Generating Passive Income with Safe Dividend Stocks
Investing in the stock market can be riskier than other investment options, but some stocks are safer than others. When searching for safe stocks, it’s essential to consider the company’s industry, business model, and balance sheet. A company’s ability to withstand economic downturns and its potential for future earnings growth are also crucial factors.
Three Recession-Resistant Dividend Stocks
Coca-Cola (NYSE: KO), Clorox (NYSE: CLX), and Southern Company (NYSE: SO) are three dividend stocks with recession-resistant business models and decades of dividend increases. Investing in equal parts of each stock can produce an average dividend yield of 3%, which is higher than the S&P 500 index average dividend yield of 1.3%. With a $900 investment in each stock, investors can generate over $80 in passive income per year.
Coca-Cola: A Textbook Example of a Safe Stock
Coca-Cola is a Dividend King with 62 consecutive years of dividend raises. Its geographically diversified business and variety of products make it an ultra-safe stock even during economic downturns. Coca-Cola’s ability to develop and market brands is its greatest competitive advantage. With a 2.8% dividend yield, Coca-Cola is a foundational holding for risk-averse investors looking to generate passive income.
Clorox: A Turnaround Story
Clorox stock has staged an epic rally in recent months, but its fiscal 2024 results were disappointing. However, the company’s cost-cutting efforts and divestitures indicate a focus on its strongest brands and geographic regions. Clorox’s margins have begun to improve, and its portfolio of brands, including Burt’s Bees and Glad trash bags, is excellent. With a 3% dividend yield, Clorox is a good buy if it can continue improving margins.
Southern Company: A Utility with a Balanced Approach
Southern Company is a utility that focuses on the Southeastern U.S. and makes money through traditional electric operating companies, natural gas distribution, and wind, solar, and natural gas power generation assets. The company has embraced nuclear energy and opened two new nuclear power plants in recent years. With 23 consecutive years of dividend increases and a dividend yield of 3.2%, Southern Company stands out as a solid income stock.
Investing in Safe Dividend Stocks
Investing in safe dividend stocks like Coca-Cola, Clorox, and Southern Company can provide a steady stream of passive income. These companies have demonstrated their ability to withstand economic downturns and have a history of dividend increases. With a relatively small investment, investors can generate a significant amount of passive income per year.
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