In this article, we will take a look at the 15 best passive income stocks to buy right now.
The idea of generating passive income has been gaining a lot of attention recently. Taking on extra jobs and exploring side hustles has become common in the U.S as more people look for ways to boost their earnings. Still, investing remains the top choice for those seeking passive income, with dividend investing being especially popular
Morgan Stanley noted that many companies have the financial capacity to start paying dividends to shareholders. According to strategist Todd Castagno, companies that initiate regular dividends have the potential to deliver significant returns for investors. The firm found that businesses announcing a new quarterly dividend outperformed the market by an average of 650 basis points in the six months following the announcement and by around 920 basis points after 12 months. Dividend payments can also provide stability for portfolios during periods of uncertainty and when valuations are high. Castagno made the following comment:
“During times of higher risk and valuations, dividends play a greater role in investors’ total returns, helping reduce volatility and offering some support for stock prices. When growth slows and interest rates fall, stable, higher-yielding dividends become more appealing as cash and fixed income options lose their allure.”
Given this, we will take a look at some of the best dividend stocks for passive income.
Photo by Dan Dennis on Unsplash
Our Methodology:
For this article, we screened companies with a market capitalization of at least $10 billion that have increased their dividends for at least 10 consecutive years. This consistent dividend growth shows that these companies can navigate challenging periods while continuing to provide passive income. From that group, we selected stocks with an upside potential of at least 10% according to analysts’ forecasts and ranked them in ascending order.
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. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
15. Johnson & Johnson (NYSE:JNJ)
Upside Potential as of November 12: 10.02%
Johnson & Johnson (NYSE:JNJ) is one of the best dividend stocks for passive income.
On November 12, Scotiabank’s Louise Chen began coverage of ten large-cap biopharma companies and took a positive stance on the sector, noting that years of lagging performance compared with other industries and major indices may offer investors an appealing entry point, according to a report by The Fly. She suggested that the next phase of innovation could be driven by companies working toward actual cures for serious illnesses.
In her view, firms that are positioned to be first in treating diseases with the aim to cure them stand out. She pointed to Johnson & Johnson (NYSE:JNJ) as the firm’s top pick, saying the company’s work toward curative treatments and its consistent execution are making its underlying growth clearer. Scotiabank kept an Outperform rating on the stock.
Johnson & Johnson (NYSE:JNJ) carries a dividend record that is rarely matched. It has raised its payout for 63 straight years. Even with challenges such as patent expirations, the company’s broad pharmaceutical portfolio continues to produce steady growth. This year it faced the loss of US exclusivity for Stelara, a major immunology drug, yet both revenue and earnings continued to trend higher. Third-quarter sales reached $24 billion, up 6.8% from the same period last year.
Johnson & Johnson (NYSE:JNJ) operates globally and focuses on two main areas: Innovative Medicine and MedTech.
14. Cisco Systems, Inc. (NASDAQ:CSCO)
Upside Potential as of November 12: 10.11%
Cisco Systems, Inc. (NASDAQ:CSCO) is among the best dividend stocks for passive income.
On November 10, Erste Group’s Hans Engel moved Cisco Systems, Inc. (NASDAQ:CSCO) to a Buy rating from Hold, as reported by The Fly. He told investors that the company is likely to maintain an operating margin that stays above the industry average, along with a strong return on equity. He also noted that Cisco’s management has provided “an optimistic outlook for the new fiscal year 2026,” and the firm views the company’s forecast as conservative, expecting the company to perform better than its stated target.
For fiscal Q1 2026, Cisco Systems, Inc. (NASDAQ:CSCO) posted record revenue of 14.88 billion dollars, reflecting a 7.53% increase from the same quarter last year. This level of growth keeps the company on course for what it believes could be its strongest full year yet. Product revenue rose 10%, helped by steady demand for AI infrastructure and campus networking solutions. AI infrastructure orders from hyperscalers reached $1.3 billion in the quarter, and the company expects to recognize around $3 billion from hyperscaler AI infrastructure revenue in FY26.
Cisco Systems, Inc. (NASDAQ:CSCO) continues to reward shareholders with dividends and has raised its payouts for 18 straight years. The company remains a well-established name in IT infrastructure, with a portfolio that includes switches, routers, and firewalls. It also provides a range of artificial intelligence solutions that help businesses manage both the opportunities and the risks that come with adopting AI.
13. Bank of America Corporation (NYSE:BAC)
Upside Potential as of November 12: 10.28%
Bank of America Corporation (NYSE:BAC) is one of the best dividend stocks for passive income.
On November 7, Morgan Stanley kept its Overweight rating and a $70 price target on Bank of America Corporation (NYSE:BAC), according to a report by The Fly. The firm also placed the bank among its top picks in the large-cap banking group following the company’s investor day. In its research note, the analyst mentioned that management laid out a path towards a 16% to 18% return on tangible common equity, supported by steady revenue growth and plans to bring the expense ratio down to a range of 55% to 59%. The firm also pointed out that it sees the bank entering a stretch of consistent operating leverage, which it believes should help Bank of America outperform its peers.
During the investor day on November 5, Chairman and CEO Brian Moynihan highlighted that he expected earnings to grow at a strong pace, with returns rising accordingly. In the Global Corporate & Investment Banking segment, the bank aims to lift corporate banking revenue at a mid-single-digit compound rate. Part of that growth is expected to come from its overseas expansion, where the company is targeting roughly 20% growth in Latin America and around 40% in Europe, the Middle East, and Africa. The Global Investment Banking unit is working with similar mid-single-digit growth expectations.
Bank of America Corporation (NYSE:BAC) has spent the past decade expanding its presence across the US. From 2014 through 2024, it put more than $5 billion into building out financial centers and moving into new markets nationwide.
Bank of America Corporation (NYSE:BAC) ranks among the largest financial institutions in the country, offering a broad range of banking, investment, and financial management services to individuals, small firms, and corporations around the world.
