Investing

Baby Boomers Hit the Passive Income Lottery With 5 Blue-Chip Dividend Stocks

Lee Jackson

Published: November 22, 2024 8:44 am

Key Points

• It’s likely the Federal Reserve will lower interest rates by another 25 basis points in December.
• Job growth should resume in November after hurricanes and strikes hit results in October.
• Dependable income stocks are part of a solid asset allocation plan financial advisors can provide. Help finding one is a click away.

The more passive income can help cover costly and rising costs like mortgage, insurance, taxes, and other expenses, the easier it is for investors to put away money for future needs and as a positive supplement to Social Security and pension income distributions.

According to the Internal Revenue Service (IRS), passive income generally includes earnings from rental activity or any trade, business, or investment in which the individual does not materially participate.

While getting to retirement age can be a blessing and a curse, the reality of counting on the U.S. government to provide for your needs is not the best idea. The full retirement age is 66 if you were born from 1943 to 1954. The full retirement age increases gradually if you were born from 1955 to 1960 until it reaches 67; for anyone born in 1960 or later, full retirement benefits are payable at age 67.

With the youngest baby boomers (Americans born between 1946 and 1964) approaching retirement age, it is becoming increasingly important to focus on magnificent dividend stocks that will supply significant passive income either in or out of designated retirement accounts like IRAs. We found five perfect blue-chip stocks, all rated Buy by top Wall Street firms, that can help baby boomers win the passive income lottery.

Why do we cover dividend stocks?

Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contributed 68%. Therefore, sustainable dividend income and capital appreciation potential are essential for total return expectations.

Dominion Energy

Many of the Wall Street firms we cover are still very positive on utilities, and this company pays a strong 4.50% dividend. Dominion Energy Inc. (NYSE: D) operates through four segments:

• Dominion Energy Virginia
• Gas Distribution
• Dominion Energy South Carolina
• Contracted Assets

The Dominion Energy Virginia segment generates, transmits, and distributes regulated electricity to residential, commercial, industrial, and governmental customers in Virginia and North Carolina.

The Gas Distribution segment engages in:

• Regulated natural gas gathering
• Transportation
• Distribution and sales activities
• Distributes nonregulated renewable natural gas

This segment serves residential, commercial, and industrial customers.

The Dominion Energy South Carolina segment generates, transmits, and distributes electricity and natural gas to residential, commercial, and industrial customers in South Carolina.

The company’s portfolio of assets included approximately:

• 30.2 gigawatts of electric generating capacity
• 10,500 miles of electric transmission lines
• 85,600 miles of electric distribution lines
• 94,200 miles of gas distribution lines
• Dominion serves approximately 7 million customers

Dow

This company was spun out from DuPont in 2019 and offers investors growth and income potential with a huge and dependable 5.67% dividend. Dow Inc. (NYSE: DOW) is a leading materials science company formed by the merger of Dow and DuPont in 2017 and subsequent spin-off in 2019.

The company is organized into three principal divisions:

• Performance Materials & Coatings
• Industrial Intermediates & Infrastructure
• Packaging & Specialty Plastics

The company’s segments include Agricultural Sciences, which provides crop protection, seed/plant biotechnology products and technologies, urban pest management solutions, and healthy oils.

Consumer Solutions, which consists of:

• Consumer Care
• Dow Automotive Systems
• Dow Electronic Materials
• Consumer Solutions-Silicones businesses

Infrastructure Solutions, which consists of:

• Dow Building & Construction
• Dow Coating Materials
• Energy & Water Solutions
• Performance Monomers and Infrastructure Solutions-Silicones businesses
• Performance Materials & Chemicals, which consists of Chlor-Alkali and Vinyl, Industrial Solutions and Polyurethanes businesses

Performance Plastics, which consists of:

• Dow Elastomers,
• Dow Electrical and Telecommunications,
• Dow Packaging and Specialty Plastics
• Energy and Hydrocarbons business

Exxon Mobil

The recent decline in oil prices offers investors an excellent entry point, and they will gladly grab a strong 3.25% dividend. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company, exploring for and producing crude oil and natural gas in:

• The United States
• Canada
• South America
• Europe
• Africa
• Asia
• Australia/Oceania

Exxon Mobil also manufactures and markets commodity petrochemicals, including:

• Olefins
• Aromatics
• Polyethylene and polypropylene plastics and specialty products

Exxon Mobil also transports and sells crude oil, natural gas, and petroleum products.

