Some investors prefer a more active approach to owning stocks, closely monitoring the market’s daily fluctuations and trading regularly to capitalize on opportunities. On the other hand, some investors are more passive, opting to buy and hold stocks without frequent check-ins on their portfolio. These investors often focus on dividends as a key component of their investment strategy, which can lead to better overall returns compared to their more active counterparts.
For those who lean towards a passive investing style, here are three stocks that have the potential to generate decades of passive income:
1. Bank of America (NYSE: BAC)
Despite Warren Buffett’s recent decision to scale back Berkshire Hathaway’s stake in Bank of America, this bank remains a strong dividend stock with a forward-looking dividend yield of nearly 2.8%. The dividend has been growing consistently since 2016 at an average annualized rate of over 20%. With a profit per share that exceeds its dividend payout, there is room for continued dividend growth even in challenging economic conditions.
2. Realty Income (NYSE: O)
Realty Income is a real estate investment trust (REIT) that owns a diverse portfolio of retail properties, including strip malls, stand-alone stores, and warehouses rented out to major retailers like Dollar General and Walgreens. The REIT has a remarkable track record of paying monthly dividends for 649 consecutive months and increasing its dividend in each of the past 107 quarters. With a current yield of over 5.2%, Realty Income is a reliable source of passive income.
3. PepsiCo (NASDAQ: PEP)
PepsiCo is a leading beverage and snack company with a forward-looking dividend yield of over 3.1%. Compared to its competitor Coca-Cola, PepsiCo has a higher dividend yield and stronger dividend growth, with an average annualized growth rate of over 7% in the past 10 years. With a diversified revenue stream that includes popular snack brands like Frito-Lay, PepsiCo offers investors a stable source of passive income.
In conclusion, these three stocks have the potential to provide investors with decades of passive income through consistent dividend payments and growth. Whether you choose to reinvest these dividends or use them as cash flow, these stocks can be valuable additions to a long-term investment portfolio. Consider incorporating these stocks into your investment strategy for a reliable source of passive income over the years.
