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Top passive income stocks to buy right now

by | Last updated 27 Nov, 2022 | Get financial insights

Through passive income stocks, investors have built incomes in the stock market for years. Interestingly, $1.26trn was reported to have been paid out as dividends in 2020. And this number is expected to even be higher in 2021. 

As the curtain on 2021 gradually closes, investors may be interested in adding some dividend stocks to their portfolios. With that in mind, let’s explore my top passive income stocks to buy now. 

A high-yield dividend business

Investors in LyondellBasell Industries NV (NYSE:LYB) earn a 5.17% yield through dividends. And considering the stock trades at a price-to-earnings ratio of just over five, it suggests that it may also be undervalued. That’s often a sign of a good potential investment in my experience.

For a business to consistently pay dividends, it has to make a profit. And also, having a competitive edge in a market boosts investors confidence. LyondellBasell is a chemical company that produces a wide range of products.

In its 2021 third-quarter report, the group announced a net income of $1.8bn. While speaking on the results, CEO Bob Patel said, “Our third-quarter results reflect robust demand for  LyondellBasell products and tight market conditions, which supported strong margins across most of our businesses”. In my opinion, the company’s prospects are bright and should be able to make profits and continue to pay dividends. 

Nevertheless, the firm is not immune from competitors. Better products from its rivals could reduce demand for LyondellBasell products. Aside from that being a major sign of financial trouble, it could also jeopardise the dividends. Having said that, I personally believe the company is up to the task. And therefore, LyondellBasell is a top passive income stock to buy in my eyes.

A top passive income stock with high-yield

WP Carey Inc (NYSE:WPC) is a real estate investment trust founded in 1973 with its headquarters in New York. The firm has a diversified commercial real estate portfolio that includes 1,264 net lease properties that cover over 150 million square feet. 

This potentially top passive income stock pays out a 5.44% yield at today’s share price. And since the start of the year, the stock has risen by double digits. This could make capital gain investors pick some interest in the company. Considering it has an occupancy rate of 98.4%, the business should be able to continue generating revenue and profit to pay dividends for its investors. At least, that’s what I think.

But, although WP Carey is on the verge of becoming a dividend aristocrat, it has some risks which could affect its business. Firstly, the capital paid out as dividends limits growth to a certain extent as it is not being reinvested into the company. Also, if properties become unoccupied, revenue will drop. Furthermore, the firm has plenty of competitors to battle with over tenants and, in turn, market share.

In any case, WP Carey has managed to stay committed to providing investors with consistent and rising income. That’s why it’s on my list of top passive income stocks to buy right now.

Final thoughts on passive income stocks

LyondellBasell and WP Carey are both great companies in my mind. They have consistently increased their dividends over the years, and providing that doesn’t change, they could be some of the best passive income stocks to buy today. But they’re not the only ones I’ve got my eye on.

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Prosper Ambaka does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies, assets, and strategies mentioned in this article are those of the writer and, therefore, may differ from the opinions of analysts in The Money Cog Premium services.

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