10 Best Passive Income Stocks to Buy Now

Published on October 11, 2022 at 9:08 am by Vardah Gill in Dividend Stocks, Hedge Funds, News

In this article, we discuss 10 best passive income stocks to buy now. You can skip our detailed analysis of dividend stocks and their performance in the past, and go directly to read 5 Best Passive Income Stocks to Buy Now.

According to a report published by Hartford Funds, dividend stocks represented 84% of the total S&P 500 return from 1960 to 2021. The report further highlighted that in the decades when the overall market return was less than 10%, dividend stocks’ contribution was significant. For example, in the 1940s, 1960s, and 1970s, dividend companies accounted for 67%, 44%, and 73% of the total market return, respectively. Another report by Guinness Atkinson Funds sheds light on the performance of dividend strategies relative to inflation. The report highlighted that from December 1940 to April 2015, the S&P 500 dividend growth surpassed the rate of inflation by over three times. In addition to this, during 53 calendar years from 1962 through 2014, the market declined 15 times. However, with the inclusion of dividend payments for each year, the negative years shrank to 11.

From a passive income perspective, dividend companies like PepsiCo, Inc. (NASDAQ:PEP), The Procter & Gamble Company (NYSE:PG), and Johnson & Johnson (NYSE:JNJ) are popular among investors as these companies hold solid dividend growth track records. In addition to this, these companies have solid financials to further support their dividends and generate passive income for investors. In view of this, we will discuss the best passive income stocks to buy now.

Photo by Karolina Grabowska: https://www.pexels.com/photo/hands-holding-us-dollar-bills-4968630/

Our Methodology:

The stocks mentioned below are reliable options for generating passive income as these companies pay regular dividends to shareholders. In addition to this, these companies have strong balance sheets and solid financial health.

Best Passive Income Stocks to Buy Now

10. American Equity Investment Life Holding Company (NYSE:AEL)

American Equity Investment Life Holding Company (NYSE:AEL) is an American life insurance company that specializes in the fixed index annuities marketplace. The company also offers retirement-related services to its consumers. In the past six months, the stock delivered a 3.62% return to shareholders, while its 12-month return came in at 24.9%, as of October 10.

American Equity Investment Life Holding Company (NYSE:AEL) has been making regular dividend payments to shareholders since 2003. It currently pays a quarterly dividend of $0.34 per share for a dividend yield of 0.87%, as of October 10. The company reported a strong cash position in Q2 2022, as its operating cash flow stood at $212.4 million, compared with $13 million during the same period last year.

In September, Piper Sandler raised its price target on American Equity Investment Life Holding Company (NYSE:AEL) to $47 with an Overweight rating on the shares. The firm mentioned that the company persisted against the market volatility in its recent quarterly earnings.

At the end of Q2 2022, 14 hedge funds tracked by Insider Monkey owned stakes in American Equity Investment Life Holding Company (NYSE:AEL), down from 17 in the previous quarter. These stakes hold a collective value of over $103.3 million.

In addition to some of the best dividend stocks like PepsiCo, Inc. (NASDAQ:PEP), The Procter & Gamble Company (NYSE:PG), and Johnson & Johnson (NYSE:JNJ), American Equity Investment Life Holding Company (NYSE:AEL) is another good option for income investors due to the company’s regular payouts.

First Pacific Advisors mentioned American Equity Investment Life Holding Company (NYSE:AEL) in its Q2 2022 investor letter. Here is what the firm has to say:

“American Equity Investment Life Holding Company (NYSE:AEL), a leading writer of fixed index annuities, has continued to transition to its American Equity Investment (AEL) 2.0 business model. The plan’s main goals are to diversify the company’s assets into a broader array of investments, including private debt through strategic partnerships, and to increase its use of reinsurance to free up capital. We think this is an interesting, but somewhat aggressive plan. Thus far, the results have been impressive, but we continue to monitor the credit quality of their assets as they move toward achieving their target of having 40% of their portfolio invested in private assets, up from 15.4%.”

9. Applied Industrial Technologies, Inc. (NYSE:AIT)

Applied Industrial Technologies, Inc. (NYSE:AIT) is an Ohio-based company that specializes in power transmission products and also provides flow control solutions. The company is one of the best dividend stocks for passive income as it maintains a 12-year streak of consistent dividend growth. It currently pays a quarterly dividend of $0.34 per share, with a dividend yield of 1.25%, as of October 10.

In fiscal Q4 2022, Applied Industrial Technologies, Inc. (NYSE:AIT) announced a 1.5 million share repurchase program. The company’s operating cash flow for the quarter stood at $53.7 million, up from $48.6 million during the same period last year. Its free cash flow also grew to $47.3 million, from $45 million in the prior-year quarter. The company’s revenue of $1.06 billion showed an 18.3% year-over-year growth. As of the close of October 9, the stock is up 7.17% year-to-date.

In August, Baird raised its price target on Applied Industrial Technologies, Inc. (NYSE:AIT) to $129 with a Neutral rating on the shares. The firm called the company’s fiscal Q4 results ‘excellent’ and also appreciated its FY23 guidance.

