Passive income brings joy.
Making your money work for you allows for capital gains upon selling investments. However, not all investments will make you money, and smart investors know caution is recommended when choosing stocks.
So, passive income investors wisely look out for dividend stocks, identifying companies with strong records of dividend payments, stable balance sheets and steady cash flows. These companies believe in rewarding investors and will hike dividends over the years. Also, these global giants own an impressive record of dividend payments and are trading at an attractive valuation.
So, if you have limited cash on hand and are looking for dividend stocks under $100, explore these three top picks.
Walmart (WMT)
Trading at $59, Walmart (NYSE:WMT) has a dividend yield of 1.39%. Once known as a traditional brick-and-mortar company, it has transformed into a successful e-commerce business.
In Q4 results, Walmart reported an online sales growth of 17% in the U.S. and 23% globally. It saw a 4% rise in comparable store sales across the U.S. While it remains the biggest U.S. grocery store, its giant strides increase its e-commerce space domination. Besides running over 10,000 stores today, WMT is investing aggressively in the e-commerce.
Its business model continues to focus on the basics including health and wellness and groceries. The healthy growth in its top and bottom lines show that the company is doing well despite the inflationary pressures.
As consumer spending improves, we could see Walmart report stronger numbers, improving its cash flow position. In 2024, the company saw its cash flow increase to $15.1 billion from $3.1 billion. Thus, it raised the dividend by 9% to reach $0.21 per share. WMT stock is a resilient, safe investment for passive income investors.
Coca-Cola (KO)
The global conglomerate Coca-Cola (NYSE:KO) enjoys a dividend yield of 3.27%. The dividend aristocrat has raised its dividends over the last six decades, with a payout ratio of 68%. Although KO stock has moved sideways over the past few months, it is trading at $59 today. And down 5% in the year, there isn’t much to worry about.
Coca-Cola has been a strong industry player, diversifying into healthy drinks to meet consumer demands. Its well-marketed brand is a part of the lifestyle worldwide. Since it has sold off most of its bottling plants to local bottlers, currently KO focuses on marketing and advertising.
Sales of the concentrated syrup to the bottles provides most of the revenue. This is what has helped Coca-Cola keep going while ensuring that the operating costs remain at a minimum.
It’s hard to beat Coca-Cola’s dividend growth and reliability. The management is optimistic about 2024 growth prospects with organic sales between 6% to 7%. Thus, it has enough cash to keep rewarding shareholders in the coming years.
Morgan Stanley (MS)
Trading for $94 today, Morgan Stanley (NYSE:MS) transitioned from a traditional investment bank to a wealth management company. And, it generates the majority of its revenue from wealth management services today.
With a dividend yield of 3.65% and a quarterly dividend of $0.85 per share, it certainly looks attractive. Through acquisitions, MS manages to boost the wealth management revenue by over 40%. So it has become a strong play in uncertain economic cycles. Morgan Stanley makes money primarily in the form of fees from the assets under management. And as these assets rise, revenue soars.
In the last quarter, the company reported earnings per share of $0.85 and net revenue of $12.9 billion. Ending the year on a strong note, expect the momentum to continue.
Morgan Stanley has hiked dividends for 10 consecutive years, and it is set to report results on April 16. The company could beat estimates yet again and have another dividend hike. The stock is very close to the 52-week high, but strong results could take it higher.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.