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Best Dividend Stocks For Passive Income | Top 10 List

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  • Post last modified:July 25, 2022

Best Dividend stocks For Passive Income

Do you invest in the stock market? If you are an existing investor in the stock market what is the strategy you follow while investing?

Think about these 2 questions as many investors start investing in the stock market without any plan or strategy and lose money.

First of all, we would like to welcome all our readers to our blog and today we will be helping you know more about earning money through a passive source of income.

A passive source of income is a type of income you earn passively without much effort or activity.

It is important that with the rising inflation we can manage our expenses by increasing income sources.

Low salary, no pay hikes, and delayed promotions don’t help us at all so what does a common man do to manage his or her life. Well, I have a simple answer look for additional sources of income and enjoy your life better than the rest.

Today in this article on the best dividend stocks for passive income we would be discussing a strategy of stock market investment that help you earn passive income and stay ahead in the worsening economic condition of the world.

Stay put as we bring to you the list of best dividend stocks for passive income.

best dividend stocks for passive income

Know the Basic of Dividend Stock Investment

Before knowing about the best dividend stocks for passive income one must be aware of the key terminologies involved with dividend-paying stocks and hence we have a small tutorial to strengthen your basic knowledge of the stock market.\

What is Dividend

It’s a form of cash payout usually transferred online to the investor’s bank account by a company.

It’s a form of distributing extra profits which won’t be utilized in any further reinvestment for the company and is a method of retaining and rewarding the investors with some money.

The amount of dividend per share to be given is a decision taken by the board of directors and then has to be passed by a majority of votes in a board meeting where all shareholders must vote.

Dividend Announcement Date

It refers to the date of announcement of dividend by the company generally done post a board meeting and quarterly or annual profit calculation.

Ex-Dividend Date

Refers to the day on which the final list of investors eligible to receive the announced dividend is finalized.

Record Date

It’s the cutoff date, established by the company in order to determine which shareholders are eligible to receive a dividend or distribution.

Payment Date

The day all investors finally receive their dividend amount credited to the bank account.

So these are some of the key terms one must know and understand to ensure that he or she is able to make full use of investing in the best dividend stocks for passive income.

Impact of Dividend on Stock Price

Ever wondered why stock price falls on the record date of dividend-paying stocks if you are not aware let us explain.

So the company’s stock price is a representation of its net asset value during its initial listing and then it increases or decreases based on the demand and supply of a stock which is governed by a plethora of economic and macroeconomic factors.

So when a company is paying out dividends its net asset value decreases so as per regulation the company’s stock price is deducted by the same amount to calibrate for the change.

At the same time when a dividend is announced the stock price increases for some trading sessions as many buy the stock for receiving the dividend payout and also speculate a surge in stock prices later helping them realize capital gains.

Many shareholders who have a large quantity of dividend-paying stocks and hence could receive a high amount of dividend which would lead them to pay high taxes take advantage of the surge in stock prices to post dividend announcements and sell their shares which lead to a fall in price after the initial surge.

So these are the dynamics in a play of a dividend-paying stock.

Why companies pay dividends

Some of you might be wondering why a company pays dividends at all, why not use it to reinvest to help the company grow its business, well don’t stress your inquisitive minds we are here with the reasons a company pays dividends:

  • Sharing of profit to investors or shareholders
  • Shelling of extra cash to avoid hostile takeovers
  • No profitable growth plan on the radar hence the company uses the extra profits to pay shareholders and retain them

Next, we will be looking into the list of some of the best dividend stocks to earn passive income but before that, we would like to discuss some key insights about investing in dividend-paying stocks.

Firstly the payout of dividends by a company is decided by the board of directors and company management also the frequency of payout is decided by them some companies may pay quarterly, monthly, or annually.

Secondly one must also look into the tradeoff between the high dividend payout of a stock and its low growth opportunity as the company instead of investing back in new projects is paying the money to investors.

We recommend that one must look into buying dividend stock as a passive income if the company has a good growth rate and the investor is looking to stay invested for a considerable duration.

10 Best Dividend stocks For Passive Income

best dividend stocks for passive income

Looking to learn more about the best dividend-paying stocks to earn passive income, your wait ends here as we have researched and prepared a list for you. Keep reading and then invest and make money.

1. Mesabi Trust (MSB)

Business Overview: The company is a royalty trust founded in 1961 and its income source is the Peter Mitchell mine which is an iron mine located near Babbitt, Minnesota.

Its business is spread globally and it’s known to be one of the best royal trusts which derives its income from mining operations.

Market Cap369.59M
PE Ratio (TTM)5.01
Dividend & Yield5.05 (17.93%)
52 Week Range20.02 – 37.36
Profit Margin96.77%
Total Cash (mrq)37.87M
Quarterly Revenue Growth (yoy)51.00%
HeadquartersNew York, United States of America

2. Newtek Business Services Corp  (NEWT)

Business Overview: The company was founded in 1988 and provides business solutions to its clients which includes solutions like strategies to grow sales, cost reduction, and risk mitigation.

Its consultancy services which are adhered to by many clients and make it a strong company to put your money in and earn passive income through dividends and capital gains as the company does well in its operations.

Market Cap487.571M
PE Ratio (TTM)7.36
Dividend & Yield3.35 (16.60%)
52 Week Range17.65 – 35.85
Profit Margin67.63%
Total Cash (mrq)4.91M
Quarterly Revenue Growth (yoy)-41.30%
HeadquarterNew York, United States of America

3. Camping World Holdings Inc (CWH)

Business Overview: It is an automobile company established in 1966 and mostly involved in recreational vehicles. It sells recreational vehicles along with services like selling recreational vehicle parts and providing camping supplies.

