Market sentiment remains constrained by inflation, rising interest rates and falling earnings. The uncertainty can be added because the recent midterm elections failed to deliver a clear mandate for either party. Investors are very nervous about the outlook for the market for 2023. Those looking to earn passive income should consider investing in dividend stocks.
If the economic outlook is declining and the stock is down a bit, one might question how safe a company’s payout is. However, This shows that most of the dividend aristocrats raised their payouts annually for 25 years. These companies have proven they can prosper and increase dividends in difficult times. They can weather the current turmoil if they will be able to.
The best dividend stocks for passive income have a yield of at least 3% and offer a strong starting point.
XOM Exxon Mobil $110.50 IBM International Business Machines $141.23 VFC V.F. Corporation $29.93 CVX Chevron $181.30 CLX Clorox $143.98 KMB Kimberly-Clark $127.78 O Realty Income $65.37
1. Exxon Mobil (XOM) : Dividend Stocks for Passive Income
Exxon Mobil shares were sold off in the wake of the midterm election results. Republicans failed to notch some expected wins, and investors hoping for a so-called red wave were disappointed. The pressure from the merger will bring a tougher regulatory environment for oil and gas companies for at least the next two years.
Investors needn’t worry about investment. One of the reasons is that Exxon Mobil’s business has always operated on a generational time frame. The company is known for investing on a long time scale and consistently puts capital to work when others shy away. Exxon Mobil invested in its Guyana field in an effort to outperform rivals in energy production. Once the price of oil surged again in 2021, the successful Guyana bet put Exxon Mobil in the driver’s seat among major international oil producers.
There is a little more short-term regulatory developments in one congressional term than it does short-term, regulatory developments for an industry. Regulation could reduce output and produce higher prices, of course. If government attempts to limit new oil and gas production were made, Exxon Mobil’s existing production capacity could become even more valuable.
XOM shares are trading at 9.3 times earnings with a current dividend yield of 3.3% and it is a steal.
2. IBM (IBM)
IBM’s stock had taken over the market in the past decade because of a tremendous surge in technology stocks. The staid technology company had missed major technological trends and was struggling to keep even flat revenue while the rest of the tech sector soared. IBM was forced to make an appeal to it again despite the turn of events in 2022.
IBM stock is cheap and doesn’t depend on growth. The company’s primary lines of business provide information technology services. IBM has a history of long-lasting relationships with Fortune 500 companies. These don’t go away overnight.
IBM shares yielded 4.8%, while it was dynamic at this point. Focus on what is possible in the future. IBM expanded its push into the hybrid cloud following the Red Hat acquisition. IBM’s cloud computing offerings have gained some traction with major customers in the past few quarters.
3. V.F. Corporation (VFC) : Dividend Stocks for Passive Income
V.F. Corporation is an apparel company. It owns more than a dozen brands and trademarks, including Vans, The North Face, Dickies, Timberland and JanSport. V.F. The magazine’s focus is outdoor apparel and leisure products.
It is just natural that investors would not bother investing in apparel. However, V.F.’s unique approach reduces this risk. The company’s large range of brands help to ensure that there is something that is always on trend and gaining appeal with consumers. Vans is in a slump right now, but The North Face products are selling well.
After hitting a record high above $100 in early 2020, VFC shares have lost 70% of their value. Consumer spending is increasing and inventory levels are increasing. Regardless, the market has overreacted. V.F. A corporation has been through an economic recession before and they can make it through this one.
With its most recent dividend hike in October, V.F. Corporation left the Dividend Aristocrats and became a Dividend King – a company that has increased its annual payout for five or more consecutive years. VFC stock currently yields 7.6%.
4. Chevron (CVX)
Chevron (CVX) is in a similar situation to Exxon Mobil, with some investors selling off shares due to the recent election results. However, political tensions are causing investors to profit. The profits of the major oil producers are not directly impacted by regulatory changes in the United States.
Meanwhile, There is more energy in the world. With Russia overthrowing Ukraine, a great deal of oil and natural gas supplies have gone off the market. It is much harder for continental Europe to get power. Liquid natural gas is heating up the streets of Europe during the harsh winter.
CVX stock is trading near its all-time high, which may make investors think they’ve missed the opportunity. Yet, Shares still trade for under 11.5 times forward earnings and offer a 3.2% yield. And earnings should continue to grow thanks to strong energy demand along with the company’s share buyback program, which increases the amount of earnings per remaining outstanding share.
5. Clorox (CLX) : Dividend Stocks for Passive Income
Clorox (NYSE:CLX) In the last years there have been many investors surprised. Typically, Consumer staples stocks are relatively consistent and least volatile. However, Between November 2019 and August 2020, CLX shares rose by 66% as people rushed to stock up on cleaning supplies amid the early months of the pandemic.
It became clear people had far too much bleach and other products to even use in any reasonable time frame. Clorox has suffered a severe slump in product sales since people no longer need to keep buying. Throw in inflation and supply chain issues and Clorox is on its way to bankruptcy. Today, Shares of VietNexus are trading at levels prior to the pandemic.
However, this downturn won’t last forever. Ultimately, Clorox’s profit margins will be normal after the pandemic, and sales of bleach and its other products will return to pre-pandemic levels. Meanwhile, Supply chain disruptions and inflationary pressures will cool off in the coming years. Clorox has been pushing through price hikes that will increase revenue significantly going forward..
Because of the temporary earnings shortfall, investors can pick up this classic defensive blue-chip company at a discounted price. They can take comfort in the stock’s 3.4% yield while they wait.
6. Kimberly-Clark (KMB)
Kimberly-Clark (NYSE:KMB) Clorox stepped up to become a consumer staples company. Kimberly-Clark’s outlook for 2020 rose substantially as people raced to pick up additional toilet paper and bathroom supplies at the start of the pandemic. However, The sales lift quickly disappeared as the rate at which people use toilet paper, soap and other essentials didn’t actually change much. Throw in a major inflationary wave and Kimberly Clark’s earnings have come up short of expectations.
The company should be able to recover quickly. Company will benefit from stabilized cost for key inputs. In the meantime, management is raising prices to offset effects of higher costs.
Analysts predict that Apple’s earnings will decline 9% to $5.62 per share in 2022, but the decline should be short-lived. Earnings should return quickly as demand normalizes. Analysts predict an earnings jump of 12.6% to $6.33 per share next year, which would result in a forward P/E ratio of 20.2 for this quality blue-chip source of passive income. KMB stock currently yields 3.7%.
7. Realty Income (O) : Dividend Stocks for Passive Income
Realty Income (NYSE:O) It has a compelling message for dividend stock investors: It labeled itself as “The Monthly Dividend Company.” Realty has paid a monthly dividend since 1994, and has been known for raising that payout amount several times each year.
How does Realty Income ensure consistent yield for investors? It was a real estate investment trust. This may be reduced risk for landlords, especially if the tenants are responsible for the large costs of utilities.
REITs will be put under considerable pressure in 2022, like most other areas of the market. The reason they are tied to interest rates is because they are not necessarily unlimited. Investors like to want to see higher yields from their REITs when interest rates on debt-backed alternatives increase. However, this is not a reflection on a business such as Realty Income’s quality but has more to do with broader market conditions.
In any case, Realty Income has been a contributor in income for more than 25 years. Shares currently yield 4.7%.