15 Dividend Stocks for Passive Income

Published on August 1, 2022 at 11:29 am by Vardah Gill in Hedge Funds, News

In this article, we discuss 15 dividend stocks for passive income.

With growing inflation and recession risks this year, investors are piling up on dividend stocks like Exxon Mobil Corporation (NYSE:XOM), The Procter & Gamble Company (NYSE:PG), and Johnson & Johnson (NYSE:JNJ), which would increase the amount of their passive income to overcome the situation.

Historically, dividends stocks grew substantially in inflationary periods and companies that raised their dividends during inflation outperformed the broader index. Dividend payouts surged 12% during the 2000s and 116% during the 2010s due to the growth in corporate profits during these times, as reported by CME Group.

According to a recent report published by S&P Dow Jones Indices, the S&P 500 annual dividend rate reached its new high at $550 billion on July 22. Analysts have presented a positive outlook on dividend stocks, even as interest rates rise and the economy slows for the rest of the year. Moreover, the S&P 500 High Dividend Index has outperformed the broader index, falling by 3.62% in 2022 so far, compared with a 17.05% negative return of the S&P 500, as of the close of July 28. In view of this, we will discuss dividend stocks with passive income.

Our Methodology:

Dividend stocks mentioned below are the best passive income options for investors as they have strong dividend histories and have paid millions of dollars in dividends to shareholders in their recent reports. Moreover, due to their solid dividend policies, these stocks are expected to maintain their dividend payouts in the upcoming years as well.

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

Dividend Yield as of July 28: 0.65%

Brown & Brown, Inc. (NYSE:BRO) is a Florida-based insurance company that provides insurance and reinsurance services to businesses, corporate, governmental, institutional, and individual clients. In the past month, the stock gained 9.31%, as of the close of July 28.

At the end of Q2 2022, Brown & Brown, Inc. (NYSE:BRO) reported $2.4 billion in cash and cash equivalents, up from $693 million at the end of December 2021. The company paid $58 million in dividends to shareholders during the quarter, up from $52.2 million paid in Q4 2021. On July 20, Brown & Brown, Inc. (NYSE:BRO) announced a quarterly dividend of $0.1025 per share, with a yield of 0.65%, as of July 28. The company maintains a 28-year track record of consistent dividend growth. Its payout ratio sits at 18.52%.

In July, Goldman Sachs initiated its coverage of Brown & Brown, Inc. (NYSE:BRO) with a Neutral rating and a $67 price target. The firm believes that the company is well-positioned to benefit from the rising interest rates.

At the end of Q1 2022, 24 hedge funds in Insider Monkey’s database owned stakes in Brown & Brown, Inc. (NYSE:BRO), down from 25 in the previous quarter. The collective value of these stakes is over $1.46 billion. Select Equity Group was the company’s largest stakeholder in Q1, owning stakes worth over $1.33 billion.

Just like Exxon Mobil Corporation (NYSE:XOM), The Procter & Gamble Company (NYSE:PG), and Johnson & Johnson (NYSE:JNJ), Brown & Brown, Inc. (NYSE:BRO) is also one of the prominent dividend candidates for passive income.

14. Albemarle Corporation (NYSE:ALB)

Dividend Yield as of July 28: 0.67%

Albemarle Corporation (NYSE:ALB) is a chemical manufacturing company that is the largest provider of lithium for electric vehicle batteries. In the past six months, the stock surged 13.6% while returning 20.4% in the past year, as of the market close of July 28.

In Q1 2022, Albemarle Corporation (NYSE:ALB) reported $206.2 million in cash from operations, compared with $158 million during the same period last year. The company had $463.3 million available in cash and cash equivalents at the end of the quarter. Its financials have remained strong over the years to fulfill its shareholder obligations. In Q1, Albemarle Corporation (NYSE:ALB) paid $45.6 million in dividends, up from $41.1 million in the previous quarter.

It currently pays a quarterly dividend of $0.395 per share, with a dividend yield of 0.67%, as of July 28. The company holds a 28-year streak of consistent dividend growth. Its five-year average payout ratio is 59.2% and its current payout ratio stands at 66%.

In July, KeyBanc upgraded Albemarle Corporation (NYSE:ALB) to Sector Weight, expecting a solid earnings growth in the second quarter of 2022.

