3 Must-Own Dividend Stocks For Plenty Of Passive Income

Investors will want to grab reliable stock picks that provide passive income

• These dividend stocks can generate steady passive income that grows each year.
• IBM (IBM): The company is going through a transformation and is reasonably valued.
• JPMorgan (JPM): This established bank always seems to do well even when most of the banking sector struggles.
• Exxon Mobil (XOM): The oil giant is diversifying its portfolio and giving out high dividends along the way.

Passive income helps investors retire with less financial stress. Passive income can take care of extra bills, but it can also cover your living expenses if you invest in dividend stocks for a long enough amount of time.

Investors can choose from many dividend stocks to diversify their portfolios and increase their cash flow. However, a high yield and past successes don’t ensure an asset is a great pick. Investors have to consider where the company is now and where it may head in the future. 

Accumulating these three dividend stocks can lead to additional passive income and help investors who are closing in on their retirement years.

IBM (IBM) 

After struggling for a few years and still trading lower now than it did in 2011, IBM (NYSE:IBM) is staging a comeback. The Red Hat acquisition has fueled IBM’s earnings and can help the company return to respectable growth. 

Big Blue exceeded revenue and earnings estimates in the third quarter, with revenue inching up by 4.6% year over year (YOY). The company’s profit margin remains in the low double-digits. Also, IBM is working on artificial intelligence initiatives which can lead to further gains for shareholders. 

The sleepy stock is starting to gain life and is up by 8% year to date (YTD). Shares have gained 36% over the past five years. The stock currently has a 21 P/E ratio and a 4.35% dividend yield. IBM isn’t exactly a dividend growth superhero. The company only raised its quarterly dividend from $1.65 per share to $1.66 per share in 2023. 

Investors get to enjoy a good yield while benefitting from a company that has more exposure to AI, the cloud, and cybersecurity. Don’t bank on this stock outpacing growth stocks. Yet, it does provide a high and safe yield.

JPMorgan (JPM)

JPMorgan (NYSE:JPM) is one of the few bank stocks that continues to deliver YOY revenue and earnings growth. Any panics with the smaller banks encourage consumers to put their money into larger banks like JPMorgan.

In fact, JPM has provided steady returns for investors. Shares have gained 12% YTD when many banking stocks are down by that much or more. Over the past five years, JPMorgan has gained 42%. 

JPM had to briefly pause its dividend hike in 2022 but continued to pay the dividend. This year, the firm increased its quarterly dividend from $1 per share to $1.05 per share. It’s a decent 5% dividend increase that is part of a 2.80% dividend yield. 

JPMorgan is an established blue-chip stock that can help during retirement. The stock doesn’t endure as much volatility as other banking stocks. JPMorgan currently has a 1.10 beta which implies its volatility is practically in line with the stock market.

Exxon Mobil (XOM)

A recent correction has made Exxon Mobil (NYSE:XOM) shares more attractive for long-term investors. Currently, the stock offers a 3.70% dividend yield and continues to make large investments for future growth.

Recently, Exxon Mobil announced its expansion into the lithium business which can open up new revenue streams. The company aims to produce enough lithium to supply over 1 million electric vehicles (EVs) by 2030. 

XOM is positioning itself for increased lithium usage while holding its title as a top gas producer. Exxon Mobil doesn’t need EVs to gain market share but is preparing for that scenario nevertheless. 

Additionally, the past few quarters have been sluggish, resulting in a 4% YTD drop in the stock price. However, shares have gained 35% over the past five years.

Exxon Mobil recently hiked its quarterly dividend from $0.91 to $0.95 per share. It represents a 4.4% YOY increase. But investors shouldn’t expect big dividend hikes from the oil giant. However, the dividend is reliable, providing opportunities that can translate into long-term gains for shareholders.

This post originally appeared at InvestorPlace.

On the date of publication, Marc Guberti did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Category: Dividend Stocks To Buy?