Its covers a niche business line that covers the automotive industry but focuses on recreational and camping requirements. Thus it faces less competition and has strong future growth potential.

Market Cap1.119B
PE Ratio (TTM)4.72
Dividend & Yield2.50 (9.32%)
52 Week Range20.85 – 46.77
Profit Margin3.72%
Total Cash (mrq)139.48M
Quarterly Revenue Growth (yoy)6.70%
HeadquarterLincolnshire, IL 60069 United States

4. Southern Copper Corp (SCCO)

Business Overview: It’s a mining company that was established in 1952. Its currently involved in a mining operation in Mexico. Its an indirect subsidiary of  Grupo Mexico S.A.B. de C.V. and carry out most of its business which is mining activities in Peru through a registered branch office.

In 2005 it acquired the largest Mining company in Mexico as it acquired  Minera Mexico.

Market Cap37.162B
PE Ratio (TTM)10.88
Dividend & Yield5.00 (10.40%)
52 Week Range44.70 – 79.32
Profit Margin30.61%
Total Cash (mrq)3.25B
Quarterly Revenue Growth (yoy)9.10%
HeadquarterPhoenix, AZ 85014 United States

5. Altria Group Inc (MO)

Business Overview: It’s the world’s largest manufacturer and producer of cigarettes and tobacco-related products.

The company has spread its tobacco products worldwide and is a global company that has been able to grow well in the last few years.

The company’s management has a strong vision of business and could lead the way for diversification and expansion in future.

Market Cap78.017B
PE Ratio (TTM)26.12
Dividend & Yield3.60 (8.35%)
52 Week Range41.00 – 57.05
Profit Margin14.30%
Total Cash (mrq)5.35B
Quarterly Revenue Growth (yoy)-1.30%
HeadquarterVirginia, United States of America

6. Artisan Partners Asset Management Inc (APAM)

Business Overview: It’s a company involved in the business of investing and provides a wide range of investment strategies to its clients.

The company is essentially a globally recognized investment firm and has been able to acquire clients domestically as well as internationally providing excellent investment strategies and helping the grow.

Market Cap2.523B
PE Ratio (TTM)7.80
Dividend & Yield3.86 (10.31%)
52 Week Range32.07 – 53.29
Profit Margin26.65%
Total Cash (mrq)203.04M
Quarterly Revenue Growth (yoy)-3.10%
HeadquarterWisconsin, United States of America

7. Pioneer Natural Resources Co (PXD)

Business Overview: Established in 1997, Pioneer Natural Resources is a company engaged in hydrocarbon exploration.

The company is involved in the business of energy services in a niche domain of exploring hydrocarbon which involves search for petroleum and related hydrocarbons for generation of energy.

Market Cap50.763B
PE Ratio (TTM)12.50
Dividend & Yield12.34 (5.88%)
52 Week Range137.54 – 288.46
Profit Margin20.03%
Total Cash (mrq)3.26B
Quarterly Revenue Growth (yoy)100.60%
HeadquarterTexas, United States of America

8. Franchise Group Inc (FRG)

Business Overview: The company is the owner of various retail brands like American Freight, Buddy’s Home Furnishings, The Vitamin Shoppe, Pet Supplies Plus, Sylvan Learning, and Badcock Home Furniture.

Established in 2019, the company is engaged in the business of managing franchises for its clients.

Market Cap1.327B
PE Ratio (TTM)5.99
Dividend & Yield2.50 (7.60%)
52 Week Range29.66 – 55.10
Profit Margin9.61%
Total Cash (mrq)149.6M
Quarterly Revenue Growth (yoy)82.70%
HeadquarterDelaware, OH 43015 United States

9. ONEOK Inc (OKE)

Business Overview: The company is one of the leading midstream service providers and owns one of the USA’s premier natural gas liquids systems, connecting NGL supply in the Rocky Mountain, Mid-Continent, and Permian regions. Founded in 1906 this company is involved in natural gas exploration.

Market Cap25.899B
PE Ratio (TTM)17.26
Dividend & Yield3.74 (6.45%)
52 Week Range48.51 – 75.07
Profit Margin8.01%
Total Cash (mrq)19.03M
Quarterly Revenue Growth (yoy)70.40%
HeadquarterOklahoma, United States of America

10. Devon Energy Corporation (DVN)

Business Overview: The company is one of the best independent oil and natural gas exploration and production companies, it focuses its oil exploration business mostly in the USA and tries to carry out its operation in an environmentally sustainable manner.

Founded in 1971 this company is involved in the energy business as its involved in hydrocarbon exploration.

Market Cap36.425B
PE Ratio (TTM)10.32
Dividend & Yield5.08 (9.20%)
52 Week Range24.46 – 79.40
Profit Margin24.03%
Total Cash (mrq)2.46B
Quarterly Revenue Growth (yoy)74.00%
HeadquarterOklahoma, United States of America

So these are the best dividend stocks for passive income one can look to invest in.

FREQUENTLY ASKED QUESTIONS (FAQs)

How Long Do I Need to Own a Stock to receive the Dividend? 

You need to be a shareholder of a dividend-paying stock till the record date of the announced dividend. It’s not a matter of how long but a matter of being a shareholder at the end of a record date to receive a dividend.

Bottomline

So did you enjoy reading about the best dividend stocks for passive income? We would like to express our gratitude to our readers who made time off their busy schedules to read our articles as we wrap up the article.

So we explained some of the fundamentals of dividends paid by companies and then moved to the list of some of the highest dividend-paying companies on the USA stock exchange.

We hope you gained key insights by spending your precious time on this article and will help invest in the best dividend stocks for passive income by investing in the recommended list of dividend stocks.

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