At the end of March 2022, 44 hedge funds tracked by Insider Monkey held investments in Albemarle Corporation (NYSE:ALB), valued at $454.4 million. In the previous quarter, 48 hedge funds held stakes in the North Carolina-based company, worth over $505 million.

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

Dividend Yield as of July 28: 1.03%

The Sherwin-Williams Company (NYSE:SHW) is an American paint and coating manufacturing company that also offers color selection tools and painting supplies for its consumers.

At the end of June 2022, The Sherwin-Williams Company (NYSE:SHW) had $312.6 million available in cash and cash equivalents, up from $219.6 million at the end of December 2021. The company returned nearly $1 billion to shareholders in the first six months of the year, $307 million of which accounted for the dividend payments. The Sherwin-Williams Company (NYSE:SHW) has a solid 43-year dividend growth streak with a 5-year dividend CAGR of 15.3%. It currently offers a dividend of $0.60 per share, with a dividend yield of 1.03%, as recorded on July 28.

In July, Northcoast upgraded The Sherwin-Williams Company (NYSE:SHW) to Buy from Neutral, with a $300 price target.

As per Insider Monkey’s Q1 2022 database, 54 hedge funds reported owning stakes in The Sherwin-Williams Company (NYSE:SHW), up from 53 in the previous quarter. These stakes are collectively valued at over $1.75 billion. Among these hedge funds, Chilton Investment Company owned the largest SHW stake, valued at over $311 million.

12. Ecolab Inc. (NYSE:ECL)

Dividend Yield as of July 28: 1.27%

Ecolab Inc. (NYSE:ECL) specializes in water treatment, purification, cleaning, and hygiene and provides solutions and services for the protection of people and vital resources.

Ecolab Inc. (NYSE:ECL) has a strong dividend history, paying dividends on its common stock for the past 85 years consecutively. The company has also boosted its payouts consistently for the past 30 years. The dividend payments are safe for the upcoming years as well, as the company’s free cash flow has grown at a CAGR of 10.1% in the last decade. Moreover, annual average dividend growth came in at 10.2% in the last 10 years. Ecolab Inc. (NYSE:ECL) currently pays a quarterly dividend of $0.51 per share. As of July 28, its dividend yield came in at 1.27%.

This July, Wells Fargo initiated its coverage of Ecolab Inc. (NYSE:ECL) with an Overweight rating and a $187 price target, appreciating the company’s increased focus on clean energy, water scarcity, and sustainability.

The number of hedge funds tracked by Insider Monkey owning stakes in Ecolab Inc. (NYSE:ECL) stood at 47 in Q1 2022, increasing from 42 in the previous quarter. The consolidated value of these stakes is over $2.4 billion.

Baron Funds mentioned Ecolab Inc. (NYSE:ECL) in its Q1 2022 investor letter. Here is what the firm has to say:

“Lastly, we added to our position in the leading water, hygiene, and infection prevention company, Ecolab Inc. (NYSE:ECL), as the stock sold off on concerns over rising raw material costs. We believe the sell-off is overdone as Ecolab’s strong competitive positioning and proven pricing power would enable it to offset the rising costs (though with a lag). We think that the company will continue benefiting from the secular growth trends towards sustainability, while still having a long runway for growth with only an 8% share of its estimated $147 billion addressable market.”

11. Expeditors International of Washington, Inc. (NASDAQ:EXPD)

Dividend Yield as of July 28: 1.33%

Expeditors International of Washington, Inc. (NASDAQ:EXPD) is a Washington-based logistics and freight forwarding company. At the end of Q1 2022, the company reported over $2.1 billion available in cash and cash equivalents, compared with $1.7 billion in the previous quarter. The company’s net cash from operating activities came in at $414 million, up from $355.8 million at the end of December 2021. In the past year, its operating cash flow grew by 33%, which shows that the company has enough cash to fund its operations.

On May 3, Expeditors International of Washington, Inc. (NASDAQ:EXPD) declared a quarterly dividend of $0.67 per share, raising it by 15.5% from its previous dividend. This was the company’s 28th consecutive year of dividend growth. As of July 28, the stock’s dividend yield came in at 1.33%.

In June, Cowen raised its price target on Expeditors International of Washington, Inc. (NASDAQ:EXPD) to $125 with an Outperform rating on the shares, highlighting the company’s strong quarterly earnings.

