best 7 dividend stocks for passive income 2023
In today’s post, I am going to share with you the best 7 dividend stocks. I’m actually getting dividends this year. Especially the way the market is trending. We are seeing a rotation out of tech stocks and into higher-value stocks and stable companies, many of these stable companies will be paying dividends. If you want to grow your own passive income streams. Then dividend stocks can be a great way to do that. Before we get into the list, let’s briefly explain exactly why companies pay dividends. Here’s what you can expect from the dividend as well as some pitfalls when it comes to this part. we will get into the complete stock list and then why companies pay dividends when companies make a profit they need to do some smart work h that profit they usually have some different options.
best dividend stocks for passive income 2023
Number one they can reinvest their money. For example, if you are a growing startup and you make some profit then you can actually reinvest it in your business to make better products. Hope can get more market share.
The other thing that companies can do when they make a profit. It has to pay some of that profit back to its shareholders in the form of cash dividend payments. So by owning only dividend-paying stocks, you usually get paid cash dividends every quarter, which is the usual schedule.
These dividend effects can be pretty amazing over time if you compound them. Now there are other things that companies can do with their profits such as share buybacks or perhaps reducing debt on their balance sheet. But for the most part, what we’re focused on right now is the dividend. This is known as a dividend trap. I think anything over a five or six-percent dividend yield
Gotta look a little closer because that kind of tells you they’re not reinvesting their money back into the business. Perhaps they are paying out too much in dividends to their shareholders or the company’s stock price has dropped so much that dividends now represent a large percentage of their entire stock value. I am not saying that all high-yielding stocks are bad stocks which I am not saying at all. But anytime you see a dividend yield higher than five or six percent, you should do some more research.
first stock best dividend stocks JP Morgan
The first stock in the portfolio is a great dividend-paying company. JP Morgan Chase. It’s one of the largest financial companies out there and they’re paying a 3.4 to 3.5 percent dividend yield on its stock right now. That means for each that share of JPMorgan that you own. You’re getting paid about four dollars a year for owning that stock. 3.5 is not really a high level of yield per se. But it is higher than the S&P 500 benchmark which is around 1.7 percent. The dividend yield is overall very less than that time it is due to an increase in share price because if the stock price keeps increasing and the dividend remains constant then as we know that dividend yield will reduce caused. I like jp morgan.
JPMorgan Chase & Co
So much so that they have a large amount of cash on their balance sheet. They basically have liquid assets of $1.7 trillion and of this, more than $700 billion is in cash. That means if you’re a shareholder you’re going to feel pretty secure knowing that JPMorgan isn’t going to go bankrupt. I think JPMorgan is in a good position in the financial sector, especially with the rising interest rate environment. is in So you may or may not know that the Fed is going to raise interest rates again this week.
Net interest income for JPMorgan should continue to grow, especially this year and throughout the next year. As the Fed continues to battle inflation during the year, it will likely keep raising rates. If this happens it would stand to benefit JP Morgan. I really value safety when it comes to dividend-paying portfolios because they’re not going to pay you dividends if the company goes out of business.
In the case of JP Morgan they didn’t go bankrupt in 2008 like some other financial institutions for example Lehman Brothers and you know they have so much cash on their balance sheet they are not going anywhere for it. Cause I really like having JP Morgan in my portfolio.
best dividend stocks- Avery Dennison
The next stock in my portfolio is known as Avery Dennison. It is actually a biopharmaceutical company that owns a portfolio of drugs in various areas such as oncology immunology and neuroscience. The stock currently pays a 3.95 percent dividend yield, which translates to approximately 5.64 cents per share. You might’ve never heard of Avery Dennison before, but I guarantee you’ve probably seen an ad for their most notable drug. Which is actually called Humira. It is a medicine that reduces the pain and inflammation caused due to arthritis.