Top Wall Street analysts expect ExxonMobil to remain a key beneficiary in a higher oil price environment, and most remain optimistic about the company’s sharp positive inflection in capital allocation strategy, upstream portfolio, and leverage to further demand recovery. ExxonMobil also offers greater Downstream/Chemicals exposure than its peers.

In May, Exxon Mobil completed its purchase of oil shale giant Pioneer Natural Resources Company in an all-stock transaction worth $59.5 billion. The deal created the largest U.S. Oil field producer and guaranteed a decade of low-cost production. In addition, the company posted very solid third-quarter results and raised the dividend by 4%.

Pfizer

This top pharmaceutical stock was a massive winner in the COVID-19 vaccine sweepstakes but has been beaten down over the last few years as many are not getting boosters. Pfizer Inc. (NYSE: PFE) discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide and pays a hefty 5.90% dividend, which has risen yearly for the last 14 years.

The company offers medicines and vaccines in various therapeutic areas, including:

• Cardiovascular metabolic and women’s health under the Premarin family and Eliquis brands
• Biologics, small molecules, immunotherapies, and biosimilars under the Ibrance, Xtandi, Sutent, Inlyta, Retacrit, Lorbrena, and Braftovi brands
• Sterile injectable and anti-infective medicines and oral COVID-19 treatment under the Sulperazon, Medrol, Zavicefta, Zithromax, Vfend, Panzyga, and Paxlovid brands.

Pfizer also provides medicines and vaccines in various therapeutic areas, such as:

• Pneumococcal disease, meningococcal disease, tick-borne encephalitis
• COVID-19 under the Comirnaty/BNT162b2, Nimenrix, FSME/IMMUN-TicoVac, Trumenba, and the Prevnar family brands
• Biosimilars for chronic immune and inflammatory diseases under the Xeljanz, Enbrel, Inflectra, Eucrisa/Staquis, and Cibinqo brands
• Amyloidosis, hemophilia, and endocrine diseases under the Vyndaqel/Vyndamax, BeneFIX, and Genotropin brands

Trading not far from its lowest split-adjusted level in 13 years, the stock is an incredible bargain at current levels and pays a massive dividend.

The pharmaceutical giant reported substantial third-quarter 2024 revenues of $17.7 billion, representing 32% year-over-year operational growth that beat Wall Street’s estimates. Earlier this year, the company raised full-year 2024 revenue guidance to $59.5 to $62.5 billion and lifted adjusted diluted EPS guidance to $2.45 to $2.65. Patient investors will receive one of the highest blue-chip dividends, and shares trade at a reasonable 9.88 times estimated 2025 earnings.

Verizon

This top telecommunications company offers tremendous value, trading at 8.75 times estimated 2025 earnings and paying investors a strong 6.43% dividend. Verizon Communications Inc. (NYSE: VZ) provides communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide.

It operates in two segments:

• Verizon Consumer Group
• Verizon Business Group

The Consumer segment provides wireless services across the wireless networks in the United States under the Verizon and TracFone brands and through wholesale and other arrangements.

It also provides fixed wireless access (FWA) broadband through its wireless networks and related equipment and devices, such as:

• Smartphones
• Tablets
• Smartwatches and other wireless-enabled connected devices

The segment also offers wireline services in the northeastern and mid-Atlantic United States, including the District of Columbia, through its fiber-optic network, Verizon Fios product portfolio, and a copper-based network.

The Business segment provides wireless and wireline communications services and products, including:

• FWA broadband
• Data
• Video and conferencing
• Corporate networking
• Security and managed network
• Local and long-distance voice

Network access services to deliver various IoT services and products to businesses, government customers, and wireless and wireline carriers in the United States and internationally.

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