Passive income is a popular investment strategy that allows individuals to earn money without actively working for it. One common method of generating passive income is through dividend stocks, which are stocks that pay out a portion of their earnings to shareholders on a regular basis. In this article, we will discuss 16 of the best passive income stocks to buy according to hedge funds.
According to a recent survey by the investment platform Magnifi, a significant percentage of Americans invest to secure additional income rather than solely for retirement. Investing in dividend stocks is a popular choice for generating passive income due to the consistent returns they offer over time. Data from 1926 to July 2023 shows that dividend income accounted for 32% of the monthly total return of the S&P 500, with the remainder attributed to capital appreciation. Dividends have also shown resilience during periods of high inflation, making them a reliable source of income for investors.
A study conducted by Wisdom Tree highlighted the benefits of investing in dividend-paying stocks for generating income. By focusing on dividends, investors can enhance their earnings and potentially raise their dividend yield, especially during times of low yields and market volatility. Dividend-paying stocks are considered essential for building a steady income stream, particularly for retirees or those looking to supplement their traditional income sources.
Some of the most prominent dividend stocks include Broadcom Inc. (NASDAQ: AVGO), Walmart Inc. (NYSE: WMT), and Exxon Mobil Corporation (NYSE: XOM), which have a proven track record of consistently increasing their dividends. These companies are reliable options for shareholders looking to generate passive income. In addition to these well-known stocks, there are other dividend stocks that offer attractive opportunities for passive income.
To compile a list of the best passive income stocks, we used a stock screener to identify companies that have raised their dividends for at least 10 consecutive years and have a dividend yield of at least 1%. We then selected 16 stocks with the highest number of hedge fund investors, as hedge funds’ top consensus stock picks have outperformed the S&P 500 Index by over 140 percentage points in the last 10 years.
Some of the top passive income stocks according to hedge funds include Lowe’s Companies, Inc. (NYSE: LOW), Philip Morris International Inc. (NYSE: PM), NIKE, Inc. (NYSE: NKE), The Home Depot, Inc. (NYSE: HD), The Procter & Gamble Company (NYSE: PG), Chevron Corporation (NYSE: CVX), Linde plc (NASDAQ: LIN), AbbVie Inc. (NYSE: ABBV), QUALCOMM Incorporated (NASDAQ: QCOM), Pfizer Inc. (NYSE: PFE), and Johnson & Johnson (NYSE: JNJ). These companies have a history of consistent dividend growth and offer attractive dividend yields for passive income investors.
In conclusion, investing in dividend stocks is a proven strategy for generating passive income. By selecting high-quality companies with a track record of dividend growth and strong financial standings, investors can build a reliable income stream over time. The 16 best passive income stocks discussed in this article offer attractive opportunities for investors looking to earn passive income through dividends.
