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- Dividend stocks can provide investors with passive long-term income.
- AbbVie offers stable and consistent distributions.
- Realty Income has increased its dividend for 25 consecutive years.
- Also: 2 Dividend Legends To Hold Forever
Seasoned investors tend to closely follow the ups and downs of the market. Through adequate research and understanding of potential risks, many investors can build an investment strategy that can help them generate substantial returns.
Although the market presents plenty of opportunities for investors to gain financial independence, companies that pay dividends to shareholders can provide them with the ability to generate reliable passive income and capital appreciation.
Dividend Stocks: Why Are They Important
For some investors, dividend stocks make up an essential part of their investment portfolio. Dividend stocks are shares of a company that distributes a portion of their earnings to shareholders as dividends. These distributions are paid quarterly and can provide a steady stream of income for investors.
Companies that pay dividends are considered industry leaders who are well-managed and have been around for many years. Think of the biggest companies that exist - Walgreens Boots Alliance ( NASDAQ: WBA ), British American Tobacco ( NYSE: BTI ), Verizon ( NYSE: VZ ), and Coca-Cola ( NYSE: KO ) - who are considered dependable dividend companies that consistently pay contributions.
Dividend Stocks To Keep On Your Radar
1. AbbVie
- Dividend Yield: 3.27%
- Payout Ratio: 50% - 60%
- Dividend Growth: 4.79% annually
AbbVie ( NYSE: ABBV ) is a multinational biopharmaceutical conglomerate that researches, discovers, and develops medicines for complex health issues with specialization in treatments including oncology, neuroscience, eye care, immunology, and virology.
During Q2 2024 quarterly earnings, AbbVie reported strong net revenues of $14.46 billion, an increase of 4.3% quarter-over-quarter. Portfolio revenues for immunology rose 2.3% to $6.97 billion, with revenues for oncology and neuroscience climbing 10.5% and 14.7%, respectively.
Aesthetics portfolio generated $1.39 billion in net revenues, an increase of 0.5%. The acquisition of Allergan added a robust portfolio of aesthetic products, diversifying AbbVie's revenue stream.
ABBV has gained approximately 17% year-to-date (YTD) and gained 11% between July and August. On average, the stock has delivered a return of 90% over the past five years, with earnings growing at an annual rate of 12%.
2. Ares Capital
- Dividend Yield: 9.47%
- Payout Ratio: 85% - 90%
- Dividend Growth: 6.10% annually
Next up is Ares Capital ( NASDAQ: ARCC ) a leading specialty financial services company that provides direct loans and investment services to middle-market companies. Talking numbers, Ares Capital has more than $23.1 billion in total investments, with over 500 companies in its portfolio.
As a business development company, Ares Capital underwrites senior secured loans and focuses on subordinated debt and equity investments. With a robust portfolio and increasing investment income, ARCC has delivered consistent and gradual growth over the past years.
In Q2 2024, the private equity firm delivered revenue of $755 million, surpassing Wall Street expectations of $714.3 million based on eight analysts forecasts. On a per-share basis, Ares reported a profit of $0.52 per share or $0.61 adjusted for investment costs.
On the stock market, ARCC continues to hold a steady position, however, shares have fallen by over 3% in the last month between July and August. Despite the somewhat lackluster performance, share prices slightly above $20.00 make ARCC an affordable option for passive income investors.
3. Realty Income
- Dividend Yield: 5.38%
- Payout Ratio: 80% - 85%
- Dividend Growth: 4.3% annually
Finally, Realty Income ( NYSE: O ), a commercial real estate investment company with over 15,450 properties in its portfolio is known as the “Monthly Dividend Company '' and has declared a consecutive monthly dividend for 649 months. On top of this, the company has increased its dividend distribution for 25 consecutive years.
Based on Q1 2024 financial results, Realty Income reported a net income of $129.7 million, or $0.16 per share. Additionally, throughout the reported quarter, the company invested $598 million, with 54% of investment volume in the United Kingdom and Europe. In Q1, Realty Income reported a total revenue of $1.26 billion, which was an increase of 33.29% compared to Q1 2023.
Elsewhere on the stock market, O started the year on a slow pace, dropping over 10% throughout the first three months of 2024. Shares have recovered since then, gaining approximately 12% between March and August. O is underpinned by consistent dividend payments and the strong financial health of the company.
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