he S&P 500 posted a staggering 53.2% gain over the two-year period from 2023 to 2024. During this period, the passive income from most dividend stocks pales in comparison to the broader market's capital gains. The best strategy for investing in dividend stocks isn't to try to ride the hot stock market rally, but to invest in companies with the potential to grow and hold on to them for the long term, thereby delivering consistent returns. The advantage of dividend stocks becomes apparent when the broader market is mediocre or depressed. At this time, income from dividend stocks or dividend-paying exchange-traded funds (ETFs) can effectively supplement retirement funds or provide additional funds for reinvestment in the market.
Here are 3 stocks and ETFs to watch in 2025 for investors looking to earn passive income.
Here are 3 stocks and ETFs to watch in 2025 for investors looking to earn passive income.
Honeywell: Bringing gratifying returns to investors
Honeywell: Bringing gratifying returns to investors
Daniel Fulber (Honeywell)
Daniel Fulber (Honeywell)
Honeywell is one of the great stocks that meets 2025 investment criteria. As a diversified industrial group, Honeywell is involved in aerospace, industrial and building automation, industrial Internet of Things, energy and sustainable development solutions and other fields..
The stock is currently fairly valued, with a price-to-earnings ratio of 26.2 and a projected price-to-earnings ratio of 20.6. Honeywell has raised its dividend for 14 consecutive years, and its dividend yield is 2%, higher than the S&P 500's 1.3% and the Pioneer Industries ETF's 1.1%.
Although Honeywell has not shown a significant growth record in the past and has no clear path for future growth, the company is accelerating growth through acquisitions. While these acquisitions will take time to pay off, and Honeywell's balance sheet leverage is at an all-time high, over the long term Honeywell is unlocking more value by spinning off its aerospace division.
Overall, Honeywell is a company dedicated to the Industrial Internet of Things, and if you are looking to invest in this area at a relatively reasonable price, Honeywell is undoubtedly an option worth considering.
American Electric Power Company: A perfect combination of high earnings and invoice growth
American Electric Power Company: A perfect combination of high earnings and invoice growth
Scott Levine (American Electric Power Company)
Scott Levine (American Electric Power Company)
American Electric Power may be one of those nearly "perfect" dividend stocks. In addition to offering a high dividend (with an expected dividend yield of over 4%), the company has demonstrated a history of rewarding shareholders over the long term, and its business model is stable and reliable, making it a solid choice for conservative investors looking to grow their passive income. An ideal choice.
American Electric Power has paid quarterly dividends for 114 consecutive years, and the dividend has grown at a compound annual growth rate of 5.8% over the past 10 years. Company management expects future dividend increases to be consistent with annual operating profit growth of 6% to 7%. Of particular note is that the company's dividend payout ratio has averaged 70% over the past five years, and management plans to maintain the dividend payout ratio between 60% and 70% in the next few years, which provides shareholders with more sustainable
Additionally, since the company primarily operates in regulated markets, it provides stable returns, making American Electric Power a solid investment. As data center power consumption increases, the company expects commercial sales to grow 7.6% year-on-year in 2025, providing strong momentum for future growth.
Energy Select Sector SPDR ETF: The best choice for investing broadly in energy and diversifying risks
Energy Select Sector SPDR ETF: The best choice for investing broadly in energy and diversifying risks
Lee Samaha (Energy Select Sector SPDR ETF)
Lee Samaha (Energy Select Sector SPDR ETF)
Discussions about the future direction of oil prices continue, but it is worth noting that the current oil price is stable above $70 per barrel, which is very beneficial to oil exploration and production companies. This means these companies are able to generate significant cash flow and support healthy dividend payments to investors.
The Energy Select Sector SPDR ETF offers a 3.3% dividend yield. The ETF holds 22 energy companies, with Exxon Mobil (23%), Chevron (15.3%) and ConocoPhillips (8.1%) being its top three holdings. Analyzing the price-to-earnings ratios (multiples of free cash flow) of these stocks shows that they are relatively cheap. For example, Chevron's P/E ratio of 14 times means that 7.1% of its market capitalization comes from free cash flow, and Chevron can theoretically pay at least a 7.1% dividend yield.
Still, Chevron doesn't spend all of its free cash flow on dividends because oil prices are volatile. However, unless you have a negative view on the oil market, this ETF is certainly a good choice for dividend-seeking investors, and diversification can also help reduce the risk posed by a single stock.
Summarize
Summarize
Whether it's Honeywell, American Electric Power, or the Energy Select Sector SPDR ETF, these stocks and ETFs all have characteristics that appeal to long-term investors: strong dividend returns, stable cash flow, and good growth potential. For investors looking to increase their passive income in 2025, these are options worth considering.
Which Stock Should You Buy in Your Next Trade?
Which Stock Should You Buy in Your Next Trade?
With stock valuations skyrocketing in 2024, many investors are hesitant to allocate more funds into the market. If you're unsure where to invest next, consider accessing our proven portfolios to discover high-potential opportunities.
In 2024 alone, Team BullMax identified two stocks that surged over 150%, four stocks that jumped over 30%, and three others that climbed over 25%. This impressive track record is worth noting.
With portfolios tailored for Dow stocks, S&P stocks, tech stocks, and mid-cap stocks, you can explore a variety of wealth-building strategies.
ChatGPT FAQ
Want to earn more passive income in 2025? Consider this ETF and 2 rock-solid dividend stocks
ChatGPT is owned by OpenAI, which isn't publicly traded, so you can't buy stock directly in ChatGPT. However, you can buy stock in Microsoft, which owns almost half of OpenAI.
Who owns ChatGPT?
ChatGPT is owned by OpenAI, a company that was founded to develop artificial general intelligence (AGI) and to ensure that it benefits all of humanity. OpenAI was founded as a nonprofit but restructured as a capped-profit company in 2019.
Can I buy stock in OpenAI?
OpenAI is not publicly traded, so you can't buy stock in it.
Is OpenAI a publicly traded company?
OpenAI is not a publicly traded company, and it currently has no plans to go public.
Want to earn more passive income in 2025? Consider this ETF and 2 rock-solid dividend stocks
No, ChatGPT is not publicly traded. OpenAI, the company that owns ChatGPT, is also not publicly traded.
What's the best AI stock to buy?
No one knows for sure what the best-performing AI stock will be, but Nvidia has so far been the leader in generative AI and the biggest beneficiary from the explosion in AI. It's one of the easiest AI stocks to own, and is likely to continue to benefit from the growth of the sector.
