With the many uncertainties brought by the pandemic, having multiple streams of income has become the talk of the town. People realize the importance of having other sources of income that are not dependent on themselves. Passive income is one way of generating income without doing much work.
Generating Income Through Stock Dividend
There are scores of ways to create passive income. Among the simplest ways to earn passive income is buying dividend stocks. People can invest their money in businesses where they can make dividend stocks. Interested individuals can purchase high-paying dividend stocks at publicly traded companies.
For example, a publicly-traded company offers 3% dividend stocks every quarter. Someone who invested $2,000 will earn $60 quarterly as a dividend for that investment. Annually, that individual can make about $240 for his $2,000. A meager amount in the short term but will prove valuable in the long run.
Before investing in dividend stocks, the first thing to do is finding stocks to buy that pay dividends and looking into:
- Dividend yield. It tells how much dividends are paid out by the company to shareholders relative to the current stock price. If its dividend yield is higher than the industry benchmark, it might be in a red flag.
- Payout ratio. It is the percentage of the company’s income that goes to paying as dividends of shareholders. If a stock’s payout ratio is too high or topping 100%, it might indicate that the company is going into debt to pay out dividends.
High-Paying Stocks For 2020
Here are four stocks to buy with high dividend payments for 2020:
AbbVie is an American biopharmaceutical company established in 2013. It is the manufacturer of Humira, one of the bestselling drugs in the world. The drug is primarily used to treat rheumatoid arthritis. It is a successful company that currently outperforms the market and continuously pays out a fair amount of dividends. AbbVie has a market capitalization of $167 billion. Its dividend yield stands at 4.9%, and its payout ratio is 78%.
- Lumen Technologies
It is a telecommunications firm that provides communications, voice, cloud solutions, network services, and managed services to business and residential customers worldwide. It was formerly known as CenturyLink Inc. until the company decided to rebrand itself as it shifted into emerging technologies. The company has an $11.2 billion market capitalization, with a dividend yield of 9.78% and a payout ratio of 91.12%.
- New York Community Bancorp Inc.
New York Community Bancorp is a multi-bank holding firm with several subsidiaries like Roosevelt Savings Bank, Queens County Savings Bank, and Atlantic Bank. It provides a wide variety of banking products and services to residents of the New York City metropolitan area. New York Community Bancorp has a market cap of $3.9 billion. It has an 8.13% dividend yield 86.14% payout ratio.
- British American Tobacco
It is among the leading companies in the tobacco industry that sells tobacco and cigarettes in at least 180 countries worldwide. Some of the company’s well-known brands include Lucky Strike, Camel, Lucky Strike, Natural American Spirit Dunhill, and Newport. It has a market cap of $85 billion, a dividend yield of 6.9%, and a payout ratio of 65%.
Dividend stock investment is one of the many pathways to generate passive income. But anyone who wants to earn from stocks must do a lot of research to identify the stocks to buy with high dividend payments.