14 Best Passive Income Stocks To Buy Now

Published on April 20, 2023 at 7:22 am by Vardah Gill in Dividend Stocks, Hedge Funds, News

In this article, we discuss 14 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.

Last year’s market decline marked one of the worst eras investors had ever seen. The selloff resulted in the loss of nearly $3 trillion from the US retirement accounts, according to research conducted by Boston College. Analysts are still examining the fluctuating market conditions and expect that earnings may fall slowly throughout the year. CBS News spoke with Comerica Wealth Management earlier this year to record the bank’s outlook for 2023. Here are some comments from the bank:

“We are of the opinion that for a true low to be achieved, it must be successfully tested, thereby forming a ‘double bottom’.”

For this reason, investors turn their attention to income-generating stocks as these stocks can provide an inflation hedge. In addition to this, income stocks create a regular and passive source of income for investors. While income stocks may be popular among retirees, investors of all ages and financial goals may find income stocks attractive for various reasons. According to a survey conducted by Magnify in March, 49% of Americans invest to earn additional income, compared with 42% of Americans who invest for retirement. When it comes to income investing, dividend companies are most popular among investors because these stocks can generate regular income for investors without their active participation in the respective company’s operations. Moreover, quality companies can increase their dividend payments over time, which can help to keep pace with inflation. Some of the best dividend stocks that have raised their dividend for long periods of time include Exxon Mobil Corporation (NYSE:XOM), The Procter & Gamble Company (NYSE:PG), and Johnson & Johnson (NYSE:JNJ).

Over the years, dividend stocks have performed really well and surpassed inflation. During the high inflation decades of the 2000s and the 2010s, dividend payments grew by 12% and 116%, respectively, as reported by CME Group. To know more about income stocks, readers can also have a look at 10 Best Stocks to Buy for Income.

14 Best Passive Income Stocks To Buy Now

Photo by Sharon McCutcheon on Unsplash

Our Methodology:

For this list, we scoured Insider Monkey’s database of 943 hedge funds as of Q4 2022 and picked dividend stocks that have raised their dividends for at least 10 years. From that list, we shortlisted companies with strong balance sheets and stable cash flow, which show the stability of their future dividends and make them reliable options for generating passive income. We ranked these companies in ascending order of the number of funds that have stakes in them as of Q4.

14. Midland States Bancorp, Inc. (NASDAQ:MSBI)

Number of Hedge Fund Holders: 10

Midland States Bancorp, Inc. (NASDAQ:MSBI) is an Illinois-based bank holding company that provides commercial and personal banking services to its consumers. In the fourth quarter of 2022, the company posted revenue of $97.39 million, which showed a 26.8% growth from the same period last year. During the quarter, it paid nearly $3.2 million to shareholders in dividends, which makes it one of the best dividend stocks on our list.

On February 7, Midland States Bancorp, Inc. (NASDAQ:MSBI) declared a 3.4% hike in its quarterly dividend at $0.30 per share. This was the company’s 23rd consecutive year of dividend growth. The stock has a dividend yield of 6.05%, as of April 19. Some other best dividend stocks with long dividend growth track records include Exxon Mobil Corporation (NYSE:XOM), The Procter & Gamble Company (NYSE:PG), and Johnson & Johnson (NYSE:JNJ).

At the end of Q4 2022, 10 hedge funds tracked by Insider Monkey reported having stakes in Midland States Bancorp, Inc. (NASDAQ:MSBI), the same as in the previous quarter. The collective value of these stakes is over $11.7 million, compared with $9.3 million worth of stakes owned by funds in the previous quarter. Among these hedge funds, AQR Capital Management was the company’s leading stakeholder.

13. Canadian Imperial Bank of Commerce (NYSE:CM)

Number of Hedge Fund Holders: 11

Canadian Imperial Bank of Commerce (NYSE:CM) is a Canada-based banking and financial services company. The company currently offers a quarterly dividend of C$0.85 per share and has a dividend yield of 5.74%, as of April 19. It has been raising its dividends consistently for the past 12 years, which makes it one of the best dividend stocks on our list.

Appreciating the performance of Canadian Imperial Bank of Commerce (NYSE:CM) last year, Street analysts gave a positive stance on the stock. In February, both RBC Capital and Canaccord raised their price targets on the stock to C$70 and C$66.5, respectively.

