In this article, we discuss 10 stocks for passive income in 2022.
Investors looking for passive income rely on stable and mature dividend paying stocks, which boast strong balance sheets, consistently growing dividends over the years, and a trustworthy reputation in the market, which gives them the ability to weather stock price volatility and a dynamic fiscal environment.
Kevin Mahn, Hennion & Walsh Asset Management’s president and chief investment officer, stated in a CNBC interview on December 13, 2021, that dividend paying stocks offer investors the best hedge against rising inflation.
As per Eugene Profit, the CEO of Profit Investments, investors now more than ever are looking for reasons to sell and head to the sidelines, since they cannot afford to lose more money in the uncertain market.
Some of the most notable stocks for passive income include The Coca-Cola Company (NYSE:KO), Altria Group, Inc. (NYSE:MO), and Exxon Mobil Corporation (NYSE:XOM).
Our Methodology
We selected the companies that have a stable dividend history, strong cash flow positions, solid business fundamentals, and mostly positive analyst ratings.
Stocks For Passive Income In 2022
10. Johnson & Johnson (NYSE:JNJ)
Dividend Yield as of February 18: 2.57%
Number of Hedge Fund Holders: 88
Johnson & Johnson (NYSE:JNJ) develops and markets healthcare products. The company recently separated its Consumer Health and Medical Devices divisions to deliver focused services to its clients.
On January 4, Johnson & Johnson (NYSE:JNJ) declared a $1.06 per share quarterly dividend, in line with previous. The dividend will be paid on March 8, to shareholders of record on February 22. The company has offered 59 consecutive years of dividend growth and is one of the top stocks for passive income in 2022.
Citi analyst Joanne Wuensch reiterated a Buy rating on Johnson & Johnson (NYSE:JNJ) with a $195 price target on January 25, following the company’s Q4 results. Against a challenging backdrop, Johnson & Johnson (NYSE:JNJ) delivered a quarter that reflected “resilience and gave 2022 guidance that bracketed consensus”, according to the analyst.
According to the third quarter database of Insider Monkey, 88 hedge funds held a bullish stance on Johnson & Johnson (NYSE:JNJ), with collective stakes amounting to $6.8 billion. Fundsmith LLP is the largest stakeholder of Johnson & Johnson (NYSE:JNJ) as of Q3 2021, with 7.20 million shares worth $1.16 billion.
In addition to The Coca-Cola Company (NYSE:KO), Altria Group, Inc. (NYSE:MO), and Exxon Mobil Corporation (NYSE:XOM), Johnson & Johnson (NYSE:JNJ) is one of the top picks of elite investors for passive income.
Distillate Capital mentioned Johnson & Johnson (NYSE:JNJ) in its Q2 2021 investor letter. Here is what the firm has to say:
“The largest additions in the rebalance, Johnson & Johnson (NYSE:JNJ) was around 50 and 40 basis points incrementally. J&J underperformed in the quarter while its normalized free cash flows held steady and so its position size was topped off to match the stable cash flows.”
9. The Coca-Cola Company (NYSE:KO)
Dividend Yield as of February 18: 2.83%
Number of Hedge Fund Holders: 61
The Coca-Cola Company (NYSE:KO) is an American multinational beverage company that markets a product portfolio of non-alcoholic and alcoholic beverages, operating via a global network of independent bottling partners, distributors, wholesalers, and retailers.
On February 17, The Coca-Cola Company (NYSE:KO) declared a $0.44 per share quarterly dividend, a 4.8% increase from its prior dividend of $0.42. The dividend is payable on April 1, for shareholders of record on March 15. The Coca-Cola Company (NYSE:KO)’s dividend yield as of February 18 is 2.84%.
The Coca-Cola Company (NYSE:KO) posted its Q4 results on February 10, reporting earnings per share of $0.45, beating estimates by $0.04. Revenue over the period jumped 10.08% year-on-year to $9.47 billion, surpassing estimates by $579.32 million. Based on its positive outlook, the company also expects to resume share repurchases in 2022, with net share repurchases of approximately $500 million for the year.
