Stock Analysis & Ideas

Seeking Passive Income? Consider these 2 Dividend Stocks

Story Highlights

Investors can consider dividend stocks to generate passive income. We’ll focus on stocks that have a track record of paying dividends.

Shares of dividend-paying companies are a viable option to generate passive income. However, given the current economic uncertainty, investors should consider shares of companies with a solid dividend payment history and resilient payouts. Against this backdrop, Realty Income (NYSE:O) and Altria Group (NYSE:MO) stocks appear attractive. Let’s dig deeper. 

Is Realty Income Part of the S&P 500?

Realty Income is a part of the S&P 500 (SPX) and a member of the S&P 500 Dividend Aristocrats Index (which includes shares of corporations that have raised dividends for at least 25 consecutive years). 

Its extensive portfolio of 11,700 real estate properties, diversified customer base (92% of its rents are resilient to economic downturns), and long-term lease agreements support its cash flows and dividend payouts. Realty Income offers a monthly dividend. It has raised its dividend for 27 consecutive years. Meanwhile, it offers a dividend yield of over 4.68%.

Realty Income stock has a Moderate Buy consensus rating based on five Buy and four Hold recommendations. Meanwhile, analysts’ average price target of $68.78 implies 7.33% upside potential. Overall, Realty Income has an Outperform Smart Score of nine.

How Often Does Altria Pay a Dividend?

Tobacco-related product maker Altria pays a quarterly dividend. Altria has raised its dividend 57 times in the last 53 years. Meanwhile, it offers an attractive dividend yield of 7.92%. While its high dividend yield makes it a solid investment for passive income, it trades at a low valuation multiple. 

Altria stock is trading at a forward P/E (price-to-earnings) multiple of 9.65, lower than its five-year average of 11.28. Also, Altria stock is less volatile due to its low beta of about 0.66

Altria has a Hold consensus rating on TipRanks. MO stock has received one Buy, three Hold, and two Sell recommendations. Meanwhile, analysts’ average price target of $45 implies 3.12% downside potential.

While analysts remain sidelined, hedge funds sold 189.4K shares of MO. Nevertheless, MO stock has an Outperform Smart Score of eight. 

Bottom Line

These stocks have a solid dividend payout history and have consistently enhanced shareholders’ returns. Investors could consider adding these stocks to their portfolios to generate steady passive income. 

Disclosure

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