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- Dividend stocks offer investors the opportunity to increase investment total return.
- Quality dividend shares also allow investors to build a passive income stream.
- Check out this free report: Access 2 legendary, high-yield dividend stocks Wall Street loves.
Dividend stocks, a trusted choice among investors, offer a secure income stream and a promising path for total return. Total return, a comprehensive measure of investment performance, includes interest, capital gains, dividends, and distributions realized over time.
Let’s take a closer look at the concept of total return. Imagine you purchase a stock at $20 that offers a 3% dividend. If the stock price rises to $22 within a year, your total return is 13%. This is calculated by adding the 10% increase in stock price to the 3% dividend.
As mentioned, quality dividend stocks help investors acquire companies that have paid and raised payouts to shareholders for years, which in turn helps increase the passive income stream those stocks can produce.
We screened our 24/7 Wall St. S&P 500 dividend stock database and found five under $40 dividend stocks to buy now that offer solid and dependable dividends and have outstanding upside potential. Five companies are outstanding to add to portfolios; all are rated Buy at top firms on Wall Street.
Why do we cover 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.
Baker Hughes
This oilfield services giant pays a solid 2.44% dividend and could jump higher with a surge in oil prices. Baker Hughes Co. (NYSE: BKR) provides a portfolio of technologies and services to energy and industrial value chains worldwide.
The company operates through:
- Oilfield Services & Equipment (OFSE) and
- Industrial & Energy Technology (IET) segments.
The OFSE segment designs and manufactures products and provides related services, including:
- Exploration
- Appraisal
- Development
- Production
- Rejuvenation
- Decommissioning for onshore and offshore oilfield operations
This segment also provides:
- Drilling services
- Drill bits
- Drilling and completions fluids
- Completions
- Intervention
- Measurements
- Pressure pumping
- Wireline services
- Artificial lift systems
- Oilfield and industrial chemicals
- Subsea projects and services
- Flexible pipe systems
- Surface pressure control systems
- Integrated well services and solutions
It serves oil and natural gas companies; the United States and international independent oil and natural gas companies; national or state-owned oil companies; engineering, procurement, and construction contractors; geothermal companies; and other oilfield service companies.
The IET segment provides gas technology equipment, including drivers, driven equipment, flow control, turnkey solutions for mechanical drive, compression, power-generation applications, and energy sectors, such as oil and gas, LNG operations, petrochemical, and carbon solutions.
This segment also provides rack-based vibration monitoring equipment and sensors, integrated asset performance management products, inspection services, pumps, valves, and gears, precision sensors and instrumentation, and condition monitoring solutions.
Exelon
This top utility stock may hit the jackpot serving data centers and pay investors a massive 4.0% dividend. Exelon Corp. (NASDAQ: EXC)is a utility services holding company that engages in the energy distribution and transmission businesses in the United States and Canada.
The company is involved in the purchase and regulated retail sale of electricity and natural gas, transmission and distribution of electricity, and distribution of natural gas to retail customers.
It also offers supportservices, including legal, human resources, information technology, supply management, financial, engineering, customer operations, transmission and distribution planning, asset management, system operations, and power procurement services.
It serves:
- Distribution utilities
- Municipalities
- Financial institutions
- Commercial, industrial, governmental, and residential customers
Exelon owns and operates Potomac Electric Power Company, or PEPCO, which serves the Washington, D.C., metropolitan area. Eight of the biggest data centers in the nation are located in this area. Data centers consume an enormous amount of electricity, and that demand is expected to increase exponentially over the next 20 years.
Kinder Morgan
This is one of the top energystocks and remains a favorite across Wall Street. It pays a dependable 6.29% dividend. Kinder Morgan Inc. (NYSE: KMI) is an energy infrastructure company in North America. The company operates through Natural Gas, Products, Terminals, and CO2 segments.
The Natural Gas Pipelines segment owns and operates:
- Interstate and intrastate natural gas pipeline and underground storage systems
- Natural gas gathering systems and natural gas processing and treating facilities
- Natural gas liquids fractionation facilities and transportation systems
- Liquefied natural gas liquefaction and storage facilities
The Products Pipelines segment owns and operates refined petroleum products, crude oil and condensate pipelines, associated product terminals, and petroleum OKEpipeline transmit facilities.
The Terminals segment owns and operates liquids and bulk terminals that store and handle various commodities, including:
- Gasoline
- Diesel fuel
- Chemicals
- Ethanol
- Metals
- Petroleum coke
- Owns tankers
Lastly, the CO2 segment produces, transports, and markets CO2 to recover and produce crude oil from mature oil fields and owns interests in/or operates oil fields and gasoline processing plants, as well as a natural oil pipeline system in West Texas. It holds and runs approximately 83,000 miles of pipelines and 144 terminals.
Kraft Heinz
Even in bad times,everybody has to eat, and this company always stands to benefit while paying a tremendous 4.47% dividend. Kraft Heinz Co. (NYSE: KHC) was formed via the merger of H.J. Heinz Company and Kraft Foods Group.
The company is a leading global food company with estimated annual revenues of $25 billion from well-known brands such as Kraft, Heinz, Oscar Meyer, and Maxwell House.
Kraft Heinz is North America’s third-largest food and beverage manufacturer, and it derives 76% of its revenues from that market and 24% from International.
The Company’s additional brands include:
- ABC
- Capri Sun
- Classico
- Jell-O
- Kool-Aid
- Lunchables
- Ore-Ida
- Oscar Mayer
- Philadelphia
- Planters
- Plasmon
- Quero
- Weight Watchers
- Smart Ones
- Velveeta
Six Dividend Kings to Buy in July That Deliver Huge Passive Income
Truist Financial
This company was created through a merger of SunTrust Bank and BB&T in 2019, and it also has much of its business in the fast-growing south and southeast and pays a big 5.55% dividend. Truist Financial Corp. (NYSE: TFC) is a financial services company that provides banking and trust services in the Southeastern and Mid-Atlantic United States.
The company operates through three segments:
- Consumer Banking and Wealth
- Corporate and Commercial Banking
- Insurance Holdings
Its deposit products include noninterest-bearing checking, interest-bearing checking, savings, money market deposit accounts, certificates of deposit, and individual retirement accounts.
The company also provides:
- Funding
- Asset management
- Automobile lending
- Credit card lending
- Consumer finance
- Home equity and mortgage lending
- Direct retail lending
- Insurance
- Investment brokerage
- Mobile/online banking; payment solutions
- Point-of-sale lending
- Retail and small business deposit products
- Small business lending
- Wealth management/private banking services
In addition, it offers asset-based lending, investment banking and capital market, institutional trust, insurance premium finance, derivatives, commercial lending, international banking, leasing, merchant, commercial deposit and treasury, floor plan, mortgage warehouse lending, real estate lending, and supply chain financing services.
Further, the company provides insurance brokerage, retail and wholesale brokerage, securities underwriting and market making, loan syndication, and investment management and advisory services.
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