Evercore ISI analyst Robert Ottenstein on February 15 raised the price target on The Coca-Cola Company (NYSE:KO) to $70 from $63 and kept an Outperform rating on the shares, arguing that he sees drivers for multiple expansion. While the last two years may have obscured progress, The Coca-Cola Company (NYSE:KO) continues to improve its business model, portfolio, and long-term outlook, according to the analyst.
A total of 61 hedge funds were bullish on The Coca-Cola Company (NYSE:KO), with combined stakes amounting to more than $25 billion. Warren Buffett’s Berkshire Hathaway is the biggest stakeholder of The Coca-Cola Company (NYSE:KO), holding 400 million shares worth approximately $21 billion.
8. TELUS Corporation (NYSE:TU)
Dividend Yield as of February 18: 4.10%
Number of Hedge Fund Holders: 12
TELUS Corporation (NYSE:TU) is a Canadian multinational conglomerate working in the telecommunications, information technology, health, safety, and security sectors. TELUS Corporation (NYSE:TU) made it to our list of the notable stocks for passive income in 2022, with a dividend yield of 4.10% as of February 18.
TELUS Corporation (NYSE:TU) on February 14 declared a C$0.3274 per share quarterly dividend, in line with previous. The dividend is payable on April 1, to shareholders of record on March 11.
On February 10, TELUS Corporation (NYSE:TU) reported earnings for the quarter ending December 2021, posting a GAAP EPS of $0.37, beating estimates by $0.19. The company’s revenue for the quarter jumped roughly 20% year-over-year to $3.83 billion, surpassing estimates by $356.51 million.
Desjardins analyst Jerome Dubreuil raised the price target on TELUS Corporation (NYSE:TU) to C$34.50 from C$33 and kept a Buy rating on the shares on February 14.
TELUS Corporation (NYSE:TU) on December 6 announced the sale of its financial solutions business to Dye & Durham, a leading provider of cloud-based software and technology solutions, for $500 million.
Among the hedge funds monitored by Insider Monkey, 12 hedge funds were long TELUS Corporation (NYSE:TU) in Q3 2021, with stakes amounting to $141.2 million. Renaissance Technologies held the largest TELUS Corporation (NYSE:TU) stake as of September 2021, holding 3.3 million shares worth $73.5 million.
7. Realty Income Corporation (NYSE:O)
Dividend Yield as of February 18: 4.41%
Number of Hedge Fund Holders: 22
Realty Income Corporation (NYSE:O) is a real estate investment trust based in California, which leases out commercial spaces across the United States, Spain, and the United Kingdom. Realty Income Corporation (NYSE:O) delivers a 4.41% dividend yield as of February 18.
Realty Income Corporation (NYSE:O) on February 15 declared a per share monthly dividend of $0.2465, in line with previous. The dividend is payable on March 15, to shareholders of record on March 1. Realty Income Corporation (NYSE:O)’s revenue for Q4 2021 came in at $1.05 billion, up 53.1% year-over-year, outperforming estimates by $55.92 million.
On February 15, it was announced that Wynn Resorts, Limited (NASDAQ:WYNN) will sell all land and real estate assets of Encore Boston Harbor to Realty Income Corporation (NYSE:O) for $1.7 billion in cash, representing a 5.9% cap rate. The purchase will strengthen the REIT’s portfolio further.
Mizuho analyst Vikram Malhotra lowered the price target on Realty Income Corporation (NYSE:O) on January 20 to $76 from $82 and kept a Buy rating on the shares. The analyst says “lofty” valuations and “resilient, but modestly decelerating” fundamentals imply multiple contraction risk in the REIT sector.
In Q3 2021, 22 hedge funds were bullish on Realty Income Corporation (NYSE:O), with stakes valued at $275 million, as compared to 23 funds in the quarter earlier, holding stakes in Realty Income Corporation (NYSE:O) worth $221.70 million. Millennium Management is the largest Realty Income Corporation (NYSE:O) stakeholder, with 934,068 shares worth $60.5 million.
