Want Passive Income? Try These 3 Dividend Stocks

The economy has experienced a slowdown for two consecutive quarters this year amid the rising interest rate environment. While the decline in inflation in July from the multi-decade high level provides investors some relief, the 8.5% CPI level is still uncomfortable for policymakers. Elevated inflation and a red-hot job market could push the Fed to maintain its hawkish policy stance. So, the market is expected to remain volatile.

Given this backdrop, dividend stocks have been gaining popularity among investors as they offer a steady passive income stream. Investors’ interest in dividend stocks is evident in the iShares Core High Dividend ETF’s (HDV) 6.5% returns over the past year.

Therefore, investors looking to generate passive income could consider adding stocks AbbVie Inc. (ABBV), Emerson Electric Co. (EMR), and Becton, Dickinson and Company (BDX) to their portfolios. These stocks have consistently increased their dividends for several years.

AbbVie Inc. (ABBV)

ABBV is engaged in developing, manufacturing, and selling pharmaceuticals globally. It offers its products in various categories: immunology, oncology, neuroscience, eye care, and women's healthcare. The company markets its products to wholesalers, distributors, government agencies, health care facilities, and independent retailers.

ABBV’s four-year average dividend yield is 4.63%, and its current dividend translates to a 4% yield. Its dividends have grown at a 9.9% CAGR in the past three years and a 17.5% CAGR in the past five years. The company has increased its dividend for eight consecutive years.

On July 26, 2022, the European Commission approved the company’s RINVOQ (upadacitinib) for treating adults with moderate to severe ulcerative colitis who have had an inadequate response and lost response or were intolerant to either conventional therapy or a biologic agent. This approval should strengthen ABBV’s ability to treat patients with ulcerative colitis.

ABBV’s net revenues increased 4.5% year-over-year to $14.58 billion in the second quarter ended June 30, 2022. The company’s non-GAAP net earnings increased 10.7% from the year-ago value to $6 billion, while its adjusted EPS rose 11.2% from the prior-year quarter to $3.37.

Analysts expect ABBV’s EPS and revenue to increase 8.1% and 4.5% year-over-year to $3.60 and $14.99 billion, respectively, in the third quarter ending September 30, 2022. It surpassed the Street EPS estimates in each of the trailing four quarters. ABBV has gained 22.7% over the past year to close the last trading session at $140.94.

ABBV’s strong fundamentals are reflected in its POWR Ratings. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

It also has an A grade for Quality and a B for Growth and Value. Also, it is ranked #9 of 172 stocks in the Medical - Pharmaceuticals industry. To see additional POWR Ratings for Momentum, Stability, and Sentiment for ABBV, click here.

Emerson Electric Co. (EMR)

EMR manufactures and sells technology and engineering products worldwide for industrial, commercial, and consumer markets. The company operates through Automation Solutions and Commercial & Residential Solutions segments.

On July 27, 2022, EMR’s subsidiary Aspen Technology, Inc. (AZPN) announced the acquisition of Micromine, an end-to-end mining software provider. This acquisition will diversify AZPN’s footprint into the metals and mining market through end-to-end software providers and accelerate EMR’s long-term growth prospects.

On August 2, 2022, the company’s Board of Directors declared a quarterly cash dividend of $0.51 per share of common stock payable on September 9, 2022.

EMR has increased dividends for 25 consecutive years. Its dividend payouts have grown at a 1.67% CAGR in the past three years and a 1.42% CAGR in the five years. Its current dividend translates to a 2.35% yield, while its four-year average yield is 2.68%.

During the fiscal third quarter ended June 30, 2022, EMR’s net sales increased 6.5% year-over-year to $5 billion. Its EBIT increased 52.4% year-over-year to $1.19 billion. The company’s net earnings grew 46.9% from the year-ago value to $921 million, while its adjusted EPS grew 16% from the prior-year quarter to $1.38. Also, its adjusted EBITA rose 21.3% year-over-year to $1.14 billion.

Analysts expect EMR’s revenue for the fourth quarter ending September 30, 2022, to increase 9.3% year-over-year to $5.41 billion. Street expects its EPS to increase 17.4% year-over-year to $1.42 in the ongoing quarter. It surpassed the EPS estimates in each of the trailing four quarters. The stock has gained 8.5% over the past month to close the last trading session at $87.03.

EMR’s POWR Ratings reflect solid prospects. According to our proprietary rating system, it has an overall rating of B, translating to a Buy.

It has a B grade for Sentiment and Quality. The stock is ranked #14 out of 91 in the Industrial - Equipment industry. Click here to see the other ratings of EMR for Growth, Value, Momentum, and Stability.

Becton, Dickinson and Company (BDX)

BDX is engaged in developing, manufacturing, and selling a range of medical supplies, devices, laboratory equipment, and diagnostic products. The company operates through three business segments: BD Medical, BD Life Sciences, and BD Interventional.

BDX’s four-year average dividend yield is 1.28%, and its forward annual dividend of $3.48 translates to a 1.35% yield. Its dividends have grown at 4.2% and 4% CAGRs over the past three and five years, respectively. BDX has increased dividends for 49 consecutive years.

On August 09, 2022, BDX collaborated with Laboratory Corp. of America Holdings (LH), a leading global life sciences company, to develop flow cytometry-based companion diagnostics for matching patients with treatments.

LH’s chief scientific officer, Dr. Bill Hanlon, said, "Flow cytometry is a trusted and powerful tool for analyzing cells to better understand disease, and it has tremendous untapped potential as a companion diagnostic in oncology and other therapeutic areas." Analysts expect the combined capabilities of both companies to advance flow cytometry as an essential companion diagnostic modality for cancer and other diseases.

For the fiscal 2022 third quarter ended June 30, 2022, BDX’s revenues increased marginally year-over-year to $4.64 billion. The company’s operating income came in at $537 million, up 9.1% from the prior-year period, while its adjusted EPS rose 16.7% year-over-year to $2.66.

For the fourth quarter, ending September 30, 2022, BDX’s EPS is expected to increase 6.4% year-over-year to $2.75. Its revenue is expected to increase 3.2% year-over-year to $19.43 billion for fiscal 2023. BDX surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 11.1% to close the last trading session at $258.56.

BDX’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. It has a B grade for Growth, Stability, and Sentiment.

Within the Medical - Devices & Equipment industry, it is ranked #25 out of 145 stocks. Click here to see the other ratings of BDX for Value, Momentum, and Quality.

ABBV shares were trading at $141.01 per share on Thursday morning, up $0.07 (+0.05%). Year-to-date, ABBV has gained 7.11%, versus a -10.00% rise in the benchmark S&P 500 index during the same period.

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.

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