Top 3 High-Dividend Stocks for Earning Passive Income
These three high-yield names can secure dividend payouts for investors looking to achieve passive income.
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Passive income stocks help you build rising income for retirement and/or financial freedom. Passive income stocks are meant to be purchased once and never sold.
The beauty of earning passive income is that it allows investors to generate income for doing almost nothing.
The following three passive income stocks have high yields above 5%, and secure dividend payouts.
1. Realty Income (O)
Realty Income O was founded in 1969. It is a retail-focused REIT that has become famous for its successful dividend growth history and monthly dividend payments, even labeling itself “The Monthly Dividend Company.”
The trust employs a highly-scalable business model that has enabled it to grow into a massive landlord of more than 15,000 properties.
It owns retail properties that are not part of a wider retail development (such as a mall) but instead are standalone properties. This means the properties are viable for many tenants, including government, healthcare and entertainment services.
Realty Income recently reported fourth-quarter and full-year 2024 financial results. Revenue increased 24% for the quarter, and 29% for the full year, due to new properties and rental increases at existing properties. For the fourth quarter, adjusted funds from operations per share increased 4.0% to $1.05 per share. For 2024, AFFO increased 4.8% to $4.19 per share, compared to the prior year.
The REIT ended 2024 with a portfolio occupancy rate of 98.7%.
Realty Income generates its growth through growing rents at existing locations, via contracted rent increases or by leasing properties to new tenants at higher rates, but also by acquiring new properties. Realty Income expects to increase its investments in international markets moving forward.
It made a first deal in the UK in 2019 and plans to do more such deals in the future when it finds attractive targets. These acquisitions will help drive profits in the long run.
Realty Income has increased its dividend for 27 consecutive years, making it a Dividend Aristocrat. Shares are currently yielding 5.6%.
2. Pfizer Inc. (PFE)
Pfizer Inc. PFE is a global pharmaceutical company focusing on prescription drugs and vaccines. Its top products are Eliquis, the Prevnar family, Comirnaty, the Vyndaqel family, Ibrance and Xtandi. Pfizer had revenue of $63.6 billion in 2024.
Pfizer reported solid Q4 2024 results on February 4, 2025. Company-wide revenue grew 21% operationally and adjusted diluted earnings per share climbed to $0.63 versus $0.10 on a year-over-year basis because of stabilizing COVID-19 related sales, growing revenue from the existing portfolio and lower expenses.
Global Biopharmaceuticals sales gained 22% led by gains in Primary Care (+27%), Specialty Care (+12%) and Oncology (+27%). New launches, Octagam, Padcev, Adcetris, Tukysa and Tivdak are growing rapidly. For 2025, Pfizer set revenue guidance at $61.0 billion to $64.0 billion and adjusted diluted EPS guidance at $2.80 to $2.90.
Future growth will come from increasing sales for approved indications, extensions, R&D, bolt-on acquisitions and margin expansion. Pfizer has a strong pipeline in oncology, inflammation and immunology, internal medicine and vaccines and recently revamped its R&D leadership.
However, loss of exclusivity (LOE) in Eliquis, Ibrance and other drugs will cause a headwind between 2025 and 2028.
Pfizer is one of the largest pharmaceutical companies in the world. As such, it has scale in R&D, manufacturing, regulatory affairs, distribution and marketing around the world.
This gives Pfizer the ability to bring new therapies to market, partner with smaller companies or acquire entire companies outright. The current pipeline is robust, and some will likely be blockbuster drugs even after attrition.
With a 2025 dividend payout ratio of 59%, Pfizer’s dividend is secure. PFE shares currently yield 6.6%.
3. BP plc (BP)
BP BP is one of the largest oil and gas corporations in the world, based in the U.K. It is a fully-integrated company and operates in two segments: upstream and downstream (mostly refining).
In mid-February, BP reported financial results for the fourth quarter of fiscal 2024. Refining margins contracted sharply off abnormally high levels in the prior year’s quarter, as the tailwind from the Ukrainian crisis faded. In addition, results were hurt by significant turnaround activity. Fourth-quarter average refining margin stood at $13.1 per barrel, down from last year's $18.5 per barrel.
As a result, earnings-per-share declined by 59%, from $1.07 to $0.44, and missed the analysts’ consensus by $0.01. BP has beaten the analysts’ consensus in 11 of the last 16 quarters and has reduced its debt in 16 of the last 19 quarters. BP has stated that its dividend is sustainable even at a Brent price of $40. BP has greatly improved its portfolio in recent years via the addition of low-cost reserves.
In 2024, BP delivered operating cash flow of $27.3 billion. The company plans to increase cash flow in part, through cost reductions. The company announced a new target to deliver at least $2 billion of savings by the end of 2026 relative to 2023.
BP is very shareholder-friendly. Last year, BP raised the dividend per ordinary share by 10% and delivered $7 billion of share buybacks. The dividend is clearly a top priority for BP’s management team.
While BP did cut its dividend by 50% in 2020 during the coronavirus pandemic, the 2020 reduction was warranted due to the debt load of BP and drastically reduced demand for oil and gas.
We view the current dividend as fairly safe, particularly given the drastic reduction of debt in the last four years. With a 2025 expected dividend payout ratio of approximately 60%, the dividend payout is sufficiently covered by earnings.
At the time of publication, Ciura had no positions in any securities mentioned.