Investing a Thousand Dollars in Each of These Three Secure Dividend Shares Can Potentially Yield Around $280 in Passive Income by 2025
Investing in dividend stocks can be a smart move for those seeking supplemental income or value-focused investments in 2025. Three top picks for such investments are ExxonMobil, United Parcel Service, and American States Water, each with reasonable valuations and the potential to generate substantial passive income.
ExxonMobil: A standout in the oil patch with a track record of dividend growth
With its long history of dividend increases and a yield above 3.5%, ExxonMobil (XOM -1.35%) is a highly appealing dividend stock in the S&P 500. ExxonMobil's extended corporate plan, stretching through 2030, provides an element of accountability and includes goals for free cash flow, earnings, capital return, capital investment, and other targets.
The company emphasizes cost reductions, focusing on efficiency improvements and a higher-quality oil and gas portfolio. Developments in the Permian Basin, offshore Guyana, and liquefied natural gas should help ExxonMobil achieve these goals. The potential downside for investors is that the company's stock price may be influenced by oil prices in the short term, but the company is well-positioned to outperform competitors and take market share in downturns due to its strong balance sheet and ongoing investment in oil and gas, low-carbon fuels, and carbon capture and storage.
UPS: A package delivery giant with room for improvement and solid earnings potential
UPS (UPS -0.43%) is a well-known package delivery company with a promising dividend yield of 5%. The company is implementing strategic actions to improve profitability, agility, and market differentiation, with a focus on growing in high-potential sectors such as healthcare and SMBs.
UPS reported strong financial performance in the fourth quarter of 2024, showing a 1.5% increase in revenue and a substantial hike in consolidated operating profit compared to the previous year. The delivery giant returned $5.9 billion to shareholders in the form of dividends and share repurchases in the same quarter. In 2025, UPS has potential to drive further growth if it maintains its momentum and makes the most of opportunities in expanding markets.
American States Water: A reliable and conservative dividend stock with a long-standing track record
American States Water (AWR -0.92%) boasts a stable yield of 2.5% and is currently undervalued when compared to its five-year average cash flow multiple. The company operates in regulated markets, bringing a predictable revenue stream and ensuring that management has foresight into future cash flows for capital expenditures, such as dividends.
American States Water has an exceptional record of dividend hikes, raising its dividend for 69 consecutive years, besting all Dividend King competitors. The company's revenue is dominated by its regulated business operations, accounting for about 80% of revenue and 88% of net income.
Enrichment Data:
ExxonMobil
- Long-term growth prospects: ExxonMobil forecasts Permian volumes to increase from 1.5 mmboed in 2025 to 2.3 mmboed in 2030, fueled by volume growth and cost reductions. The company aims to invest in various businesses, generating $3 billion in earnings by 2030.[3]
UPS
- Long-term growth prospects: UPS anticipates revenues of $89 billion in 2025 with an operating margin of 10.8%. The company is focusing on driving profits through operational changes, strategic actions, and growth in high-potential markets.[2][5]
Incorporating enrichment insights, savings from streamlining processes with its largest customer, and insourcing delivery services have been key to UPS's financial improvement.
- To further boost their investing portfolio, individuals might consider adding UPS to their finance portfolio due to its promising dividend yield and plans for long-term growth.
- For those focused on conservative investing and value, American States Water, with its consistent dividend growth and operation in regulated markets, could be an excellent choice for their money allocation in 2025.
