In this article, we will take a look at the 5 best passive income stocks to buy now. To read our analysis of these stocks, you can go directly to the 10 Best Passive Income Stocks to Buy Now.
5. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 69
Dividend Yield as of June 3: 4.98%
Verizon Communications Inc. (NYSE:VZ) is a New York-based telecommunications conglomerate that is trading at an optimum P/E multiple and offers a healthy dividend yield to investors. The rolling out of 5G services will keep the company in a growth phase for the next few years due to new adopters.
However, in the short term, Verizon Communications Inc. (NYSE:VZ) is expected to come under pressure due to higher labor costs and energy-related costs related to network operations and transportation. This is a significant portion of the direct cost and can cause higher expenses going forward. The stock took a beating recently after Verizon Communications Inc. (NYSE:VZ) updated its forecast from up slightly to flat. The company’s annual dividend per share (DPS) stands at $2.56, translating into a payout ratio of 46.83%.
Verizon Communications Inc. (NYSE:VZ) stock is trading at a forward P/E ratio of less than nine, which provides an attractive opportunity to investors searching for a long-term dividend stock.
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We added to more defensive areas of the portfolio like telecom (Verizon). While the next month or two will likely prove choppy on account of the Omicron variant, we believe that Omicron, like Delta, represents a speed bump on the way to recovery rather than a true change in course. We see strong economic momentum continuing in 2022 and we expect interest rates to rise. After a decade of remarkably low rates, we would not be surprised if this change in direction is accompanied by some fits and starts in the markets. With our emphasis on pricing power, purposeful sector exposure, valuation discipline, and a strong dividend profile, we believe we are well-positioned for the year ahead.”
Overall, 69 hedge funds held a stake in Verizon Communications Inc. (NYSE:VZ) as of Q1 2022.