5 High-Quality Dividend Stocks to Hold in a Passive Portfolio

Dividend stocks are typically boring but this is just what investors seeking low volatility and sturdy health want.

Judging by the Fed fund futures probabilities with the CME FedWatch Tool, the Federal Reserve is still on track to cut interest rates three times by the end of the year. This would begin a new cycle of lowered borrowing costs, allowing for more significant free cash flows for companies.

In turn, companies are likely to take this opportunity to increase dividend payouts or reinvest for future dividend payment growth. On the other hand, if a hard landing scenario occurs, companies could just engage in maintenance mode and retain the existing level of dividends.

In either case, these five companies are among the safest bets for dividend investing.

1. Seven Hills Realty Trust – 10.28% Dividend Yield At $1.40 Annual Payout Per ($13.90) Share

As all real estate investment trusts (REITs), Seven Hills Realty is required to pay shareholders a minimum of 90% of taxable income as dividends. The trust largely focuses on the middle market, sandwiched between institutional-grade and small-scale properties typically valued up to $100 million.

Seven Hills (NASDAQ:SEVN) also engages in transitional commercial real estate (CRE), which involves properties in redevelopment to boost their value. The REIT commonly acquires mortgage loans with principals ranging from $15 million to $60 million, placing its average loan commitment at $30 million.

Under the umbrella of SEC-registered Tremont Realty Capital, a subsidiary of RMR Group, Seven Hills has $93.3 million in cash on hand with a debt-to-equity ratio of 1.6 as of Q1 ‘24 earnings statement. Combined with RMR, the trust has ~41 billion worth of gross AuM. Seven Hills’ available liquidity is $365.7 million.

2. Evolution Petroleum Corporation – 8.5% Dividend Yield At $0.48 Annual Payout Per ($5.64) Share

Although oil prices are typically volatile, making investors anxious, Evolution Petroleum (NYSE:EPM) has been building up its portfolio of gas and oil assets in the Permian Basin. Considering that gasoline-powered vehicles are not going anywhere even in the long-term future, the company is positioning itself for growth.

In fiscal Q3 ‘24 earnings delivered in May, Evolution Petroleum broke its oil production record at ~2,200 barrels of oil per day. This delivered $23 million in quarterly revenue and $0.3 million in net income. It also bears noting that the company is one of many American companies that benefited from sabotaging Nord Stream gas pipelines in Europe.

In 2023, the company generated $58.8 million in revenue from natural gas and $11.4 million from natural gas liquids, compared to $40 million from crude oil.

According to the Energy Information Administration’s (EIA) latest forecast in July, the global consumption of liquid fuels is poised for a 1.1 million b/d increase in 2024, rising to 1.8 million b/d in 2025, with oil prices expected to hit $91/b in Q1 2025.

3. Altria Group – 8.21% Dividend Yield At $3.92 Annual Payout Per ($48) Share

After the US Supreme Court overturned the Chevron (NYSE:CVX) Deference doctrine, which prevented federal agencies from making their own rules through interpretation of the law, an entire regulatory landscape is now in question.

Previously in April, the Biden admin delayed the ban on menthol cigarettes after facing civil rights scrutiny. Alongside other tobacco companies, this provided a major boost for their stocks, with Altria Group (NYSE:MO) shares rising 17% in the last three months.

According to IBIS World, Altria Group holds an enviable 42.3% market share globally. The company’s smokeless products, Skoal and Copenhagen, continue to generate over $1 billion in annual sales.

After the acquisition of NJOY Holdings worth $2.75 billion last June, the company has acquired the only pod-based e-vapors, NJOY ACE and NJOY DAILY, which the FDA approved. Considering these products’ predictable, recurring usez, Altria Group shareholders have low anxiety about their exposure.

4. Verizon Communications – 6.52% Dividend Yield At $2.66 Annual Payout Per ($41.3) Share

While Netflix (NASDAQ:NFLX) is considered a narrow-moat company, Verizon is on the other side of the spectrum. After all, Netflix has to contend with future streaming platforms, which are drastically easier to replicate than building up the network infrastructure.

This is what makes Verizon (NYSE:VZ) a solid long-term investment, owing to its diversified portfolio of wireless and fiber-optic networks that continuously generate revenue streams. Moreover, although Verizon has its own data-breach issues, they are limited in scope compared to AT&T’s, as the latest AT&T breach affected 109 million US customer accounts.

Painting Verizon in a positive light by contrast, it bolsters the case for owning VZ stock. The Q1 ‘24 earnings, leaving the telecom company with $300 millsion more cash than in the year-ago quarter, further increases investor confidence. During 2023, Verizon paid shareholders $11 billion worth of dividends, an increase of $220 million from 2022.

5. Dominion Energy – 5.23% Dividend Yield At $2.67 Annual Payout Per ($51.53) Share

As civilizational layers go, electric utility companies have an even wider moat than telecoms. Dominion Energy (NYSE:D), with headquarters in Richmond, Virginia, serves over 4.5 million customers across 13 states.

While keeping utility rates low, 14% lower than the national average for residential customers, Dominion Energy reported $674 million net income in Q1 ‘24 vs $981 million in Q1 ‘23, but still beating the estimated $0.51 EPS at $0.55.

For the full year, the utility company expects operating earnings range of $2.62 – $2.87. The last time Dominion increased dividends was at the end of 2021. As long as people need electricity, D stockholders can count on a stable passive income stream.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

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