These 3 dividend stocks will give you above-average passive income

Dividend investing, or the possibility of generating passive income, has always been one of the things that investors seek out and try to build in some way. Today, we're going to look at 3 high quality, high performing and stable stocks that pay an attractive dividend that will boost your passive income while bringing a little bit of that stability to your portfolio, as these are true stalwarts in a challenging market environment.

$PM+0.1% is one of my favorite dividend stocks to talk about today.

My selection today focuses on 3 companies that provide promising performance even in a challenging market environment, plus they have a decent payout ratio combined with a longer-term dividend payout streak. I believe that if you are focused on dividend stocks or building passive income, these picks are definitely something of interest to you.

Here we go! My 3 dividend stock picks 👇

1. Philip Morris $PM+0.1%

The dividend is 5.32%.

Philip Morris is probably not considered the most innovative company, nor is it a company that has done much positive for human health. In the old days that was true, but that old perception should change. Since 2008, the company has spent more than $8 billion on research into reduced-risk products and has done more than most organizations to transition people from dangerous traditional cigarettes to less risky ones. Investing in the economy, creating high quality research jobs and improving human health is currently the company's main focus.

What's good about this for investors? Not only is this company starting to do a lot of good, but they're making a lot of money - almost every year. In the most recent quarter, it reported adjusted net sales growth of 6.2%. It looks like the slow growth period of the last decade is now in the rearview mirror, and that the good old days of double-digit growth may be back.

On dividends - The pace of growth has been slower in recent years, but there was a reason for that, which is the giant investment in IQOS. IQOS is an electronic device that heats a solid tobacco cartridge, similar to a cigarette. Over the long term, investors have enjoyed an annual average dividend growth rate of a full 8% since 2008. The heyday was in 2011, when it was up 20.3%. Five years ago, the quarterly dividend was at $1.04, while it is currently at $1.25. That's an overall increase of 20%, or an average of 3.7% per year.

Highlights from the dividend data 👆

2. 3M Company $MMM+1.0%

3M is an American multinational conglomerate with a global footprint and a dividend of just under 5%.

Although 3M is currently in the spotlight due to lawsuits over defective earplugs that a 3M subsidiary sold to the U.S. military, it shouldn't be overlooked anyway. The $MMM+1.0% stock price is gradually taking shape nicely so that it looks very attractive. Many investors may say that of course the company won't sink, it's big and relatively important, which are strong alibis, but it doesn't change the fact that the protracted litigation may hamper and limit the company for some time, which will either mean some stagnation (in terms of growth) or further decline - depending on how the whole case develops.

The near-term outlook for 3M remains challenging as growth comes under pressure from a slowing global economy, including a decline in demand for consumer electronics and continued challenges in markets such as automotive from component shortages. The company is also still under pressure from supply chain costs (materials and logistics) which will be slow to resolve in the coming year. On a positive note, I think management is becoming more creative and dynamic about ways to preserve and create shareholder value, and I see a lot of potential here. However, as I mention, the price may still fluctuate with the whole lawsuit, but once that is over I expect a ''rebirth'' of the company and a re-empowerment. My assumption is that they will emerge from the lawsuit after some time with some penalty - they will have to pay damages, but from an existential standpoint I don't see a threat here.

As far as dividends go, this is clearly another quality stock that has a really long streak of raising and paying dividends.

Highlights from the data regarding dividends 👆

3. Johnson & Johnson $JNJ-0.3%

Finally, dividend king $JNJ-0.3% with a dividend yield of 2.8%.

In a nutshell, I would describe$JNJ-0.3% as one of the best choices in the current market environment. As you can see, YTD losses are only 4%, which is almost nothing compared to other stock names. Johnson & Johnson is home to some of the best brands in consumer healthcare, a robust pharmaceutical portfolio, and an extensive healthcare technology offering. J&J is a robust free cash flow generator with a healthy balance sheet and a bright growth outlook.

J&J has built one of the most comprehensive healthcare businesses. The company's three major operating segments are as follows: Consumer Health (which it plans to spin off), Pharmaceutical and MedTech. The pharmaceutical leader also developed a covid vaccine that is approved by the authorities, but I mention that as a point of interest as I am not counting on huge profits from other vaccinations.

The best reason to invest in $JNJ-0.3% is clearly a look at the financials. J&J ended the fiscal second quarter with $32.6 billion in cash, cash equivalents and current marketable securities versus $4.3 billion in short-term debt and $28.3 billion in long-term debt on the books.

  • In the case of $JNJ-0.3%, I would say it offers the best conditions for long-term sustainability and dividend accretion.

Highlights from the data regarding dividends 👆

Conclusion

I think this is a very good selection of companies that offer an interesting dividend, of course some may argue that this is at the expense of stronger growth, but at this time I think financial strength, cash, sustainability and stability are more important, which all three meet - well, except 3M, there are currently risks due to lawsuits, but I already mentioned that. Normally, some REIT stocks or telecom stocks would certainly play a role in this list, which often offer even more interesting dividends, but I don't like any of these companies at the moment as we are in a challenging market environment.

  • Do you favor dividend stocks this year?
  • Do you see more purpose and benefit in dividend stocks currently?
  • Which dividend stocks are attractive to you right now?

Please note that this is not financial advice. Every investment must undergo a thorough analysis.

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