Hedge funds are pouring into Realty Income Corporation (NYSE:O), in addition to The Coca-Cola Company (NYSE:KO), Altria Group, Inc. (NYSE:MO), and Exxon Mobil Corporation (NYSE:XOM).
6. Exxon Mobil Corporation (NYSE:XOM)
Dividend Yield as of February 18: 4.50%
Number of Hedge Fund Holders: 64
Headquartered in Irving, Texas, Exxon Mobil Corporation (NYSE:XOM) is a multinational natural gas and oil company, involved in the exploration and distribution of crude oil, oil products, natural gas, and petrochemicals.
Exxon Mobil Corporation (NYSE:XOM) reported its Q4 financial results on February 1, announcing earnings per share of $2.05, exceeding estimates by $0.11. The revenue jumped 82.56% from the prior-year quarter to approximately $85 billion, outperforming estimates by $6.24 billion.
On January 26, Exxon Mobil Corporation (NYSE:XOM) reported a $0.88 per share quarterly dividend, payable on March 10, to shareholders of record on February 10. Exxon Mobil Corporation (NYSE:XOM) delivers a yield of 4.50% as of February 18, and the company has consecutively raised its dividends for 39 years.
Barclays analyst Jeanine Wai raised the price target on Exxon Mobil Corporation (NYSE:XOM) on February 9 to $91 from $73 and kept an Overweight rating on the shares.
GQG Partners held the biggest Exxon Mobil Corporation (NYSE:XOM) position in Q3 2021, with 26.5 million shares worth $1.56 billion. In the third quarter of 2021, 64 hedge funds tracked by Insider Monkey held bullish positions in Exxon Mobil Corporation (NYSE:XOM), down from 68 funds in the preceding quarter.
Here is what First Eagle Investment Management has to say about Exxon Mobil Corporation (NYSE:XOM) in its Q2 2021 investor letter:
“Leading contributors in the First Eagle Global Fund this quarter included Exxon Mobil Corporation (NYSE:XOM). The continued recovery in oil prices as economies reopen helped fuel another strong performance across the energy complex, including shares of Exxon Mobil. Exxon Mobil recently lost a proxy fight with an activist investor that took three of the company’s 12 board seats. While the press was focused on the investor’s concerns over Exxon Mobil’s long term energy transformation strategy, other factors fundamental to shareholder returns—like capital discipline and balance sheet management—were also at play.”
5. Verizon Communications Inc. (NYSE:VZ)
Dividend Yield as of February 18: 4.78%
Number of Hedge Fund Holders: 57
Verizon Communications Inc. (NYSE:VZ) is an American multinational telecommunications conglomerate, offering multiple products and services including cable television, landline, broadband, digital television, internet, and telematics. Verizon Communications Inc. (NYSE:VZ)’s dividend yield on February 18 came in at 4.78%, making it a reliable stock for passive income in 2022.
On January 25, Verizon Communications Inc. (NYSE:VZ) reported its Q4 earnings. The company announced an EPS of $1.31, beating estimates by $0.03. Verizon Communications Inc. (NYSE:VZ)’s revenue came in at $34.07 billion, outperforming estimates by $30.57 million.
Verizon Communications Inc. (NYSE:VZ) on December 2 declared a $0.64 per share quarterly dividend, in line with previous. The dividend was paid on February 1, for shareholders of record on January 10.
Deutsche Bank analyst Bryan Kraft raised the price target on Verizon Communications Inc. (NYSE:VZ) to $59 from $57 and kept a Hold rating on the shares on January 26. The analyst sees about 8% upside in the stock over the next 12 months, with the target increasing on higher free cash flow estimates, notwithstanding the reduction to his 2022 estimate due to a pull forward in capex from 2023, increased working capital usage, and rising cash taxes.
