Passive income investing is a great way to build wealth. It will take years for you to generate enough for your retirement or to leave a legacy, but it is a tried and tested way of making money without having to work for it. Whether you are a beginner or want to diversify your portfolio, investing in dividend stocks is a great way to build wealth.
When choosing dividend stocks, do not just look at their yield. Instead, focus on the balance sheet and sustainability of the dividends. Look for solid companies that have been rewarding investors for years and have hiked their dividends even in times of economic uncertainty. Such companies are rock solid and can help build wealth if you hold on to them.
As a passive investor myself, I love it when companies hike dividends each quarter. It allows me to reinvest those dividends, helping me build wealth slowly and steadily. If you are looking for dividend stocks to invest in, here are the top dividend stocks to buy for under $100 in April.
Top Dividend Stocks to Buy for Under $100 in April: Coca-Cola (KO)
Source: Coca-Cola
Trading at $60, Coca-Cola (NYSE:KO) stock looks very cheap to me. The global giant has built a name for itself in the industry and its wide range of beverages keeps the revenue growing. The stock is down 3% in the year and has been moving in the range of $52 to $64 over the past 12 months. While you may not see a sudden upside in the stock price, you can make the most of the dividends.
Coca-Cola is a Dividend Aristocrat and has increased its dividends for over 60 years. Its recent dividend hike was the 62nd consecutive increase. It raised the dividend to 5.4% quarterly to 48.5 cents per share. Its annual dividend yield is 3.23%, and the dividend payout is 78%, which is better than several other players in the industry.
While the company has been lagging behind the market, it still has strong fundamentals, and the business generates adequate free cash flow to sustain the dividends. In the past four quarters, the company generated a free cash flow of $9.5 billion and also repurchased $1.7 billion worth of stock.
It has also diversified into healthy drinks and energy drinks to meet the changing demands of consumers. Coca-Cola is not the one to sit back and enjoy the business growth. It is constantly looking for new avenues to expand and is working on innovative marketing campaigns, limited edition flavors and targeted promotions. As Warren Buffett’s favorite stock, Coca-Cola still has a lot of power and is worth holding on to for years.
Morgan Stanley (MS)
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Another dividend stock to buy below $100 is Morgan Stanley (NYSE:MS). Trading at $92, the stock has soared 16% in the past six months, and the bank has built a strong business model recently. However, the stock is still trading at the same level it was in May 2021. It is one of the top dividend stocks to buy for under $100 in April.
MS stock hasn’t been able to hit $100 over the past two years but is steadily improving its position. With a rate cut and an improvement in the economy, we will see Morgan Stanley report impressive numbers.
The bank has moved past the financial crisis and has become a huge part of the investment world and wealth management. It steadily earns fees on the assets under management (AUM), which keeps growing as the assets grow.
The company makes a significant part of the revenue from underwriting deals, which grew 25% in the fourth quarter. I believe the second half of the year will be great, as interest rates are expected to come down. That also allows Morgan Stanley to have a fixed revenue business and shields it from economic ups and downs.
There is an improved outlook for the company, which can benefit investors. Morgan Stanley enjoys a yield of 3.67%. Despite a dividend yield of over 3%, the company has a payout ratio of 66%, which means there is ample space for growth. If the business keeps expanding, you can expect dividend hikes.
Starbucks (SBUX)
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Having raised dividends for 14 consecutive years, Starbucks (NASDAQ:SBUX) is a dividend stock worth buying while it trades below $100. The stock is exchanging hands for $89 and had a rough start to the year. The stock is down 6% year-to-date and 14% over the year.
The company’s financials are robust, but it reported a drop in sales in China. That led to a dip in the stock. However, I believe the coffee giant has a long way to go. It has a robust free cash flow growth, and the dividend has grown 18% in the last 10 years.
As one of the global players, Starbucks has gained brand loyalty and is on an aggressive expansion mission. It aims to open 55,000 stores by 2030, leading to a massive rise in revenue.
The company is also experimenting with different drinks to meet the needs of consumers across different countries. While the competition is growing, I think it will be hard to beat Starbucks when it comes to a coffee chain.
The stock has a dividend yield of 2.55% and a dividend payout ratio of 61%. As a passive income investor, you will not be disappointed with Starbucks. While the company missed revenue projections for the first quarter, it has slashed guidance for full-year sales, which resulted in a stock price drop.
The current issues are temporary, and the company can bounce back in the coming months. An improvement in consumer spending and the upcoming summer months could boost sales.
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.