio. Holdings like paint and coating company PPG Industries (NYSE:PPG) that use natural gas and oil related products as feedstock into their products faced sharp input cost escalation, driving meaningful margin compression, which was not well-received by investors. While negative in the short term, we remain confident that the company will be able to adjust pricing accordingly and recover margins over the medium term.”

6. NextEra Energy, Inc. (NYSE:NEE)

Dividend Yield as of December 1: 2.01%

NextEra Energy, Inc. (NYSE:NEE) is an electric utility holding company that provides renewable energy services to its consumers in the US and Canada. Guggenheim maintained a Buy rating on the stock in October with a $99 price target, presenting a positive stance on the Power and Utility group due to higher interest rates.

NextEra Energy, Inc. (NYSE:NEE) currently pays a quarterly dividend of $0.425 per share. Earlier this year, the company raised its dividend for the 26th consecutive year, which places it as one of the best dividend stocks on our list. The stock has a dividend yield of 2.01%, as of December 1.

In addition to popular dividend stocks like Exxon Mobil Corporation (NYSE:XOM), The Procter & Gamble Company (NYSE:PG), and Johnson & Johnson (NYSE:JNJ), investors are also paying attention to NextEra Energy, Inc. (NYSE:NEE) due to its solid dividend growth streak.

The number of hedge funds tracked by Insider Monkey owning stakes in NextEra Energy, Inc. (NYSE:NEE) stood at 21 in Q3 2022, up from 17 in the previous quarter. These stakes are collectively worth nearly $250 million.

ClearBridge Investments mentioned NextEra Energy, Inc. (NYSE:NEE) in its Q3 2022 investor letter. Here is what the firm has to say:

“NextEra Energy, Inc. (NYSE:NEE) is an integrated utility business with a regulated utility operating in Florida and the largest wind business in the U.S. NextEra’s regulated business includes Florida Power & Light, which serves nine million people in Florida. NextEra’s share price rose along with the passage of the U.S. Inflation Reduction Act, which considerably expands support for renewable energy.”

Click to continue reading and see 5 Best Dividend Stocks for Passive Income.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on May 1, 2024 at by Inan Dogan, PhD

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Published on May 2, 2024 at by Insider Monkey Staff

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