If you'd rather set yourself up with a hefty stream of passive income than work for a living, there are lots of options. You could write a book and then live off the proceeds, but this requires heaps of effort upfront. You could buy properties and rent them out, but this requires enough effort that we really shouldn't consider such income truly passive.
Whether you have a few million or just a few hundred to invest, sinking your hard-earned money into dividend-paying stocks is probably your most effective option for generating a truly passive income stream.
Of course, picking the right stocks at the right time is a big part of any dividend investing strategy. These three dividend-paying stocks offer high yields upfront at the moment. Plus, there's a good chance the payouts they deliver can keep rising for at least another decade.
Image source: Getty Images.
Altria Group
Shares of the American tobacco giant Altria (MO -0.37%) have fallen about 10% over the past year. At its beaten-down price, the stock offers a huge 9.2% dividend yield.
Investors should know that sales of combustible cigarettes have been in decline for decades. With the leading Marlboro brand in its portfolio, though, Altria's been able to raise its quarterly payout for 54 consecutive years.
Strict government regulations make it nearly impossible for competing tobacco companies to promote competing brands. As a result, Marlboro still boasts a 42% share of the U.S. cigarette market, even though nobody's seen the Marlboro man in decades.
Overall cigarette volumes are down, but Altria has no trouble raising prices on the leading brand. While the volume of cigarettes shipped fell 10.5% in the first nine months of 2023, revenue net of excise taxes is down just 1.4% year over year.
Combustible cigarettes are in decline, but Altria's smoke-free portfolio could drive growth in the years ahead. The company's NJOY brand is the only one approved to market a pod-based e-vapor product.
Realty Income
If you don't like waiting around for dividend raises or dividend payments, consider Realty Income (O -0.17%). At recent prices, the stock offers a 5.6% yield, which is way above average for a legendary dividend program that has grown its payout for 29 consecutive years.
Realty Income is a real estate investment trust (REIT), so it must distribute at least 90% of earnings to shareholders as a dividend. It generates highly reliable cash flows by employing long-term net leases that transfer all the variable costs of building ownership, such as taxes and maintenance, to the renter.
At the end of September, Realty Income boasted a 98.8% occupancy rate across its portfolio of 13,282 properties.
More than three-fourths of Realty Income's portfolio is rented out to retail businesses, but this REIT doesn't sign leases with every retail business that comes calling. Pharmacy, dollar store, and grocery store operators are its largest tenants. These businesses tend to thrive whether the overall economy is booming or in a slump. With a well-positioned portfolio, investors can reasonably expect this stock's payout to rise steadily for at least another decade.
AT&T
Can you remember the last time you changed service providers for your mobile phone? How about your internet service provider? If you're in the U.S., odds are good that at least one of these extremely sticky services is provided to you by AT&T (T 1.02%).
Even if you're not using an AT&T service now, there's a good chance that you will soon. In the third quarter, the company added 468,000 new phone subscribers and 296,000 new fiber-internet subscribers.
In October, AT&T Fiber was available for 20.7 million customers, and the company expects this figure to reach 30 million by the end of 2025.
At recent prices, the telecommunications giant offers a huge 6.5% yield that could climb steadily higher in the decade ahead. Over the past year, AT&T used just 41% of the free cash flow it generated to meet its dividend commitment. This means there's plenty of cash to raise its payout, pay down its sizable debt, and continue growing its business.
