If you’re concerned about having enough passive income after retirement, there are many options. Buying real estate to rent out is a popular option, but these rental properties will generate losses if you are unable to maintain them and find tenants who can pay their bills.
If you’re interested in truly passive income, consider these dividend paying stocks. They offer such high yields that you only need to split $11,930 between them to get $1,000 in annual dividend income in 2024.
Buying these stocks seems like a good deal that could continue to get better. These companies have a history of increasing their payouts, so you’re likely to receive much more than $1,000 per year once you’re ready to retire.
AT&T
Actions of AT&T (NYSE:T) offering investors a hefty dividend yield of 6.7% at recent prices. At this level, $5,004 is enough to get just over $333 in annual dividends from the telecommunications giant.
Landline subscriptions are down sharply, but America’s need for telecommunications services has been growing steadily. Data-intensive artificial intelligence (AI) applications and 5G-enabled mobile devices are driving AT&T’s growth at a rapid pace.
In the third quarter, mobility services revenue increased 3.7% year-over-year and the segment’s operating profit was better than ever. AT&T’s real growth engine these days is consumer broadband. Revenue in this segment increased 9.8% year over year in the third quarter, driven by 296,000 new AT&T Fiber subscriptions.
The third quarter of 2023 was the 15th in a row with more than 200,000 new AT&T Fiber subscribers, and its consumer broadband service sales will likely grow even more in 2024. AT&T Fiber is currently able to serve approximately 24 million retail locations and of businesses, and it’s keeping pace. to reach more than 30 million by the end of 2025. The company also launched a residential fixed wireless service already available in around 30 locations.
AT&T generated a whopping $19.8 billion in free movement of capital over the past year and only needed 41% of that to meet its dividend commitment. This leaves plenty of room to increase payouts based on profit growth in coming years.
PennantPark Capital Variable Rate
Since Great Recession, large US banks subject to stricter regulations are reluctant to lend to mid-sized companies. As a result, companies with $10 million to $1 billion in annual revenue are typically starved of capital and willing to pay business development companies (BDC) as PennantPark Capital Variable Rate (NYSE:PFLT) above-average interest rates.
As the name suggests, PennantPark Floating Rate Capital is a lender that almost always lends at variable interest rates. This can make it difficult for borrowers to repay their debts if rates rise too quickly, but with careful underwriting, variable rate debt can also generate very reliable cash flow.
At recent prices, PennantPark Floating Rate Capital offers investors a whopping 10.3% dividend yield and distributes payouts every month. At recent prices, $3,250 is enough to get you $333 in annual dividends from this stock in 2024.
PennantPark Floating Rate Capital increased its dividend payout by 7.9% in 2023, and further increases may be on the way. At the end of September, only three borrowers in BDC’s portfolio of 131 companies were in non-accrual status. With the variable interest rates they pay likely to fall significantly in 2024, cash flows should be relatively predictable for at least the next few years.
Altria Group
Actions of Altria Group (NYSE:MO) offer a juicy 9.2% dividend yield, so all it takes to get $333 in annual dividend income from the stock at recent prices is about $3,680. Sales of combustible cigarettes have been in decline for decades, but this company’s ability to raise the price of the leading Marlboro brand in the United States should allow it to continue a very long history of consecutive annual payout increases.
In the third quarter, Altria estimated an 8% year-over-year decline in domestic cigarette volume. Thanks to higher sales of non-combustible products, Marlboro price increases and share buybacks, adjusted earnings per share in the first nine months of 2023 increased 3.3% year over year.
Last August, the Altria group increased its dividend for the 58th time in 54 years. The company generated $8.5 billion in free movement of capital over the past year, but only needed $6.7 billion to meet its dividend commitment.
Having additional cash flow to pay down debt and acquire new sources of growth, such as NJOY, the only e-vapor maker with marketing approvals from the U.S. Food and Drug Administration (FDA) For a pod-based e-vapor product, investors can reasonably expect this stock to continue its 54-year streak for at least another decade.
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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the securities mentioned. The Motley Fool has a disclosure policy.
Do you want to earn $1,000 in annual dividend income in 2024? Invest $11,930 in these unstoppable, high-yielding dividend stocks was originally published by The Motley Fool
