In this article, we will take a look at the 5 Best Dividend Stocks to Buy for Passive Income. For deeper discussion and analysis, read 10 Best Dividend Stocks to Buy for Passive Income.
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5. Northrop Grumman Corporation (NYSE:NOC)
Number of Hedge Funds: 62
Dividend Yield as of June 26: 1.98%
On June 26, Jefferies lowered its price recommendation on Northrop Grumman Corporation (NYSE:NOC) to $580 from $620. It reiterated a Hold rating on the shares. In its second-quarter preview, the firm estimated that Northrop Grumman’s revenue would grow about 5% year over year. It also expects the company to keep its full-year 2026 guidance unchanged. Jefferies noted that its FY26 earnings per share estimate of $27.70 is slightly below the consensus estimate of $27.93.
During the company’s first-quarter 2026 earnings call, Corporate Vice President and CFO John Greene reaffirmed the company’s full-year guidance for sales, earnings, and cash flow. He said the company still expects 2026 sales to come in between $43.5 billion and $44 billion.
Greene also said that Northrop is looking for high single-digit sequential sales growth in the second quarter. He noted that the company’s capital spending plan has increased from its original 2026 forecast. Capital expenditures are now expected to reach $1.85 billion after the company added another $200 million to expand production capacity for the B-21 program.
Even with the additional spending, Greene said Northrop Grumman is keeping its free cash flow guidance unchanged at $3.1 billion to $3.5 billion.
Northrop Grumman Corporation (NYSE:NOC) is a global aerospace and defense technology company with four operating segments: Aeronautics Systems, Defense Systems, Mission Systems, and Space Systems.
4. Target Corporation (NYSE:TGT)
Number of Hedge Funds: 68
Dividend Yield as of June 26: 3.31%
On June 26, Jefferies raised its price recommendation on Target Corporation (NYSE:TGT) to $161 from $140. It reiterated a Buy rating on the shares. The update came after hosting CFO Jim Lee and other company executives for a meeting in Boston. According to the analyst, management “struck a measured but confident tone” when discussing the company’s early progress under its strategic reset. The team pointed to early gains from merchandising-led changes and a cultural shift toward faster, bolder execution. The analyst also said Target remains one of his top stock picks.
Earlier, on June 12, Guggenheim raised its price goal on TGT to $145 from $140. It kept its Buy rating following a meeting with CEO Michael Fiddelke and CFO Jim Lee. The discussion focused on improving the execution of a clear go-to-market strategy centered on “specialization at scale.”The analyst noted that the stock’s 35% year-to-date rally “suggests the easy money has been made.” Even so, continued operational progress could attract long-term investors.
Target Corporation (NYSE:TGT) is a general merchandise retailer that sells products through its stores and digital channels. The company offers its customers, referred to as guests, differentiated merchandise and everyday essentials at discounted prices.
3. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Funds: 71
Dividend Yield as of June 26: 1.94%
On June 26, DZ Bank upgraded QUALCOMM Incorporated (NASDAQ:QCOM) to Buy from Hold. It also assigned the stock a price target of $265.
The upgrade came shortly after Reuters reported on June 24 that Qualcomm expects its data center business to generate $15 billion in sales by 2029. The move came as the company continues to expand beyond its core smartphone chip business. The news pushed the company’s shares up more than 12% in after-hours trading.
During an investor presentation, Chief Financial Officer Akash Palkhiwala said the data center business is expected to generate $5 billion in revenue in fiscal 2027. Of that total, $1 billion is projected to come from new custom-chip customers.
The company also increased its long-term outlook for revenue from chips outside its smartphone business. Qualcomm now expects those businesses to generate $40 billion in revenue by 2029, up from its previous estimate of $22 billion. By that time, the company expects handsets to contribute only about one-third of its total chip revenue.
“We will be truly diversified,” Palkhiwala said.
QUALCOMM Incorporated (NASDAQ:QCOM) develops and commercializes foundational technologies for the wireless industry. Its portfolio includes 3G, 4G, and 5G wireless connectivity, along with high-performance and low-power computing technologies, including on-device artificial intelligence.
2. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Funds: 72
Dividend Yield as of June 26: 4.19%
On June 25, Jefferies lowered its price recommendation on PepsiCo, Inc. (NASDAQ:PEP) to $162 from $164. It reiterated a Hold rating on the stock. In its Q2 earnings preview, the firm said PepsiCo’s year-to-date performance in the U.S. has “underwhelmed.” It also said that Q2 “does not appear to be an inflection point.” The analyst noted that this places greater importance on the company’s performance in the second half of the year.
On the same day, BofA lowered its price goal on PEP to $164 from $173. It maintained a Neutral rating on the shares. Ahead of the company’s Q2 earnings report, the firm reduced its Q2 and full-year 2026 EPS estimates. The analyst said the revisions reflect weaker-than-expected performance at PepsiCo Foods North America during the quarter and expectations that the recovery will take longer and extend into the second half of the year.
PepsiCo, Inc. (NASDAQ:PEP) is a multinational food and beverage company that manufactures, markets, and distributes a broad portfolio of well-known snacks, beverages, and convenient food products.
1. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Funds: 113
Dividend Yield as of June 26: 2.10%
On June 26, Guggenheim lifted its price recommendation on Johnson & Johnson (NYSE:JNJ) from $266 to $270. It reiterated a Buy rating on the shares. The firm updated its outlook ahead of the company kicking off Q2 earnings season for the large-cap biopharma group on Wednesday, July 15. After reviewing the latest prescription data, recent company developments, and management’s comments since the Q1 earnings call in April, Guggenheim updated its model. The firm told investors it expects Johnson & Johnson to report Q2 revenue and earnings that are broadly in line with current FactSet consensus estimates.
In another development, Reuters reported on June 8 that JNJ will acquire biotech company Firefly Bio for $1 billion in cash. The move came as the company works to expand its cancer drug pipeline. Firefly’s Firelink platform uses antibodies to deliver a protein-degrading drug directly into cancer cells. Johnson & Johnson believes the technology could target tumors more precisely while sparing more healthy tissue than existing treatments.
The company said the platform, which focuses on tumors with a mutation in the KRAS gene, “bolsters Johnson & Johnson’s oncology pipeline and ambition to develop targeted medicines for the most prevalent and hard-to-treat solid tumors with high unmet need.”
Johnson & Johnson (NYSE:JNJ) and its subsidiaries develop, manufacture, and sell a wide range of healthcare products, with operations spanning pharmaceuticals, medical technology, and other healthcare businesses.
While we acknowledge the potential of JNJ to grow, 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 JNJ and that has 100x upside potential, check out our report about the cheapest AI stock.
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