When it comes to investing, a long-term mindset is best. If you are a more “set it and forget it” type of person, passive investing may be a better style for you. What’s more, you can get paid a reliable income stream just by knowing which income stocks to buy now. Holding onto those assets can produce massive compounding results.
Income stocks are profitable companies that have healthy cash flows and pay steady dividends. Unlike growth stocks, which are sometimes less profitable but show promise.
Investors looking for safer, more consistent returns will be better suited to invest in income stocks.
The Top 6 Income Stocks to Buy Now List
One of the most important things to look for in an income stock is the amount paid to shareholders via dividends. Dividends will help compound your earnings, multiplying your money over time.
With that in mind, here are the top six income stocks to buy now for steady growth:
- Verizon (NYSE: VZ)
- Proctor & Gamble (NYSE: PG)
- Coca Cola (NYSE: KO)
- 3M (NYSE: MMM)
- Lockheed Martin (NYSE: LMT)
- JPMorgan Chase (NYSE: JPM)
Warren Buffett once said, “If you don’t find a way to make money while you sleep, you will work until you die.” And with that, the top income stocks to buy now:
- Dividend Yield: 4.9%
- Payout Ratio: 52.24%
- Beta: .43
Verizon is one of the largest wireless carriers in the U.S, along with rivals T-Mobile (NASDAQ: TMUS) and AT&T (NYSE: T). Despite losing market share to competition recently, Verizon remains the most valuable wireless operator.
Additionally, Verizon pays a generous dividend yield of 4.9%. Not only that, but Verizon’s payout ratio is more than 52%.
On top of this, the company’s extensive investments into 5G are about to start paying off. In its recent investor’s day, Verizon noted that over 50% of 4G and 5G sites will be using its services.
Verizon’s strategic investments and favorable payout make it one of the top income stocks to buy for years to come.
#5 Proctor & Gamble
- Dividend Yield: 2.38%
- Payout Ratio: 61.48%
- Beta: 1.4
Proctor & Gamble is another stock that’s benefitted investors over the years. With household favorites like Gillette, Bounty, and Crest, P&G has managed 5.13% annualized dividend growth.
Right now, P&G’s payout ratio is 61.48%, a relatively high figure. On top of this, the company has raised its dividend for 65 straight years, making it a dividend aristocrat.
P&G’s +$76 billion in revenue shows how strong the company’s brands are. And the company continues expanding, with net sales growing 5% yet again this quarter.
All in all, P&G is a solid income stock that has proven its ability to provide returns.
- Dividend Yield: 2.96%
- Payout Ratio: 82.35%
- Beta: .66
Speaking of Warren Buffett, one of his most extensive holdings is in Coca-Cola. In fact, KO stock makes up over 6% of Berkshire Hathaway’s portfolio.
Seeing that Warren Buffett is one of the best passive investors of all time, Coca-Cola is considered a top tier company to own.
However, the company is also going through a brand revamp, expanding into abundant income opportunities in coffee, energy drinks, and hard seltzer categories. Coca-Cola has a gift for entering new market categories and growing its product line.
Therefore, Coca-Cola is going to be one of the best income stocks to buy now and in the future.
#3 3M Company
- Dividend Yield: 3.26%
- Payout Ratio: 58.10%
- Beta: .96
Similarly, 3M is another company known for its diverse portfolio of brands. As a matter of fact, 3M has over 60,000 products included in its portfolio, ranging from Scotch tape to Ace bandages.
The conglomerate provides a hefty 3.26% yield for investors. Not only that, but 3M is also a member of the dividend aristocrats with 63 consecutive annual increases.
However, one of 3M’s most prominent strengths comes in its financial statements. With a flawless balance sheet, growing top & bottom line, and healthy cash position, 3M is going to be a top income stock to watch for years to come.
Keep reading to discover the top two income stocks for long-term growth.
#2 Lockheed Martin
- Dividend Yield: 3.06%
- Payout Ratio: 48%
- Beta: .94
Lockheed Martin is an aerospace and defense company focusing on technological advances. The company has massive contracts with the U.S Department of Defense and other government agencies.
Not only that, but the company’s mission is a big one – solve complex challenges. With this in mind, Lockheed has a few divisions in aircraft, missile, rotary, and space units. The company is involved in some of the fastest-growing industries with AI, edge computing, and defense.
Given Lockheed’s growth over the past several years, its dividend has grown along with it. For the past ten years, Lockheed’s dividend has increased at a 13.48% annualized growth rate.
Seeing that the company has a backlog of over $141 billion, the growth doesn’t look to be slowing anytime soon. In other words, Lockheed Martin should continue being one of the best income stocks to buy now and moving forward.
#1 Income Stock to Buy Now: JPMorgan Chase
- Dividend Yield: 2.38%
- Payout Ratio: 25%
- Beta: 1.16
When talking about the top income stocks, it’s hard not to mention bank stocks. And in particular, the largest bank in the U.S, JPMorgan Chase.
Managing $3 trillion in assets, JPMorgan is one of the most respected names in the industry. Also, the ongoing low-interest environment is stimulating new loans, which is helping drive revenue for JPMorgan. With that in mind, home lending was up 43% YOY, while auto loans reached new levels.
On top of this, the excitement surrounding the stock market right now is helping boost JPM’s top line, with equity markets revenue rising 30% in the third quarter.
All in all, investment banking can be a profitable business. And with an interest rate hike on the horizon, JPM can generate additional revenue. Looking ahead, JPM looks like a top income stock to own.
Income Stocks to Buy Now: What to Keep In Mind
If you are looking to grow your wealth, investing in income stocks can help deliver steady returns. Over time, the combination of dividend payouts and stock returns will lead to a “compounding effect.”
When this happens, your money multiplies, leading to higher returns over time. Dividends are an essential part of this process. But, it’s only one factor to consider when looking for the top-performing income stocks.
It’s also critical to look for companies with a history of rewarding shareholders. Above all, businesses that have a track record of growing their earnings and delivering returns to shareholders are the type of income stocks to buy now.