$100,000 in HP and Paychex Could Pay Over $4,000 a Year in Dividends
Selling shares during a market downturn locks in losses permanently, but two overlooked dividend stocks offer a way to fund retirement expenses without ever touching your principal.
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When you’re close to retirement or already retired, a portfolio’s main job is to pay the bills. Growth still counts, but monthly expenses keep coming even when markets fall. If you have to sell shares during a downturn to cover them, those losses become permanent. Dividend income avoids that problem because the cash arrives on schedule whether the stock rose or fell that week.
Putting $100,000 into two dividend stocks, $50,000 in each, would produce more than $4,000 a year in passive income at current prices. Here’s what a $50,000 stake in each would pay, why each yield sits where it does, and how well earnings and cash flow cover each payout. Yields use the forward annualized dividend and the latest closing prices of $115.49 for Paychex (NASDAQ:PAYX | PAYX Price Prediction) and $28.43 for HP (NYSE:HPQ).
Paychex’s 4.12% Yield Rides on Tight Coverage
- Stock #2: Paychex
- Forward Yield: 4.12%
- Shares for $50,000: 432.94
- Annual Passive Income: ~$2,060.78
Paychex handles payroll, HR, benefits, and insurance for about 840,000 customers, mostly small and mid-sized businesses, and pays 1 in 11 U.S. private sector workers. Management Solutions brings in 74% of revenue, and PEO and Insurance Solutions brings in 22%. Clients pay fees every pay cycle, so revenue works much like a subscription. Management guides to an adjusted operating margin of about 44% for fiscal 2027.
The yield is high for a software company because the business needs little capital, so most of its earnings go back to shareholders. In fiscal 2026, Paychex returned $2.2 billion: $1.6 billion in dividends and $611 million in buybacks. The quarterly dividend is now $1.19. That works out to $4.76 a year, up from the $4.43 paid during fiscal 2026.
Coverage is tight. The forward dividend uses about 86% of fiscal 2026 adjusted EPS of $5.51. Guidance calls for adjusted EPS growth of 7% to 9% in fiscal 2027, and first-quarter adjusted EPS of $1.34 beat expectations. Debt rose after about $5 billion in borrowing to finance the Paycor acquisition, and lower interest rates would reduce what Paychex earns on client funds. The Oct. 26 ex-dividend date has passed, so a buyer today would miss the current payment.
HP’s Low Valuation Drives a 4.22% Yield
- Stock #1: HP
- Forward Yield: 4.22%
- Shares for $50,000: 1,758.71
- Annual Passive Income: ~$2,110.45
HP sells PCs, workstations, printers, and supplies in more than 180 countries. Personal Systems revenue rose 18% year over year to $11.77 billion in fiscal Q3, driven by AI PCs and more premium commercial sales. Printing revenue is shrinking, but its operating margin expanded to 18.1% from 17.0%.
HP’s yield comes from its low valuation. The stock trades at a forward P/E of 9 because investors are pricing in rising memory costs, tariff exposure, declining printing sales, and a leadership change under interim CEO Bruce Broussard.
The $1.20 annual dividend uses about 38% of the low end of fiscal 2026 non-GAAP EPS guidance of $3.19 to $3.29. In Q3, the $274 million dividend payout was about 17% of $1.57 billion in free cash flow. HP has raised its quarterly dividend from $0.2756 to $0.2894 and then to $0.30. The weak spot is the balance sheet, which showed a -$92 million stockholders’ deficit in Q3. Buybacks continued during the quarter, totaling $300 million.
Two Stocks, $100,000, One Income Stream
| Name | Yield | Annual Dividend Income |
|---|---|---|
| Paychex | 4.12% | $2,060.78 |
| HP | 4.22% | $2,110.45 |
| Total | 4.17% | $4,171.23 |
Steady Checks for the Retirement Years
These 2 positions generate $4,171.23 in annual passive income on a $100,000 investment, a combined yield of 4.17%. HP adds $2,110.45, and Paychex rounds out the pair with $2,060.78.
Quarterly payments from two companies give a retiree a predictable income stream that doesn’t depend on selling shares (the same income-first logic we walk through when building a dividend ladder you never have to touch, here). You can cut or move one position without disturbing the others, so the portfolio stays flexible as spending needs change. For HP, the next dividend declaration and fiscal 2026 results will show whether the payout continues to grow. For Paychex, the key number is earnings growth against its high payout ratio.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
