In this article, we discuss 5 dividend stocks for passive income. If you want to read our detailed discussion on dividend income and dividend stocks’ performance, go directly to read 15 Dividend Stocks for Passive Income.
5. The Home Depot, Inc. (NYSE:HD)
Dividend Yield as of July 28: 2.54%
An American home improvement company, The Home Depot, Inc. (NYSE:HD)’s financial health has remained strong over the years. In 2021, the company generated over $14 billion in free cash flow and expects the number to reach $17.4 billion by FY23. Its commitment to shareholders has always remained consistent as well, distributing dividends worth over $2 billion during the first quarter of 2022.
The Home Depot, Inc. (NYSE:HD) has been raising its dividends consecutively for the past 14 years and its 10-year dividend CAGR came in at 17.9%. The company currently offers a quarterly payout of $1.90 per share, with a dividend yield of 2.54%, as of July 28.
In June, Citigroup raised its price target of The Home Depot, Inc. (NYSE:HD) to $348 with a Buy rating on the shares, increasing the company’s FY22 earnings estimates.
At the end of Q1 2022, 75 hedge funds in Insider Monkey’s database presented a bullish stance on The Home Depot, Inc. (NYSE:HD), owning stakes worth nearly $5.6 billion. With over 8 million shares, Fisher Asset Management was the company’s leading stakeholder in Q1.
Diamond Hill Capital mentioned The Home Depot, Inc. (NYSE:HD) in its Q1 2022 investor letter. Here is what the firm has to say:
“Home Depot shares underperformed as continued solid fundamental results were outweighed by concerns about the impact rising mortgage rates may have on the housing market and general inflationary pressures potentially leading to a consumer spending slowdown. We view the long-term prospects and multi-year fundamental outlook as unchanged.”
4. 3M Company (NYSE:MMM)
Dividend Yield as of July 28: 3.29%
3M Company (NYSE:MMM) is a Minnesota-based multinational manufacturing company. The stock gained 6% on July 26 as it announced the plan to spin off its healthcare business with better growth and investment initiatives.
In Q2 2022, 3M Company (NYSE:MMM) reported an operating cash flow of $1.1 billion and generated $1 billion in free cash flow. The company paid approximately $800 million in dividends during the quarter. It currently pays a quarterly dividend of $1.49 per share. 3M Company (NYSE:MMM) maintains a 64-year track record of dividend growth with a 5-year CAGR of 5.38%. Its payout ratio stands at 82.9%. As of July 28, the stock’s dividend yield was recorded at 3.29%.
Following the company’s Q2 report, Street analysts are positive about the company’s future earnings. In July, both Deutsche Bank and Wells Fargo raised their price targets on 3M Company (NYSE:MMM) to $148 and $144, respectively.
3M Company (NYSE:MMM) was a popular buy among hedge funds in Q1, according to Insider Monkey’s database. The company was a part of 51 hedge fund portfolios, up from 41 in the previous quarter. The stakes owned by these funds are collectively valued at over $1.5 billion.
3. T. Rowe Price Group, Inc. (NASDAQ:TROW)
Dividend Yield as of July 28: 3.99%
T. Rowe Price Group, Inc. (NASDAQ:TROW) is a Maryland-based investment management company that offers advisory services, account management, and retirement plans for institutional and individual investors. As of May, the company has $1.4 trillion in assets under management.
T. Rowe Price Group, Inc. (NASDAQ:TROW)’s balance sheet remained strong in the first half of 2022, reporting $2.1 billion in cash and cash equivalents in Q2 2022, up from $1.5 billion at the end of December 2021. The company spent $476.6 million in dividends during the quarter. On May 10, T. Rowe Price Group, Inc. (NASDAQ:TROW) declared a quarterly dividend of $1.20 per share, consistent with its previous dividend. The company has been raising its dividends for the past 36 years consecutively. As of July 28, the stock’s dividend yield came in at 3.99%.
At the end of March 2022, 33 hedge funds tracked by Insider Monkey were bullish on T. Rowe Price Group, Inc. (NASDAQ:TROW), up from 30 in the previous quarter. The stakes owned by these hedge funds are valued at over $457 million. AQR Capital Management held the largest stake in the company in Q1, worth over $95.6 million.
2. Realty Income Corporation (NYSE:O)
Dividend Yield as of July 28: 4.13%
Realty Income Corporation (NYSE:O) is a California-based real estate investment trust company. It is one of the best dividend stocks for passive income as it offers monthly dividends to shareholders. On July 12, the company declared a monthly dividend of $0.2475 per share, in line with its previous dividend. The stock’s dividend yield was recorded at 4.13%, as of the close of July 28.
Realty Income Corporation (NYSE:O) has been a consistent dividend-payer, offering dividends to shareholders for the past 53 years and has raised its dividend every year since 1994. In the first quarter of 2022, the company paid $438.3 million in dividends, which represented 75.6% of its AFFO.
In June, Credit Suisse initiated its coverage of Realty Income Corporation (NYSE:O) with an Outperform rating and a $75 price target and named the stock one of its Top Picks.
At the end of Q1 2022, 22 hedge funds in Insider Monkey’s database owned stakes in Realty Income Corporation (NYSE:O), down from 30 a quarter earlier. The combined value of these stakes is $284.8 million.
1. Devon Energy Corporation (NYSE:DVN)
Dividend Yield as of July 28: 6.04%
Devon Energy Corporation (NYSE:DVN) is an American energy company that is engaged in the exploration of hydrocarbons, natural gas, and oil.
In Q1 2022, Devon Energy Corporation (NYSE:DVN) generated $1.3 billion in free cash flow, up from $1.1 billion in the previous quarter. The company paid $667 million in dividends during the quarter, compared with $554 million paid during the previous quarter. Devon Energy Corporation (NYSE:DVN) has been making dividend payments consistently for the past 29 years and raised its payouts every year since 2016. It currently pays a quarterly dividend of $1.27 per share, with a yield of 6.04%, as of the close of July 28.
In July, Truist raised its price target on Devon Energy Corporation (NYSE:DVN) to $115 with a Buy rating on the shares, highlighting the growth in oil prices, which will be beneficial for the company.
At the end of Q1 2022, 66 hedge funds tracked by Insider Monkey owned stakes in Devon Energy Corporation (NYSE:DVN), up from 51 in the previous quarter. The total value of these stakes is nearly $2 billion.
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