Investing in Dividend-Paying Stocks for Passive IncomeInvesting in Dividend-Paying Stocks for Passive Income Investing in dividend-paying stocks offers consistent passive income and potential long-term growth. For investors seeking decades of income, three notable options are: 1. EOG Resources (EOG) * Leading crude oil and natural gas exploration and production company * 26 consecutive years of dividend increases * High-quality asset portfolio and robust balance sheet * Forward yield: 2.86% 2. AbbVie (ABBV) * Biopharmaceutical company focused on oncology, neuroscience, immunology, and eye care * Dividend Aristocrat with 285% dividend growth since 2013 * Robust R&D engine and strong product pipeline * Dividend yield: 3.35% 3. Dover Corp (DOV) * Diversified manufacturer of industrial products and support services * 68 consecutive years of dividend increases * Organic sales growth of 4% CAGR * Dividend yield: 1.1% These companies have a history of dividend growth, financial strength, and strategic plans that support their ability to generate sufficient cash flow for dividend payments. Investing in these stocks can provide a consistent income stream and potential capital appreciation over the long term.
Investing in dividend-paying stocks offers investors the opportunity to generate consistent passive income. In addition to regular income, high-quality dividend stocks also have the potential for long-term growth. To achieve the mix of income and growth, investors should focus on companies that are committed to growing their dividends and also have the financial strength to weather market uncertainties.
Given these factors, EOG Resources (EOG), AbbVie (ABBV), and Dover Corp (DOV) are three notable options for investors looking to secure decades of passive income. These companies have consistently paid and increased their dividends, and they have a growing profit base to support their future payouts.
Let’s take a look at why these stocks are excellent choices for generating passive income for decades.
Dividend Stock #1: EOG Resources
EOG Resources (EOG) is a leading crude oil (CLU24) and natural gas (NGQ24) exploration and production company. It has earned the reputation of a reliable income stock due to its solid track record of growing its dividend across economic and commodity cycles. For example, this energy company has paid and increased its dividend for 26 consecutive years. Furthermore, EOG has never suspended or cut its dividend.
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A key aspect of EOG’s shareholder value proposition is its commitment to returning a significant portion of its annual free cash flow—approximately 70%—to shareholders. In 2023 alone, EOG paid out $3.4 billion in dividends. The company raised its dividend by 10% for 2024, offering a quarterly dividend of $0.91 per share. This results in a forward yield of 2.86%.
EOG’s dividends are supported by its high-quality asset portfolio, low cost structure, diversified multi-basin resource base and robust balance sheet. These factors enable EOG to generate solid cash flows to cover its dividends and support its payouts. In addition, EOG’s strategic infrastructure investments and efficient capital reinvestment plan position the company to improve margins and generate solid cash flows in the years ahead.
Of the 27 analysts covering EOG, 14 have a “Strong Buy” recommendation, while the remaining 13 suggest a “Hold” recommendation. The average price target for EOG is $144.96, which suggests a potential upside of around 16% from the current price.
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Dividend Stock #2: AbbVie
AbbVie (ABBV) is a leading biopharmaceutical company developing advanced therapies in critical areas such as oncology, neuroscience, immunology and eye care.
Over the past year, AbbVie stock has risen 21%, narrowly outpacing the S&P 500 Index ($SPX). What’s more, the stock has delivered an impressive total capital gain of around 247%, with a CAGR of over 28% over the past five years.
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In addition to great capital gains, AbbVie has consistently increased shareholder value through higher dividend payments. It is a component of the S&P Dividend Aristocrats Index, which includes SPX component stocks with at least a 25-year history of dividend growth. Since 2013, AbbVie has increased its quarterly dividend by 285%.
AbbVie’s success hinges on its robust research and development (R&D) engine. Over the past decade, it has developed multiple blockbuster therapies, generating billions of dollars in revenue. AbbVie’s current pipeline includes approximately 90 compounds, devices or indications in various stages of development, providing a solid foundation for future growth.
Additionally, AbbVie’s focus on strategic acquisitions is likely to expand its presence in the oncology and neuroscience segments. These accretive acquisitions are expected to bolster its long-term finances and boost future dividend payments.
Despite AbbVie’s strong long-term outlook, the company faces competitive headwinds from biosimilars, which is causing a few analysts to shy away from covering the stock. Of the 22 analysts covering ABBV shares, 13 recommend a “strong buy,” two suggest a “moderate buy,” and seven rate it a “hold.”
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The average price target of these analysts is $184.05, which is roughly in line with ABBV’s current price. Furthermore, the stock offers a decent dividend yield of 3.35%.
Dividend Stock #3: Dover Corp
Dover (DOV) is a leading manufacturer of industrial products with exposure to multiple sectors. It also provides support services. This diversified portfolio positions Dover well to tap into several growing end markets, delivering consistent organic revenue and earnings growth. In addition, the company generates robust free cash flow, supporting its commitment to returning substantial capital to shareholders.
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Dover’s organic sales have grown at a CAGR of 4% over the past five years. Over the same period, adjusted earnings per share (EPS) have grown at a CAGR of 12%, demonstrating the company’s strong earnings power. This financial strength has enabled Dover to increase dividends for 68 consecutive years.
In addition to higher dividend payouts, Dover stock has provided investors with significant capital gains. It has risen by around 28% in the past year and has delivered a remarkable 100% return over the past five years.
Dover’s strategic focus on reshaping its portfolio through acquisitions, divestitures and investments in growth platforms is expected to drive revenue. In addition, the company’s initiatives to improve its sales mix, realize productivity savings, implement strategic pricing and control costs are likely to enhance its EPS and cash flows, supporting continued dividend growth.
Of the twelve analysts covering Dover shares, eight recommend a ‘strong buy’ and four suggest a ‘hold’.
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The analysts have an average price target of $194.83 over 12 months, which implies an upside potential of around 4.5% from the current trading price. At these levels, Dover shares offer a dividend yield of 1.1%.
On the date of publication, Sneha Nahata had no (direct or indirect) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
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