Ready to boost your passive income? 3 dividend stocks you can’t go wrong with

Investing in the stock market can help you build wealth in the long run, but it can take years, even decades, to earn substantial returns.

With dividend paying stocks, however, you will not only earn long term returns on your investments, but you will also receive dividend payments annually or quarterly. Whenever you receive dividends, you can either reinvest that money to buy more stocks or cash them out to create a source of passive income.

It is important to invest wisely when choosing dividend-paying stocks. Not all stocks are created the same, and some investments are better than others. While each of these three companies have had setbacks, they consistently pay high dividends, making them a smart choice for many investors.

1. AbbVie

AbbVie (NYSE: ABBV) is a biopharmaceutical company with a strong dividend track record. It is a member of the Dividend Aristocrats, which is a group of S&P 500 stocks that have each increased their dividend payout for at least 25 consecutive years.

AbbVie has been a favorite with dividend investors for years as it is known for its high dividend yield and steadily increasing dividend. A potential red flag is that its best-selling drug, Humira, loses its exclusivity in the United States in 2023, which could lead to a drop in sales of Humira. However, the company already has several other drugs that generate strong revenue growth, which could offset Humira’s potential losses. For this reason, AbbVie remains in a strong position and should continue to increase its dividend.

The stock has a relatively high annual dividend payment of $ 1.30 per quarter, which works out to $ 5.20 per year. Its price is also around $ 106 per share at the time of writing. If you invested, say, $ 5,000 in AbbVie shares, that works out to about 47 shares. In this scenario, you would earn around $ 244 per year in dividends.

Of course, $ 244 a year is hardly enough to pay the bills. But keep in mind that investing is a long term strategy. The more you invest, the more you earn. If you reinvest your dividends to buy more stocks, it can increase your dividend payouts.

2. IBM

IBM (NYSE: IBM) has been paying dividends since 1913, making it one of the oldest dividend-paying stocks in existence. Although the company had a difficult quarter at the end of 2020, it is expected to rebound this year by focusing more on its cloud software solutions. This is a good sign for long-term investors willing to wait, as this restructuring could translate into greater growth potential.

The company also enjoys a large quarterly dividend payment of $ 1.63 (or $ 6.52 per year), and is currently trading at $ 120 per share. If you were to invest $ 5,000 in IBM shares right now, you would hold approximately 41 shares. With a dividend of $ 6.52 per year, this investment would earn you around $ 267 each year in dividend payments.

Also, keep in mind that when companies increase their dividends, it will also increase your annual payouts, even if you don’t invest more money. By investing in strong companies that increase their dividends every year, you can increase your passive income effortlessly.

3. ExxonMobil

ExxonMobil (NYSE: XOM) is another member of the Dividend Aristocrats, having increased his dividend every year for 37 consecutive years. It has a slightly lower dividend payout of $ 0.87 per quarter ($ 3.48 per year), but it also has a lower stock price of just $ 53 per share at the time of writing.

This action is riskier, as the company has had a difficult year as oil prices tumbled in 2020. In the past, ExxonMobil has worked to protect its dividend, choosing to take on more debt to avoid reducing dividend payments. But if the company continues to struggle, the dividend could be threatened.

However, the company is currently under pressure to focus more on renewables, and it is reportedly considering changing its board of directors and investing more in sustainable energy. This could lead to stronger long-term growth, which is a good sign for investors.

Currently, investing $ 5,000 in ExxonMobil would buy you 94 shares. At $ 3.48 per share in dividends, you would earn $ 327 per year in dividend payments. If you are a risk averse investor, this stock may not be the best option. But if you are willing to bet on the return of the business, it could be a profitable decision.

When choosing dividend-paying stocks, your primary focus is on the overall health of the company. Organizations that consistently pay dividends and take action to increase revenue growth are more likely to be solid long-term investments. And investing for the long term is essential for generating wealth with dividend-paying stocks.