Among the hedge funds tracked by Insider Monkey in the third quarter, 57 funds were bullish on Verizon Communications Inc. (NYSE:VZ), as compared to 63 funds in the quarter prior. Berkshire Hathaway is the biggest Verizon Communications Inc. (NYSE:VZ) stakeholder as of Q3 2021, owning 158.8 million shares of the company, worth $8.5 billion.
Here is what Weitz Investment Management Hickory Fund has to say about Verizon Communications Inc. (NYSE:VZ) in its Q4 2021 investor letter:
“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T to offer high-speed data (either via wireless connections or by building new fiber-optic networks).”
4. National Retail Properties, Inc. (NYSE:NNN)
Dividend Yield as of February 18: 4.89%
Number of Hedge Fund Holders: 21
Based in Orlando, Florida, National Retail Properties, Inc. (NYSE:NNN) is a real estate investment trust that invests in high-quality properties across the United States. The company has offered 32 consecutive years of increased annual dividends.
In a press release on February 9, National Retail Properties, Inc. (NYSE:NNN) reported a Q4 FFO of $0.75, beating estimates by $0.03. Revenue of the company came in at $187.26 million, up 14.7% on a year-over-year basis, outperforming estimates by $2.89 million.
On February 10, B. Riley analyst Craig Kucera lowered the price target on National Retail Properties, Inc. (NYSE:NNN) to $50 from $55 and kept a Buy rating on the shares. Rising inflation concerns are leading to over 10% peer multiple contraction, the analyst told investors in a research note, but shares remain attractive on a price/NAV basis.
National Retail Properties, Inc. (NYSE:NNN) declared on January 14 a $0.53 per share quarterly dividend, in line with previous. The dividend was paid on February 15, to shareholders of record on January 31. National Retail Properties, Inc. (NYSE:NNN)’s dividend yield on February 18 was 4.89%.
A total of 21 hedge funds held long positions in National Retail Properties, Inc. (NYSE:NNN), up from 19 funds in the quarter earlier. Israel Englander’s Millennium Management is the largest National Retail Properties, Inc. (NYSE:NNN) stakeholder as of Q3 2021, with 864,311 shares worth $37.3 million.
3. Enbridge Inc. (NYSE:ENB)
Dividend Yield as of February 18: 6.51%
Number of Hedge Fund Holders: 24
Enbridge Inc. (NYSE:ENB) is a Canadian multinational pipeline company that offers pipeline transport and storage services for oil, natural gas, and natural gas liquids across the United States and Canada.
On February 11, Enbridge Inc. (NYSE:ENB)’s fourth quarter results were published. The company posted GAAP earnings per share of $0.71, surpassing consensus estimates by $0.13. Revenue over the period increased 24.68% from the prior-year quarter, reaching $9.82 billion, exceeding estimates by $3.48 billion.
Enbridge (NYSE:ENB) declared a C$0.860 per share quarterly dividend on December 7, a 3% increase from its prior dividend of C$0.835. The dividend is payable on March 1, to shareholders of record on February 15.
BMO Capital analyst Ben Pham raised the price target on Enbridge (NYSE:ENB) to C$59 from C$57 and kept an Outperform rating on the shares on February 14.
According to the third quarter database of Insider Monkey, Arrowstreet Capital held a significant stake in Enbridge (NYSE:ENB), with 837,902 shares worth $33.3 million. Overall, 24 hedge funds were bullish on the stock in Q3 2021.
Here is what ClearBridge Investments Dividend Strategy has to say about Enbridge Inc. (NYSE:ENB) in its Q3 2021 investor letter:
“We are meaningfully overweight energy, particularly within North American energy infrastructure. Enbridge and Williams, our two infrastructure holdings, possess crown jewel infrastructure assets. They each deliver meaningful proportions of the overall energy produced and consumed in North America. Their revenues are backed by long-term contracts with high-quality counterparties and have little direct commodity price exposure. Their growth has been driven by the increasing production of North American energy. The advent of unconventional oil and gas production (oil sand and shale) has made North America a low-cost competitor on a global basis. We expect strong North American production to be an enduring feature of global energy supply for decades to come.”
