4 Top Dividend Stocks Yielding 4% or More to Buy Right Now for Passive Income

The concept of passive income is thrown around all the time these days. It sounds easy, but it can be quite confusing and tedious. So, here's a simple way to think about passive income from stocks: You buy a small piece of a business, and every few months it sends you a slice of the profits. The trick is to pick businesses that keep sending checks even when their customers' money gets tight.

That's why I like things people buy no matter what: groceries, a holiday ham, a work truck, a pack of cigarettes. The four consumer stocks below each yield at least 4%, and each company just reported results that make the payout look sturdier.

A stock's dividend yield is its yearly dividend divided by its share price. A 5% yield means every $1,000 invested pays about $50 a year.

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1. Your grocery store pays you back

Albertsons Companies (NYSE: ACI) operates 2,240 stores under names such as Safeway, Vons, Jewel-Osco, and Shaw's. At $13.31, its $0.68 yearly dividend yields about 5.1%, or about $51 a year per $1,000.

The latest quarter wasn't pretty. Sales at stores open at least a year slipped 0.8%, and management pulled its outlook while it reviews the whole business. But the dividend is a small bill here. Over the first 28 weeks of its fiscal year, Albertsons paid $166.6 million in dividends, brought in $1.21 billion in cash from operations, and spent more than twice the dividend buying back stock.

Why buy now? The stock is priced like a grocer that's lost its way, yet digital sales jumped 11%, and CEO Susan Morris promises a new financial plan by the fourth-quarter report. You collect about 5% while you wait.

2. The holiday ham comes with a dividend

If there's a spiral-sliced ham on your Thanksgiving table, Smithfield Foods (NASDAQ: SFD) may have made it. Its brands include Smithfield, Eckrich, and Cook's. At $19.44, its $1.25 yearly dividend yields about 6.4%, or roughly $64 a year per $1,000.

Low hog prices hammered its pork business last quarter, and earnings per share fell to $0.23 from $0.63. But packaged meats, the part you see in stores, grew its profit and is on track for a fifth straight year above $1 billion. Smithfield also closed its purchase of Nathan's Famous hot dogs on Oct. 26.

What comforts me is the balance sheet. Smithfield's debt, minus cash, equals just half a year of its earnings before interest, taxes, depreciation, and amortization (EBITDA). Cash flow hasn't fully covered the dividend this year, but the fourth quarter is when holiday hams get paid for.

3. The trucks pay for the dividend

Ford Motor Company (NYSE: F) yields about 4.9% at $12.24, or about $49 a year per $1,000.

On Oct. 28, Ford reported $4.7 billion in quarterly adjusted free cash flow, the cash left after running and upgrading the business, and raised the low end of its profit forecast. It expects $6 billion to $7 billion of free cash flow this year and holds $25.3 billion in cash. The dividend costs roughly $2.4 billion a year, so it's covered more than twice.

The catch is electric vehicles: Ford expects its Model e unit to lose about $4 billion this year. But work trucks and vans carry the business, an all-new F-150 is coming, and CEO Jim Farley pointed to "record growth in software services and parts."

4. Altria gets paid even when smokers trade down

Altria Group (NYSE: MO) yields about 5.8% at $76.50, or about $58 a year per $1,000. In August, it raised its dividend for the 61st time in 57 years.

The bad news: Industry cigarette volumes fell an estimated 5% last quarter. What interests me is where smokers went. With budgets tight, many switched to cheaper brands, and Altria owns those, too. Its discount cigarette shipments jumped 40.5%, while Marlboro grew its share of the premium market to 60%. Altria also makes cigarettes for other companies to sell overseas, and that volume climbed from 311 million to nearly 1.6 billion.

That's how Altria raised its forecast to $5.66 to $5.74 in earnings per share and added $1 billion to its buyback. The dividend uses about 78% of that profit, less wiggle room than I'd like, but management still targets mid-single-digit raises through 2028.

Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.