Investing

6 Dividend Aristocrats to Buy for Reliable Passive Income

Lee Jackson

Published: April 16, 2024 8:05 am

Last Updated: April 19, 2024 7:53 am

Investors love dividend stocks because they provide dependable income and a great opportunity for solid total return. Total return includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or portfolio consists of income and stock appreciation.

For example, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13%. That is, 10% for the increase in stock price and 3% for the dividends paid.

Often, when investors look for defensive companies paying big dividends, they are drawn to the Dividend Aristocrats, and with good reason. The 67 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. Passive income is a steady stream of unearned income that doesn’t require active traditional work. Ideas for earning passive income include investments, real estate, and side hustles. Six top stocks drew our attention, and all are buy-rated by top Wall Street firms.

Consolidated Edison

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This old-school utility stock offers income investors the stability and track record many seek now and a solid 3.55% dividend. Consolidated Edison Inc. (NYSE: ED), through its subsidiaries, engages in the regulated electric, gas, and steam delivery businesses in the United States.

It offers electric services to approximately:

• 3.6 million customers in New York City and Westchester County
• Gas to about 1.1 million customers in Manhattan, the Bronx, parts of Queens, and Westchester County
• Steam to approximately 1,530 customers in parts of Manhattan

The company also supplies electricity to approximately 0.3 million customers in southeastern New York and northern New Jersey and gas to about 0.1 million customers in southeastern New York.

In addition, it operates:

• 543 circuit miles of transmission lines
• 15 transmission substations
• 63 distribution substations
• 87,951 in-service line transformers
• 3,869 pole miles of overhead distribution lines
• 2,320 miles of underground distribution lines
• 4,359 miles of mains
• 377,741 service lines for natural gas distribution

Consolidated Edison owns, develops, and operates renewable and energy infrastructure projects, provides energy-related products and services to wholesale and retail customers, and invests in electric and gas transmission projects.

Exxon Mobil

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This mega-cap integrated energy giant is always a solid idea for passive income investors and pays a strong 3.14% dividend. Exxon Mobil Corp. (NYSE: XOM) explores and produces crude oil and natural gas in the United States and internationally.

It operates through four business silos:

• Upstream
• Energy Products
• Chemical Products
• Specialty Products 

The Upstream segment explores and produces crude oil and natural gas.

The Energy Products segment offers fuels, aromatics, catalysts, and licensing services.

Its products are sold under these brands:

• Exxon
• Esso
• Mobil 

The Chemical Products segment manufactures and markets petrochemicals, including olefins, polyolefins, and intermediates.

The Specialty Products segment offers performance products, including lubricants, basestocks, waxes, synthetics, elastomers, and resins.

The company also manufactures, trades, transports, and sells crude oil, natural gas, petroleum products, petrochemicals, and other specialty products and pursues lower-emission business opportunities, including carbon capture and storage, hydrogen, lower-emission fuels, and lithium.

In a staggering deal announced last fall, Exxon Mobil is purchasing oil shale giant Pioneer Natural Resources Co. (NYSE: PXD) for $59.5 billion in an all-stock purchase. The deal will create the largest U.S. oilfield producer and guarantee a decade of low-cost production. The deal is expected to close in this quarter.

Franklin Resources

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This company is a mutual fund powerhouse that pays a safe and secure 4.53% 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 US, an advantage given the maturing U.S. market.

Franklin Resources offers its products and services under the brands of:

• 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.

Kenvue

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Kenvue is the proprietor of well-known brands such as Aveeno, Band-Aid, Benadryl, Zyrtec, Johnson’s, Listerine, Mylanta, Neutrogena, Tylenol, and Visine.

Spun off from Johnson & Johnson Inc. (NYSE: JNJ) last year, this potential total return home run pays a solid 4% dividend. Kenvue Inc. (NYSE: KVUE) is a global consumer health company.

The company operates through three segments:

• Self Care
• Skin Health and Beauty
• Essential Health

The self-care segment offers cough, cold, and allergy pain care, digestive health, smoking cessation, and other products under:

• Tylenol,
• Nicorette
• Zyrtec brands.

The Skin Health and Beauty segment provides face and body care, hair care, sun care, and other products under:

• Neutrogena
• Aveeno
• OGX brand names.

The Essential Health segment offers oral and baby, women’s health, and wound care products under:

• Listerine
• Johnson’s
• Band-Aid
• Stayfree brands

Realty Income

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This is another ideal stock for growth and income investors looking for a safer contrarian idea for 2024 that pays a whopping 5.23% 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 6,500 real estate properties owned under long-term lease agreements with commercial tenants.

The company has declared 640 consecutive common stock monthly dividends throughout its 54-year operating history and increased the dividend 122 times since Realty Income’s public listing in 1994. It is a top real estate member of the S&P 500 Dividend Aristocrats index.

PepsiCo

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This top consumer staples company will supply the goods for spring break and summer picnics and pays a solid 2.97% dividend. PepsiCo Inc. (NYSE: PEP) is a worldwide food and beverage company.

Its Frito-Lay North America segment offers

• Lays and Ruffles potato chips
• Doritos, Tostitos, and Santitas tortilla chips
• Cheetos cheese-flavored snacks, branded dips
• Fritos corn chips

The company’s Quaker Foods North America segment provides:

• Quaker oatmeal
• Grits
• Rice cakes
• Natural granola and oat squares
• Pearl Milling mixes and syrups
• Quaker Chewy granola bars
• Cap’n Crunch cereal
• Life cereal
• Rice-A-Roni side dishes

PepsiCo’s North America Beverages segment offers beverage concentrates, fountain syrups, and finished goods under these brands:

• Pepsi
• Gatorade
• Mountain Dew
• Diet Pepsi
• Aquafina
• Diet Mountain Dew
• Tropicana Pure Premium
• Sierra Mist
• Mug brands

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