Insider Monkey’s Q1 2022 data shows that Expeditors International of Washington, Inc. (NASDAQ:EXPD) was popular among elite funds, as 38 hedge funds owned stakes in the company, up from 29 in the previous quarter. The collective value of these stakes is roughly $615 million. Cliff Asness, Jim Simons, and Israel Englander were some of the company’s major stakeholders in Q1.

10. Walmart Inc. (NYSE:WMT)

Dividend Yield as of July 28: 1.77%

An American multinational retail company, Walmart Inc. (NYSE:WMT) maintains a 49-year track record of consistent dividend growth. The company’s business remained strong even during the pandemic, as it generated over $24 billion in operating cash flow in FY21 and returned nearly $16 billion to shareholders in dividends and buybacks. According to analysts, its free cash flow is expected to grow at an annual rate of 2.8% in the next five years. Walmart Inc. (NYSE:WMT) pays a quarterly dividend of $0.56 per share, with a yield of 1.77%, as of the close of July 28.

In July, Deutsche Bank mentioned Walmart Inc. (NYSE:WMT) in its investors’ note, highlighting that the company did not cut its guidance due to a slowing consumer backdrop. The firm set a $142 price target on the stock with a Buy rating on the shares.

At the end of Q1 2022, 60 hedge funds in Insider Monkey’s database were bullish on Walmart Inc. (NYSE:WMT), down from 63 a quarter earlier. These stakes are valued at over $6.56 billion.

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

Dividend Yield as of July 28: 1.95%

PPG Industries, Inc. (NYSE:PPG) is an American company that supplies paints, coatings, and specialty materials. The company has operations in over 70 countries globally.

On July 21, PPG Industries, Inc. (NYSE:PPG) announced a 5% hike in its quarterly dividend to $0.62 per share. This was the company’s 51st consecutive year of dividend growth. It has a payout ratio of 52.2% with its 5-year average ratio standing at 39.7%. As of July 28, the stock’s dividend yield came in at 1.95%.

At the end of Q2 2022, PPG Industries, Inc. (NYSE:PPG) reported $931 million in cash and cash equivalents, with total assets amounting to $7.7 billion. The company paid $279 million in dividends during the quarter, up from $256 million paid during the previous quarter. Its free cash flow generation is strong, which puts it in a position to cover its debt and shareholder obligations.

Appreciating the company’s Q2 earnings, Street analysts presented a positive stance on PPG Industries, Inc. (NYSE:PPG). In July, both Mizuho and Wells Fargo raised their price target on the stock to $163 and $135, respectively.

First Eagle Investment Management owned over 1 million PPG shares, valued at nearly $140 million, becoming the largest stakeholder of PPG Industries, Inc. (NYSE:PPG) in Q1 2022. Overall, 33 hedge funds in Insider Monkey’s database owned stakes in the Pennsylvania-based company, worth $441.3 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.”

8. FedEx Corporation (NYSE:FDX)

Dividend Yield as of July 28: 2.02%

FedEx Corporation (NYSE:FDX) is a multinational company that focuses on transportation, e-commerce, and related services and provides time-definite delivery to over 220 countries and territories.

On June 14, FedEx Corporation (NYSE:FDX) announced its quarterly dividend of $1.15 per share, up 53% from the previous dividend. The company has been raising its dividend consecutively for the past 21 years and in the last five years, it raised its dividend by 13.4%. Its payout ratio currently stands at 20.9% with a five-year average of 69.7%. As of July 28, the stock’s dividend yield came in at 2.02%.

Appreciating the company’s guidance for FY23-FY25, BofA lifted its price target on FedEx Corporation (NYSE:FDX) in June to $287 and kept a Buy rating on the shares.

According to Insider Monkey’s database, 52 hedge funds were bullish on FedEx Corporation (NYSE:FDX) in Q1 2022, down from 64 a quarter earlier. These stakes are collectively valued at over $1.78 billion. Point72 Asset Management was one of the company’s most prominent stakeholders in Q1, owning shares worth over $240.3 million.

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

Dividend Yield as of July 28: 2.11%

An American electric services company, NextEra Energy, Inc. (NYSE:NEE) posted solid Q2 2022 results on July 22. The company reported $2.8 billion in cash and cash equivalents, with total assets amounting to over $14.3 billion. The company’s net cash used in operating activities came in at nearly $4.8 billion. NextEra Energy, Inc. (NYSE:NEE) paid over $1.67 billion in dividends during the quarter and expects its dividend per share to grow at an approximately 10% rate per year through 2024.

