Generating passive income is a dream for many investors, and one way to achieve this goal is by investing in stocks that can provide steady returns over the long term. While there is no such thing as easy money, once you have accumulated funds to invest, it becomes easier to make more money through smart investment choices. In this article, we will explore three stocks that have the potential to generate passive income for decades to come.
1. AbbVie (NYSE: ABBV)
AbbVie is a leading biopharmaceutical company with a market cap of around $345 billion. The company’s product lineup includes several blockbuster drugs and other promising candidates with the potential to generate significant sales. Despite a modest forward dividend yield of 3.17%, AbbVie has an impressive track record of increasing its dividend for 52 consecutive years, earning it a spot among the elite group of stocks known as Dividend Kings.
While AbbVie has faced challenges due to biosimilar competition for its top-selling drug Humira, the company has a solid pipeline of new drugs, including Rinvoq and Skyrizi, which are expected to drive future growth. AbbVie’s strategic approach to managing patent expirations and investing in new drug development positions it well for long-term success, making it a great stock for generating passive income.
2. Brookfield Infrastructure (NYSE: BIP)
Brookfield Infrastructure is a diversified infrastructure company that owns a portfolio of assets including cell towers, data centers, electricity transmission lines, pipelines, and more. The company pays distributions instead of dividends, with attractive forward distribution yields of 5.12% for the limited partnership (BEP) and 4.04% for the corporate entity (BEPC). Brookfield Infrastructure has a track record of increasing its distributions for 15 consecutive years and aims for annual distribution growth of 5% to 9%.
With a focus on acquiring undervalued infrastructure assets, enhancing their value through operational expertise, and recycling capital into new investments, Brookfield Infrastructure has a sustainable strategy for long-term growth. This approach makes it a reliable choice for investors seeking passive income over the years.
3. Verizon Communications (NYSE: VZ)
Verizon Communications is a leading telecommunications provider with a forward dividend yield of 6.27%, the highest among the three stocks mentioned. The company has increased its dividend for 18 consecutive years and is expected to continue this trend with improving free cash flow. With a low forward price-to-earnings ratio of 9.3, Verizon also appeals to value investors.
While Verizon may not deliver high organic growth, the company has opportunities for expansion through acquisitions. For example, Verizon’s planned acquisition of Frontier Communications for $20 billion will significantly expand its fiber footprint in the U.S. This strategic move positions Verizon for long-term growth and makes it an attractive stock for generating passive income.
In conclusion, investing in stocks like AbbVie, Brookfield Infrastructure, and Verizon Communications can provide investors with a source of passive income for decades to come. By choosing companies with strong fundamentals, reliable dividend histories, and growth potential, investors can build a portfolio that generates steady returns over the long term.