Various types of arthritis such as rheumatoid arthritis and even Crohn’s disease and other skin disorders can be treated by Humira, it also happens to be one of the most successful drugs. It regularly tops the list of best-selling drugs every year. I know it’s crazy to even have a list but in 2019 sales of Humira alone were over $19 billion for that single drug. Now I know this may sound a little wrong. It’s controversial like you’re investing in Avery Dennison which is a pharmaceutical company and the American health care system is extremely broken.
We all know that AVY is well positioned in its field as they have leading patents on various drug groups and are continuing as well. To invest in their research and development programs which mean they’re going to diversify their product mix as we go forward. I think it’s going to give them a strong economic moat and their operating cash flow right now is huge. That’s $22.9 billion per year in the most recent year plus having AVY in my portfolio is giving me some more diversification in my overall stock holdings. It is the only healthcare pharma stock. One challenge they will face now is that they are losing exclusivity with the Humira drug in 2023.
Which means next year is going to be more. Competition for that particular niche in the pharmaceutical sector though I don’t know that it’s such a big deal. They are investing so much in RD but it is something to keep track of. At 5.64 cents per share, that means it’s getting huge. If you own 100 shares of AVY, you are going to get $564 in dividends every year. Which is very compelling before the stock turns three. know that sounds ridiculous but it’s 12 free stocks. When you deposit at least one cent. Weebly is an app where you can buy and sell stocks. This is one of the best stock promotions out there.
the best dividend stocks PepsiCo
The third stock on the list is something we’re probably all too familiar with, PepsiCo. PepsiCo sells different soft drinks and beverages. But they also have Gatorade and Frito-Lay which is one. Consumer package company that sells a variety of potato chips. Their dividend right now is four dollars and sixty cents for each share you own.
This means you’re going to get roughly one dollar and fifteen cents for each share every quarter. And the result is a 2.73 dividend yield that’s right in line with JPMorgan. Now you are probably wondering why you put Pepsi over Coke.
This is definitely a valid question. Coke is a very comparable company that also has a very good dividend. But in my opinion, I think I prefer Pepsi a little bit more because of the diversification of their product mix. If you really think about it like Coke sells beverages which is great.
Pepsi sells to those consumers. Package goods like chips the last time I read their financial report and it was actually about 20% of their revenue. This is actually a good thing because if you’re looking for more growth then there is probably going to be more growth opportunities for the company. Pepsi is also one of those stocks where they get the advantage of having some pricing power.
Basically, they have pricing power because consumers will always demand their goods. Whatever happens, as long as they are not raising prices. pretty crazy but with the current inflationary climate we’re in it if they can pass on some of those inflationary costs to their customers and their customers don’t mind.
I think that’s a huge win for Pepsi. Another great thing about Pepsi is that they’re going to be here for your entire lifetime and my entire lifetime. Plus you know Pepsi and Coke have been mainstays for a long time. Because they are so big. The demand for their products is so great that I don’t think they are going anywhere.
Kraft Heinz Co
Stock number four is the Craft Heinz Co. You’ve probably heard of Kraft Heinz before because they make all your favorite condiments and consumer food staples like ketchup mustard mayonnaise and A1 steak sauce. Not only do they make the products they sell, with net sales of $26 billion last year. They have a strong dividend with a handsome 4.62 percent dividend yield which comes out to roughly $1.60 per share assuming you’ve been training basically all year for this stock. I think that compares OK to the S&P 500 which is down about 17 percent.
I think it’s always good to own a company like that. Depend on consumer food staples as its core product offering, because food isn’t going anywhere. Even in tough economic times, people still have to eat. For a company like the craft Heinz company that offers a shelf life product. That could be a risk and it’s something that I’m going to keep in mind. I’m not really worried about the Kraft Heinz Company dividend.
best dividend stocks Exxon Mobil Corp
Pick number five is another controversial pick. But it’s actually Exxon Mobil. This is controversial because it is not necessarily a green option. Oil isn’t something we’re still counting on in the next 30 or 50 years. But for now, the dependence on fossil fuels is still huge. If you want to invest in Exxon. Energy is actually one of the sectors that are performing better this year. This will greatly benefit your portfolio. If you own refined oil products such as petroleum gasoline and heating oil products that are currently going at a premium.