Canadian Imperial Bank of Commerce (NYSE:CM) showed a strong performance in its fiscal Q1 2023. The company’s revenue for the quarter came in at C$6 billion and its adjusted net income stood at C$1.8 billion.

At the end of December 2022, 11 hedge funds tracked by Insider Monkey reported owning stakes in Canadian Imperial Bank of Commerce (NYSE:CM), compared with 12 in the previous quarter. These stakes have a consolidated value of over $95 million.

12. Horace Mann Educators Corporation (NYSE:HMN)

Number of Hedge Fund Holders: 11

Horace Mann Educators Corporation (NYSE:HMN) is an Illinois-based life insurance company that specializes in property, auto, supplemental, and life insurance services. In April, Piper Sandler maintained a Neutral rating on the stock with a $36 price target. The firm expressed concerns because of the ongoing inflationary environment.

One of the best dividend stocks, Horace Mann Educators Corporation (NYSE:HMN) declared a 3.1% increase in its quarterly dividend at $0.33 per share on March 6. This marked the company’s 15th consecutive year of dividend growth. The stock has a dividend yield of 4.01%, as of April 19.

As of the close of Q4 2022, 11 hedge funds tracked by Insider Monkey reported having stakes in Horace Mann Educators Corporation (NYSE:HMN), the same as in the previous quarter. The collective value of these stakes is over $27.6 million. With a $12.4 million worth of stake, Ariel Investments was the company’s biggest shareholder in Q4.

11. Independent Bank Corp. (NASDAQ:INDB)

Number of Hedge Fund Holders: 14

Independent Bank Corp. (NASDAQ:INDB) is an American bank holding company, based in Michigan. The company provides services related to loans, mortgages, and other businesses. In March, Piper Sandler maintained a Neutral rating on the stock with a $72 price target. The firm believed that the company will continue to produce ‘peer beating’ profitability metrics.

On March 16, Independent Bank Corp. (NASDAQ:INDB) declared a quarterly dividend of $0.55 per share, which was in line with its previous dividend. In December 2022, the company stretched its dividend growth streak to 12 years, which makes it one of the best dividend stocks on our list. The stock has a dividend yield of 3.62%, as recorded on April 19.

At the end of Q4 2022, Independent Bank Corp. (NASDAQ:INDB) was a part of 14 hedge fund portfolios, according to Insider Monkey’s database. The stakes owned by these hedge funds have a total value of over $75.5 million. Ian Simm, Ken Griffin, and Dmitry Balyasny were some of the company’s leading stakeholders in Q4.

10. Apogee Enterprises, Inc. (NASDAQ:APOG)

Number of Hedge Fund Holders: 14

Apogee Enterprises, Inc. (NASDAQ:APOG) is a Minnesota-based company that provides glass products, services, and systems. On January 12, the company declared a quarterly dividend of $0.24 per share, having raised it by 9%. This was the company’s 10th consecutive year of dividend growth. The stock’s dividend yield on April 19 came in at 2.19%.

Following the company’s Q4 earnings, Craig-Hallum raised its price target on Apogee Enterprises, Inc. (NASDAQ:APOG) in April to $46 and maintained a Hold rating on the shares.

In its fiscal Q4 2023, Apogee Enterprises, Inc. (NASDAQ:APOG) posted revenue of $344 million, which showed a 5% growth from the same period last year. The company’s operating cash flow for the quarter came in at $52 million. During FY23, it returned $94 million to shareholders in dividends, which makes it one of the best dividend stocks on our list.

At the end of December 2022, 14 hedge funds in Insider Monkey’s database reported having stakes in Apogee Enterprises, Inc. (NASDAQ:APOG), up from 12 in the previous quarter. The collective value of these stakes is roughly $30 million.

9. Extra Space Storage Inc. (NYSE:EXR)

Number of Hedge Fund Holders: 27

Extra Space Storage Inc. (NYSE:EXR) is an American real estate investment trust company that invests in self-storage facilities. In April, Raymond James upgraded the stock to Strong Buy with a $185 price target, highlighting the company’s recent M&A deals.

Extra Space Storage Inc. (NYSE:EXR), one of the best dividend stocks on our list, currently pays a quarterly dividend of $1.62 per share, having raised it by 8% on February 16. Through this increase, the company’s current dividend growth streak stands at 13 years. The stock’s dividend yield on April 19 came in at 4.18%.