2. Altria Group, Inc. (NYSE:MO)
Dividend Yield as of February 18: 7.01%
Number of Hedge Fund Holders: 45
Altria Group, Inc. (NYSE:MO) is one of the largest American tobacco producers that distributes cigarettes and smokeless tobacco products. Altria Group, Inc. (NYSE:MO)’s dividend on February 18 came in at 7.01%, making it one of the top stocks for passive income in 2022.
On December 8, Altria Group, Inc. (NYSE:MO) reported a $0.90 per share quarterly dividend, in line with previous. The dividend was paid on January 10, to shareholders of record on December 23.
Altria Group, Inc. (NYSE:MO) published its Q4 results on January 27, posting an EPS of $1.09, beating estimates by $0.01. The $5.09 billion revenue surpassed market consensus estimates by $88.06 million.
BofA analyst Lisa Lewandowski downgraded Altria Group, Inc. (NYSE:MO) to Neutral from Buy with a price target of $50, down from $56. The company is likely to remain a “steady” earnings performer with limited input inflation and margin expansion, but the expectations of regulatory news flow may be an overhang on the stock in 2022, the analyst told investors in a research note.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 45 funds held long positions in Altria Group, Inc. (NYSE:MO), down from 47 funds in the quarter earlier. Harris Associates owned a leading stake in Altria Group, Inc. (NYSE:MO), with over 5 million shares worth $232.6 million.
Here is what Broyhill Asset Management has to say about Altria Group, Inc. (NYSE:MO) in its Q2 2021 investor letter:
“Altria (MO) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 20%. We shared our thoughts on these regulations during the quarter, which are available here.
MO Valuation. MO is up ~ 18% YTD (even accounting for the recent sell-off). We expect MO to generate close to $5 in annual FCF per share over the next few years, putting the stock at ~ 10x, which is less than half the market’s multiple today. Over the last decade, shares have traded at an average multiple of 15x and within a range of ~ 10x – 20x (+/-1 standard deviation). The stock yields 7.2% at the current price, close to a 6% premium to treasuries. Historically, shares have traded closer to a 3% premium to the 10Y, which would imply a ~ $75 share price.”
1. OneMain Holdings, Inc. (NYSE:OMF)
Dividend Yield as of February 18: 7.23%
Number of Hedge Fund Holders: 41
OneMain Holdings, Inc. (NYSE:OMF) is a financial services company based in Indiana, operating consumer finance and insurance businesses. In Q3 2021, 41 hedge funds were bullish on OneMain Holdings, Inc. (NYSE:OMF), with combined stakes equaling $1.04 billion. Basswood Capital held a significant stake in the company, with 2.3 million shares worth $129 million.
On February 2, OneMain Holdings, Inc. (NYSE:OMF) announced its Q4 earnings, posting an EPS of $2.38, topping estimates by $0.03. The $1.02 billion revenue was up 3.44% year-on-year.
OneMain Holdings, Inc. (NYSE:OMF) declared on February 2 a $0.95 per share quarterly dividend, a 35.7% increase from its prior dividend of $0.70. The dividend was paid on February 18, to shareholders of record on February 14. OneMain Holdings, Inc. (NYSE:OMF) delivers a 7.23% dividend yield, and is one of the top stocks for passive income in 2022.
JPMorgan analyst Richard Shane lowered the price target on OneMain Holdings, Inc. (NYSE:OMF) on January 19 to $56 from $64 and kept an Overweight rating on the shares. The analyst reduced target multiples on consumer finance companies by 8%, on average. He views 2022 as a transition year and believes that the probability is shifting from 2023 earnings representing normalized earnings to 2023.
You can also take a look at Retirement Stock Portfolio: 10 Safe Tech Stocks To Consider and 10 Best Dividend Aristocrats to Buy for 2022.
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Disclosure: None. 10 Stocks For Passive Income In 2022 is originally published on Insider Monkey.