The number of hedge funds tracked by Insider Monkey owning stakes in Applied Industrial Technologies, Inc. (NYSE:AIT) grew to 24 in Q2 2022, from 20 in the previous quarter. The stakes owned by these hedge funds hold a consolidated value of over $110.5 million. Royce & Associates was the company’s leading stakeholder in Q2.

8. Quaker Chemical Corporation (NYSE:KWR)

Quaker Chemical Corporation (NYSE:KWR) is an American chemical company that manufactures different process fluids that are used in various industrial processes. In August, Deutsche Bank lifted its price target on the stock to $210 with a buy rating on the shares. The firm highlighted the company’s quarterly earnings in this challenging macro environment.

In the second quarter of 2022, Quaker Chemical Corporation (NYSE:KWR) reported revenue of $492.4 million, up 13% from the same period last year. At the end of June, the company’s cash and cash equivalents came in at $202.3 million and its net operating cash outflow was $2.1 million. Its reported net income for the quarter was recorded at $14.3 million.

Quaker Chemical Corporation (NYSE:KWR) holds a strong dividend history, as the company has been making uninterrupted dividend payments for the past 50 years. Moreover, it has a 46-year run of consistent dividend growth, which makes it one of the best dividend stocks for passive income. Currently, it pays a quarterly dividend of $0.435 per share, with a dividend yield of 1.28%, as of October 10.

At the end of Q2 2022, 13 hedge funds in Insider Monkey’s database owned stakes in Quaker Chemical Corporation (NYSE:KWR), up from 12 a quarter earlier. The consolidated value of these stakes is over $272.6 million.

Carillon Tower Advisers mentioned Quaker Chemical Corporation (NYSE:KWR) in its Q1 2022 investor letter. Here is what the firm has to say:

“Quaker Houghton (NYSE:KWR) develops, produces, and markets formulated chemical specialty products. Rising input costs have pressured the company’s margins as of late, partly because a large portion of its raw materials are crude-oil based. The minor slowdown in steel production, as well as ongoing global semiconductor chip shortages, continue to limit production at the firm’s auto end-market customers, providing an additional headwind at the moment.”

7. AmerisourceBergen Corporation (NYSE:ABC)

AmerisourceBergen Corporation (NYSE:ABC) is an American wholesale drug company that provides drug distribution and consulting services to relevant businesses. Since the beginning of the year, the stock delivered a 3.86% return to shareholders, while its 12-month return came in at 12.5%, as of October 10.

On August 3, AmerisourceBergen Corporation (NYSE:ABC) declared a quarterly dividend of $0.46 per share, in line with its previous dividend. It is one of the best dividend stocks for passive income, as the company has been raising its dividends for the past 17 years. As of October 10, the stock’s dividend yield came in at 1.33%.

In July, Argus raised its price target on AmerisourceBergen Corporation (NYSE:ABC) to $170 with a Buy rating on the shares, highlighting the company’s acquisition of Alliance Healthcare. The firm mentioned that this acquisition will prove to be another growth driver for the company.

At the end of the June quarter, 36 hedge funds tracked by Insider Monkey owned stakes in AmerisourceBergen Corporation (NYSE:ABC), compared with 37 in the previous quarter. These stakes have a total value of $595.4 million. Among these hedge funds, Arrowstreet Capital was the company’s leading stakeholder in Q2.

6. ITT Inc. (NYSE:ITT)

ITT Inc. (NYSE:ITT) is a New York-based manufacturing company that produces components for the aerospace, transportation, and energy industries. In Q2 2022, the company reported revenue of $733.3 million, up 6% from the same period last year. The company’s cash generation was also strong during the quarter, with its operating cash flow coming in at $57 million and free cash flow of $39.5 million.

ITT Inc. (NYSE:ITT) has been raising its dividends for over a decade now, which places it as one of the best dividend stocks for passive income. It offers a quarterly dividend of $0.264 per share and has a dividend yield of 1.54%, as of October 10.

In July, BofA maintained its Neutral rating on ITT Inc. (NYSE:ITT) with a $74 price target as the company reported an above-average mix of European revenue with 37% of the total in its recent quarterly earnings. The company can be a good addition to dividend portfolios alongside some of the best dividend stocks like PepsiCo, Inc. (NASDAQ:PEP), The Procter & Gamble Company (NYSE:PG), and Johnson & Johnson (NYSE:JNJ).

At the end of Q2 2022, 24 hedge funds tracked by Insider Monkey owned stakes in ITT Inc. (NYSE:ITT), compared with 25 a quarter earlier. These stakes have a combined value of roughly $317 million.

Click here to continue reading and see 5 Best Passive Income Stocks to Buy Now.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on October 30, 2024 at by Inan Dogan, PhD

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A New Dawn is Coming to U.S. Stocks

Published on November 16, 2024 at by Insider Monkey Staff

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…

Should I put my money in Artificial Intelligence?

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Click to continue reading…

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