24/7 Insights

• Passive income stocks likely will get a big boost when interest rates start to come down.
• The Dividend Aristocrats are safe and dependable stocks to buy and hold.
• Access 2 legendary, high-yield dividend stocks Wall Street loves.

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.

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.

Investors looking for defensive companies paying big dividends are drawn to the Dividend Aristocrats, and with good reason. The 66 companies that made the cut for the 2024 S&P 500 Dividend Aristocrats list have increased dividends (not just remained the same) for 25 years straight. But the requirements go even further, with the following attributes also mandatory for membership on the Dividend Aristocrats list:

• Companies must be worth at least $3 billion each quarterly rebalancing.
• Average daily volume of at least $5 million transactions for every trailing three-month period at every quarterly rebalancing date.
• Be a member of the S&P 500

We screened the 2024 Dividend Aristocrats looking for the companies Wall Street endorses for passive income investors. We found five that investors can buy now and hold forever. All are rated Buy at top Wall Street firms.

Amcor

This is a very off-the-radar idea, but it makes sense as it produces products that are always needed and pays a robust 5% dividend. Amcor PLC (NYSE: AMCR) manufactures and sells packaging products in Europe, North America, Latin America, Africa, and the Asia Pacific regions.

The company operates through two segments:

• Flexibles
• Rigid Packaging

The Flexibles segment provides flexible and film packaging products in food and beverage, medical and pharmaceutical, fresh produce, snack food, personal care, and other industries.

The Rigid Packaging segment offers rigid containers for a range of beverage and food products, including:

• Carbonated soft drinks
• Water
• Juices
• Sports drinks
• Milk-based beverages
• Spirits
• Beer
• Sauces
• Dressings
• Spreads
• Personal care items
• Plastic caps for various applications.

The company sells its products primarily through its direct sales force.

Chevron

This integrated giant is a safer way for investors looking to get positioned in the energy sector, and it comes with a rich 4.18% dividend. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide through its subsidiaries.

The company operates in two segments:

• Upstream
• Downstream

The Upstream segment is involved in the following:

• Exploration, development, production, and transportation of crude oil and natural gas;
• Processing, liquefaction, transportation, and regasification associated with liquefied natural gas
• Transportation of crude oil through pipelines
• Transportation, storage, and marketing of natural gas, as well as operating a gas-to-liquids plant

The Downstream segment engages in:

• Refining crude oil into petroleum product
• Marketing crude oil, refined products, and lubricants
• Manufacturing and marketing renewable fuels
• Transporting crude oil and advanced products by pipeline, marine vessel, motor equipment, and rail car
• Manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives

Chevron announced last fall that it has entered into a definitive agreement with Hess Corp. (NYSE: HES) to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron’s closing price on October 20, 2023. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The transaction’s total enterprise value, including debt, is $60 billion.

Three lawsuits have been filed against Hess, charging inadequate disclosure over the sale, and Chevron has said arbitration over Hess’ Guyana assets could delay the closing timeline until October 2025. However, most Wall Street analysts feel the deal ultimately will get done, and Chevron will emerge even more powerful in the energy sector.

Warren Buffett’s Berkshire Hathaway owns 6.7% of Chevron’s outstanding stock with 122,980,207 shares, and the energy giant makes up 5.1% of the portfolio. Each year the stock generates $776,734,888 in dividend income for Berkshire Hathaway. 

Franklin Resources

This company is a mutual fund powerhouse that pays a safe and secure 5.42% dividend. Franklin Resources Inc. (NYSE: BEN) is among the most prominent global money managers.

The firm markets mutual funds and institutional separate accounts under the Franklin, Templeton, and Mutual Series brands. At times, 50% of its sales are from outside the United States, an advantage given the maturing U.S. market.

Franklin Resources offers its products and services under these brands:

• Franklin
• Templeton
• Franklin Mutual Series
• Franklin Bissett
• Fiduciary Trust
• Darby
• Balanced Equity Management
• K2
• LibertyShares
• Edinburgh Partners

The 2023-2024 bull market has proven to be a solid tailwind for the company. While withdrawals from baby boomers may be a concern, the path forward looks solid.

IBM

The legacy blue chip tech giant pays a solid 3.95% dividend and offers conservative investors a safer way to play the sector. International Business Machines Corp. (NYSE: IBM) together with its subsidiaries, provides integrated solutions and services worldwide.

The company operates through four segments:

• Software
• Consulting
• Infrastructure
• Financing 

The Software segment offers a hybrid cloud and AI platforms that allows clients to realize their digital and AI transformations across the applications, data, and environments in which they operate.

The Consulting segment focuses on skills integration for strategy, experience, technology, and operations by domain and industry.

The Infrastructure segment provides on-premises and cloud-based server, and storage solutions, as well as life-cycle services for hybrid cloud infrastructure deployment.

The Financing segment offers client and commercial financing, facilitates IBM clients’ acquisition of hardware, software, and services.

The company has a strategic partnership to various companies including:

• Hyperscalers
• Service providers
• Global system integrators
• Software and hardware vendors such as Adobe, Amazon Web services, Microsoft, Oracle, Salesforce, Samsung Electronics and SAP

Jefferies Red-Hot Summer Top Stock Picks Include 5 Blue Chip Dividend Giants

Realty Income

This is an ideal stock for growth and income investors looking for a safer contrarian idea for the rest of 2024 that pays a whopping 5.78% dividend. Realty Income Corp. (NYSE: O) is an S&P 500 company that provides stockholders with dependable monthly income.

The company is structured as a REIT, and its monthly dividends are supported by the cash flow from over 15,540 real estate properties owned under long-term lease agreements with commercial tenants.

The company has declared 644 consecutive common stock monthly dividends throughout its 55-year operating history and increased the dividend 123 times since Realty Income’s public listing in 1994. It is a top real estate member of the S&P 500 Dividend Aristocrats index.

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