NextEra Energy, Inc. (NYSE:NEE) pays a quarterly dividend of $0.425 per share, with a yield of 2.11%, as of the close of July 28. The company has been boosting its dividends steadily for the past 26 years.

In July, Morgan Stanley projected a 40% growth in the large-scale US solar deployments between 2022 and 2024. In view of this, the firm maintained an Overweight rating on NextEra Energy, Inc. (NYSE:NEE).

At the end of March 2022, 64 hedge funds tracked by Insider Monkey held investments in NextEra Energy, Inc. (NYSE:NEE), up from 55 in the previous quarter. These investments are collectively valued at $2.84 billion.

6. McDonald’s Corporation (NYSE:MCD)

Dividend Yield as of July 28: 2.13%

McDonald’s Corporation (NYSE:MCD) is an American multinational fast food chain, headquartered in Illinois. The company’s free cash flow remained stable even during the height of the pandemic, generating over $4.6 billion in FCF in 2020. Its FCF reached $7.10 billion at the end of December 2021, which shows that the company’s financials are in very good shape. McDonald’s Corporation (NYSE:MCD) maintains a 45-year track record of consistent dividend growth. In the past seven years, the company has raised its dividend from $0.85 per share to $1.38 per share, equaling a CAGR of 7.17%. As of July 28, the stock’s dividend yield stood at 2.13%.

In July, RBC Capital raised its price target on McDonald’s Corporation (NYSE:MCD) to $305 with an Outperform rating on the shares. The firm mentioned that the company has delivered solid Q2 results in this tough operating environment.

At the end of March 2022, 58 hedge funds in Insider Monkey’s database owned $2.7 billion worth of stakes in McDonald’s Corporation (NYSE:MCD) in Q1 2022. In the previous quarter, 57 hedge funds owned stakes in the Illinois-based company, worth over $2.2 billion. Jim Simons’ Renaissance Technologies was the company’s leading stakeholder in Q1.

Like Exxon Mobil Corporation (NYSE:XOM), The Procter & Gamble Company (NYSE:PG), and Johnson & Johnson (NYSE:JNJ), McDonald’s Corporation (NYSE:MCD) is a famous dividend stock among investors and analysts in 2022.

5. The Home Depot, Inc. (NYSE:HD)

Dividend Yield as of July 28: 2.54%

An American home improvement company, The Home Depot, Inc. (NYSE:HD)’s financial health has remained strong over the years. In 2021, the company generated over $14 billion in free cash flow and expects the number to reach $17.4 billion by FY23. Its commitment to shareholders has always remained consistent as well, distributing dividends worth over $2 billion during the first quarter of 2022.

The Home Depot, Inc. (NYSE:HD) has been raising its dividends consecutively for the past 14 years and its 10-year dividend CAGR came in at 17.9%. The company currently offers a quarterly payout of $1.90 per share, with a dividend yield of 2.54%, as of July 28.

In June, Citigroup raised its price target of The Home Depot, Inc. (NYSE:HD) to $348 with a Buy rating on the shares, increasing the company’s FY22 earnings estimates.

At the end of Q1 2022, 75 hedge funds in Insider Monkey’s database presented a bullish stance on The Home Depot, Inc. (NYSE:HD), owning stakes worth nearly $5.6 billion. With over 8 million shares, Fisher Asset Management was the company’s leading stakeholder in Q1.

Diamond Hill Capital mentioned The Home Depot, Inc. (NYSE:HD) in its Q1 2022 investor letter. Here is what the firm has to say:

“Home Depot shares underperformed as continued solid fundamental results were outweighed by concerns about the impact rising mortgage rates may have on the housing market and general inflationary pressures potentially leading to a consumer spending slowdown. We view the long-term prospects and multi-year fundamental outlook as unchanged.”

4. 3M Company (NYSE:MMM)

Dividend Yield as of July 28: 3.29%

3M Company (NYSE:MMM) is a Minnesota-based multinational manufacturing company. The stock gained 6% on July 26 as it announced the plan to spin off its healthcare business with better growth and investment initiatives.