At the end of December 2022, 27 hedge funds tracked by Insider Monkey reported having stakes in Extra Space Storage Inc. (NYSE:EXR), the same as in the previous quarter. These stakes have a consolidated value of roughly $173 million.

Renaissance Investment Management mentioned Extra Space Storage Inc. (NYSE:EXR) in its Q4 2022 investor letter. Here is what the firm has to say:

“Lastly, Extra Space Storage Inc. (NYSE:EXR) lost 14.0% in the quarter. Driven by strong pricing gains, the company reported strong operating results. However, pricing gains came at the expense of occupancy, which came in lower than expectations. Management also lowered full-year guidance due to excess inventory in the self-storage market.”

8. The Allstate Corporation (NYSE:ALL)

Number of Hedge Fund Holders: 37

An American insurance company, The Allstate Corporation (NYSE:ALL) is next on our list of the best dividend stocks for passive income. The company has been raising its dividends consistently for the past 15 years and currently offers a quarterly dividend of $0.89 per share. The stock has a dividend yield of 3.12%, as of April 19.

In April, BofA raised its price target on The Allstate Corporation (NYSE:ALL) to $145 and maintained a Buy rating on the shares, noting the company’s performance this year.

In the fourth quarter of 2022, The Allstate Corporation (NYSE:ALL) reported revenue of $13.6 billion, which showed a 4.9% growth from the same period last year. During FY22, the company paid $3.4 billion to shareholders in dividends and share repurchases.

The number of hedge funds tracked by Insider Monkey owning stakes in The Allstate Corporation (NYSE:ALL) stood at 37 in Q4 2022. The stakes owned by these hedge funds have a total value of over $401 million.

7. AmerisourceBergen Corporation (NYSE:ABC)

Number of Hedge Fund Holders: 44

AmerisourceBergen Corporation (NYSE:ABC) is an American drug wholesale company that provides distribution and consulting services to its consumers. Citigroup initiated its coverage of the stock in March with a Buy rating and a $185 price target, presenting a strong stance on the sector.

AmerisourceBergen Corporation (NYSE:ABC), one of the best dividend stocks, currently pays a quarterly dividend of $0.485 per share. The stock’s dividend yield on April 19 came in at 1.19%. The company has been raising its dividends consistently for the past 18 years.

At the end of Q4 2022, 44 hedge funds tracked by Insider Monkey reported having stakes in AmerisourceBergen Corporation (NYSE:ABC), with a total value of $996.3 million.

TimesSquare Capital Management mentioned AmerisourceBergen Corporation (NYSE:ABC) in its Q4 2022 investor letter. Here is what the firm has to say:

“Pharmaceutical distributor AmerisourceBergen Corporation (NYSE:ABC) advanced 23% on the heels of a beat to fiscal fourth quarter estimates. Management acknowledged macroeconomic headwinds while emphasizing its international business has remained resilient while U.S. growth was strong.”

6. BlackRock, Inc. (NYSE:BLK)

Number of Hedge Fund Holders: 49

BlackRock, Inc. (NYSE:BLK) is an American multinational investment management company. The company is one of the best dividend stocks on our list as it has raised its dividends for 14 years in a row. The company offers a quarterly dividend of $5 per share and has a dividend yield of 2.88%, as of April 19.

In addition to BlackRock, Inc. (NYSE:BLK), Exxon Mobil Corporation (NYSE:XOM), The Procter & Gamble Company (NYSE:PG), and Johnson & Johnson (NYSE:JNJ) are some other dividend stocks to consider for passive income.

The number of hedge funds tracked by Insider Monkey owning stakes in BlackRock, Inc. (NYSE:BLK) grew to 49 in Q4 2022, from 46 in the previous quarter. The collective value of these stakes is over $2.5 billion.

Baron Funds mentioned BlackRock, Inc. (NYSE:BLK) in its Q4 2022 investor letter. Here is what the firm has to say:

“Shares of BlackRock, Inc. (NYSE:BLK), the world’s largest asset manager, increased during the quarter. Despite volatility and a mid-December decline, most equity markets finished higher in the quarter, and BlackRock, which is heavily tied to these markets, benefited. Additionally, investors are anticipating that the company’s fixed income products will experience growth in 2023. Alternative strategies are expanding as well and should continue to provide a profitable revenue stream.”

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