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These days, investors, especially those nearing retirement, seek passive income streams to supplement social security, pension income, or qualified retirement account withdrawals.
According to the Internal Revenue Service (IRS), passive income generally includes earnings from rental activity or any trade or business in which the individual does not materially participate. It can also include income from limited partnerships and other similar enterprises where the individual is not actively involved.
With interest rates due to be lowered starting in September, Fed Funds will likely drop from the current 5.25% to 5.5% level to 3.5% by late 2025 or early 2026. Investors looking to generate solid and dependable passive income streams should start buying quality dividend stocks now, as they will likely increase in popularity in a lower-rate environment.
We screened our 24/7 Wall St. passive income stock database search for companies trading under $20 that offer some of the highest and safest dividends and came across five must-own stocks that make sense now. All are rated Buy at major Wall Street firms. Dividend investors will also want to grab this awesome free report .
Why do we cover passive income dividend stocks?
Dividend stocks provide investors with reliable streams of passive income. Passive income is characterized by its ability to generate revenue without requiring the earner's continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.
Apple Hospitality REIT
Apple Hospitality REIT owns one of the largest portfolios of upscale, select-service hotels in the United States.
Paying investors a solid monthly 6.90% dividend, Apple Hospitality REIT Inc. ( NYSE: APLE ), a publicly traded real estate investment trust, stands out in the market with its unique offering. Despite its name, it is not affiliated with the technology giant. However, it offers a solid total return potential, owning one of the largest and most diverse portfolios of upscale, room-focused hotels in the United States.
Apple Hospitality's portfolio comprises 220 hotels with over 28,900 guest rooms in 87 markets throughout 37 states and one property leased to third parties.
Concentrated on industry-leading brands, the company's hotel portfolio comprises:
- 97 Marriott-branded hotels
- 119 Hilton-branded hotels
- 4 Hyatt-branded hotels.
AT&T
AT&T is the world's third-largest telecommunications company by revenue and the second-largest wireless carrier in the United States behind Verizon.
The legacy telecommunications company has been undergoing a lengthy restructuring while lowering its dividend, which still stands at 5.65%. AT&T Inc. ( NYSE: T ) provides worldwide telecommunications, media, and technology services. Its Communications segment offers wireless voice and data communications services.
AT&T sells through its company-owned stores, agents, and third-party retail stores:
- Handsets
- Wireless data cards
- Wireless computing devices
- Carrying cases
- Hands-free devices
AT&T also provides:
- Data
- Voice
- Security
- Cloud solutions
- Outsourcing
- Managed and professional services
- Customer premises equipment for multinational corporations, small and mid-sized businesses, and governmental and wholesale customers.
In addition, this segment offers residential customers broadband fiber and legacy telephony voice communication services.
It markets its communications services and products under:
- AT&T
- Cricket
- AT&T PREPAID
- AT&T Fiber
The company's Latin America segment provides wireless services in Mexico and video services in Latin America. This segment markets its services and products under the AT&T and Unefon brands.
Energy Transfer
Energy Transfer is one of North America's largest and most diversified midstream energy companies.
The top master limited partnership is a safe way for investors looking for energy exposure and income, as the company pays a massive 8.26% distribution. Energy Transfer L.P. ( NYSE: ET ) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint in all of the major domestic production basins.
The company is a publicly traded limited partnership with core operations that include:
- Complementary natural gas midstream
- Intrastate and interstate transportation and storage assets
- Crude oil, natural gas liquids (NGL), and refined product transportation and terminalling assets
- NGL fractionation and various acquisition and marketing assets
Energy Transfer owns and operates more than 114,000 miles of pipelines and related assets in all significant U.S.-producing regions and markets across 41 states, further solidifying its leadership position in the midstream sector.
Through its ownership of Energy Transfer Operating, the company also owns Lake Charles LNG, as well as the general partner interests, the incentive distribution rights, and 28.5 million standard units of Sunoco L.P. ( NYSE: SUN ), and the public partner interests and 39.7 million standard units of USA Compression Partners L.P. ( NYSE: USAC ).
Hercules Capital
Hercules Capital is the lender of choice for innovative entrepreneurs and their VC partners.
This highly regarded company across Wall Street pays a giant 10.06% dividend. Hercules Capital Inc. ( NYSE: HTGC ) is the largest non-bank lender to venture capital-backed companies at all stages of development in a broadly diversified variety of technology, life sciences, and sustainable and renewable technology industries.
With two decades of experience in venture debt, Hercules is uniquely positioned to quickly create innovative financing solutions that perfectly fit within a company's existing capital structure and map to its business objectives.
Recognized as the industry leader, Hercules understands the flexibility these types of companies need and has the experience to work closely with them, even through challenging times, to help them reach critical milestones.
Since its inception in December 2003, Hercules has committed more than $18 billion to over 640 companies and is the lender of choice for entrepreneurs and venture capital firms seeking growth capital financing.
KeyCorp
KeyBank is an American regional bank headquartered in Cleveland, Ohio, and the 25th largest bank in the United States.
This top regional player is very cheap at current levels for investors looking at financials and pays a big 5.27% dividend. KeyCorp. ( NYSE: KEY ) operates as the holding company for KeyBank National Association, which provides various retail and commercial banking products and services in the United States.
It operates in two segments:
- Consumer Bank
- Commercial Bank
The company offers various deposits, investment products, and services to individuals and small and medium-sized businesses including:
- Commercial leasing
- Investment management
- Consumer Finance
- Personal finance and financial wellness
- Student loan refinancing
- Mortgage and home equity lending
- Credit card
- Treasury
- Business advisory
- Wealth management
- Asset management
- Cash management
- Portfolio management
- Trust and related services
It also provides a suite of banking and capital market products, such as:
- Syndicated Finance
- Debt and equity capital market products
- Commercial payments
- Equipment Finance
- Commercial mortgage banking
- Derivatives
- Foreign exchange
- Financial advisory and public finance
- Commercial mortgage loans are offered to middle-market clients in the consumer, energy, healthcare, industrial, public sector, real estate, and technology sectors
In addition, the company offers community development financing, securities underwriting, brokerage, and investment banking services.
Six Blue-Chip Dividend Giants Every Passive Income Investor Should Own
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