In Q2 2022, 3M Company (NYSE:MMM) reported an operating cash flow of $1.1 billion and generated $1 billion in free cash flow. The company paid approximately $800 million in dividends during the quarter. It currently pays a quarterly dividend of $1.49 per share. 3M Company (NYSE:MMM) maintains a 64-year track record of dividend growth with a 5-year CAGR of 5.38%. Its payout ratio stands at 82.9%. As of July 28, the stock’s dividend yield was recorded at 3.29%.

Following the company’s Q2 report, Street analysts are positive about the company’s future earnings. In July, both Deutsche Bank and Wells Fargo raised their price targets on 3M Company (NYSE:MMM) to $148 and $144, respectively.

3M Company (NYSE:MMM) was a popular buy among hedge funds in Q1, according to Insider Monkey’s database. The company was a part of 51 hedge fund portfolios, up from 41 in the previous quarter. The stakes owned by these funds are collectively valued at over $1.5 billion.

3. T. Rowe Price Group, Inc. (NASDAQ:TROW)

Dividend Yield as of July 28: 3.99%

T. Rowe Price Group, Inc. (NASDAQ:TROW) is a Maryland-based investment management company that offers advisory services, account management, and retirement plans for institutional and individual investors. As of May, the company has $1.4 trillion in assets under management.

T. Rowe Price Group, Inc. (NASDAQ:TROW)’s balance sheet remained strong in the first half of 2022, reporting $2.1 billion in cash and cash equivalents in Q2 2022, up from $1.5 billion at the end of December 2021. The company spent $476.6 million in dividends during the quarter. On May 10, T. Rowe Price Group, Inc. (NASDAQ:TROW) declared a quarterly dividend of $1.20 per share, consistent with its previous dividend. The company has been raising its dividends for the past 36 years consecutively. As of July 28, the stock’s dividend yield came in at 3.99%.

At the end of March 2022, 33 hedge funds tracked by Insider Monkey were bullish on T. Rowe Price Group, Inc. (NASDAQ:TROW), up from 30 in the previous quarter. The stakes owned by these hedge funds are valued at over $457 million. AQR Capital Management held the largest stake in the company in Q1, worth over $95.6 million.

2. Realty Income Corporation (NYSE:O)

Dividend Yield as of July 28: 4.13%

Realty Income Corporation (NYSE:O) is a California-based real estate investment trust company. It is one of the best dividend stocks for passive income as it offers monthly dividends to shareholders. On July 12, the company declared a monthly dividend of $0.2475 per share, in line with its previous dividend. The stock’s dividend yield was recorded at 4.13%, as of the close of July 28.

Realty Income Corporation (NYSE:O) has been a consistent dividend-payer, offering dividends to shareholders for the past 53 years and has raised its dividend every year since 1994. In the first quarter of 2022, the company paid $438.3 million in dividends, which represented 75.6% of its AFFO.

In June, Credit Suisse initiated its coverage of Realty Income Corporation (NYSE:O) with an Outperform rating and a $75 price target and named the stock one of its Top Picks.

At the end of Q1 2022, 22 hedge funds in Insider Monkey’s database owned stakes in Realty Income Corporation (NYSE:O), down from 30 a quarter earlier. The combined value of these stakes is $284.8 million.

1. Devon Energy Corporation (NYSE:DVN)

Dividend Yield as of July 28: 6.04%

Devon Energy Corporation (NYSE:DVN) is an American energy company that is engaged in the exploration of hydrocarbons, natural gas, and oil.

In Q1 2022, Devon Energy Corporation (NYSE:DVN) generated $1.3 billion in free cash flow, up from $1.1 billion in the previous quarter. The company paid $667 million in dividends during the quarter, compared with $554 million paid during the previous quarter. Devon Energy Corporation (NYSE:DVN) has been making dividend payments consistently for the past 29 years and raised its payouts every year since 2016. It currently pays a quarterly dividend of $1.27 per share, with a yield of 6.04%, as of the close of July 28.

In July, Truist raised its price target on Devon Energy Corporation (NYSE:DVN) to $115 with a Buy rating on the shares, highlighting the growth in oil prices, which will be beneficial for the company.

At the end of Q1 2022, 66 hedge funds tracked by Insider Monkey owned stakes in Devon Energy Corporation (NYSE:DVN), up from 51 in the previous quarter. The total value of these stakes is nearly $2 billion.

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