The market and Ukraine with Russia war are still going on and do not end anywhere. I don’t expect energy prices to come down anytime soon. Exxon is growing profitable right now and they pay their shareholders a 3.78 dividend yield which amounts to 3.52 cents per share. Per year. that you adopt them. The other great thing about Exxon this year especially is that they are above 50 compared to stocks like Google. which is actually below 30. As you can tell energy is doing really well this year and tech is getting crushed. Exxon also makes for a really great inflation hedge.
Any CPI you read in the largest sector always goes up in price. Exxon will benefit from this and if you really think about the entire supply chain, the entire oil is used in almost everything. From delivering your food on trucks to even harvesting your crops with the machines they use. I personally am a fan. of their dividend and I think it’s a good idea to keep Exxon in your portfolio as a diversification measure, there are also some risks to Exxon now that governments are moving more towards green energy
Home Depot Best stocks
The next stock on our list you can guess based on the soundtrack it’s already playing is Home Depot. It really is a wonderful place to visit. If you need some home improvements and they’re in right now, they’re paying a 7.60 dividend per share, which equates to a yield of about 2.7 percent. Home Depot is the largest home improvement retailer in North America with over 2,300 stores and $150 billion in revenue over the past decade. In terms of revenue breakdown over the past 12 months, nearly half of the revenue comes from professional contractors. The other half comes from DIY customers. I think the revenue breakdown is pretty healthy. Suppose one segment stops buying at least then you have other segments to rely on for help.
Home Depot is also wildly beneficial for this. They have a 33 gross margin and 17 Ebitda margin. This means their dividend isn’t going anywhere anytime soon. Another reason I like Home Depot is that there just aren’t enough homes being built in the United States. As we keep up with the demand for building homes, we should see more home improvement spending increase. Who benefits from that Home Depot? There are really only two retailers in the space for home improvement.
Where else are you either going to Home Depot or you going to Lowe’s? Because of that, I think they have a monopoly on that home improvement field which is great because if you have a monopoly on the whole field. You’re probably doing fine as the company you’re leaving. It kind of owns Google stock. Do you know how Google stock basically owns all the search results? Makes a really strong economic moat and the same can be said for Home Depot.
bonus stock – ETF stocks to buy
There is one bonus stock that I want to throw in this post. It’s actually going to be ETF. Many people do not think about this. But they really do pay dividends. Buy a small percentage if you don’t know it’s an ETF. Each company in the SP 500 is referred to as the SP 500 ETF and actually pays a dividend yield of 1.57 percent, or about 5.65 cents.
best dividend stocks Johnson & Johnson
Our last and final stock for today is Johnson & Johnson. This is one stock that Warren Buffett still owns today. It’s for good reason that they pay a dividend. The 2.7 percent yield is in line with JPMorgan Chase. That’s about 4.52 cents per share annualized. Johnson’s most popular brands include Tylenol Listerine Band-Aid Pepcid Vino and Zyrtec. The company is pretty much immune to any economic downturn. It’s not because we’re in a depression or maybe if inflation is high or interest rates are high so docs are still. Johnson & Johnson is going to prescribe the products to its patients. The other thing I love about Johnson & Johnson is that they are a Dividend Aristocrat
This means that they have been paying dividends to their shareholders for the last 50 or more years. They continue to grow it as well as JNJ is a value stock that is going to do well in any type of environment. They’re up about one percent this year so that means they’re outperforming the S&P 500.
Thanks for reading Best 7 Dividend Stocks for Passive Income 2023
I am not a financial advisor. Always engage a Financial Adviser to advise you on financial decisions. Always do your research as the information and tips shared in these blogs are for educational purposes only. The Information and tips are therefore not investment advice. If you decide to invest without your own research, you do so at your own risk. No rights can be derived from the information discussed in this blog. investing involves risks, you can lose (part of) your investment.
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