Three Excellent Dividend Stocks to Purchase in December for Securing Consistent Passive Earnings
With December approaching and 2025 just around the corner, it's an excellent time for investors to assess their portfolios and revise their watch lists. Yet, with the broader stock market indices hitting all-time highs, it's no walk in the park to snag shares of top-notch firms at appealing prices.
When stock prices outpace dividend growth rates, dividend yields plummet, as we witness with the S&P 500 offering a dismal 1.2% yield. This might not be enough for those aiming to bolster their passive income or supplement income during retirement. Fortunately, there are still some stellar dividend stocks out there – you simply need to know where to dig. Allow me to present three standout options: ExxonMobil (XOM), boasting a 3.3% forward-yielding dividend; Vitesse Energy (VTS), with its 7.5% yield; and Clorox (CLX), boasting a humble 0.06% yield dip. Let's delve deeper into these gems.
ExxonMobil: A Reliable Dividend Gem in the Oil Patch
Investors, particularly those seeking reliable dividend stocks, know the significance of scrutinizing high yields. While tempting, juicy payouts may dry up if companies are on shaky financial footing. ExxonMobil, however, is an exception. With its 42-consecutive-year history of dividend hikes, its commitment to rewarding shareholders is unyielding.
ExxonMobil's robust performance is attributable to its vast energy value chain operations, continuously cementing its position as an energy powerhouse. Recent achievements, such as the acquisition of Pioneer Natural Resources, have bolstered ExxonMobil's market presence, likely resulting in pre-tax synergies of about $2 billion per year over the decade ahead. This accomplishment complements ExxonMobil's success in enhancing upstream profitability in the past five years, reporting earnings of $10 per barrel of oil equivalent in 2024 compared to $5 per barrel in 2019, excluding the influence of Pioneer.
Those concerned about renewable energy adoption potential to jeopardize the company's financial well-being – ultimately jeopardizing the dividend – might be underestimating the impact of renewables. Fossil fuels will likely retain their critical role for years to come, and ExxonMobil is strategically preparing for this future. It recently pledged over $200 million to expand its recycling operations in Texas, aiming to reach an annual recycling capacity of 350 million pounds when the project commences in 2026. Moreover, ExxonMobil has inked a memorandum of agreement with LG Chem to procure up to 100,000 pounds of lithium carbonate for future production projects in the U.S.
Vitesse Energy: Focused Management Paying Dividends
Vitesse Energy has captured the interest of investors who remain hopeful that oil prices won't nosedive. The company operates a distinctive business model – it doesn't own or manage assets but rather identifies and invests in working interests in wells (in the Bakken region) operated by other companies. This allows Vitesse's management to focus on creating value for shareholders by wisely investing in productive assets and diversifying risk through investments in multiple wells.
Moreover, Vitesse's management hedges oil production to mitigate the impact of volatility. For instance, as of Q3 2024, management had hedged 43% of its expected oil production in 2025 at an average price of $73.21 per barrel. This strategy derisks the stock, making Vitesse a worthwhile option for investors confident in oil's price stability. Additionally, with a 7.5% dividend yield, Vitesse offers a promising passive income opportunity.
Clorox: Safe Stock with a Generous Yield
Clorox's ongoing success and scorching run (hitting a new 52-week high of $170 a share in November 2024) have left investors thrilled. This performance is largely owed to Clorox's seemingly flawless business turnaround. Profit margins are on the rise, sales are near all-time highs, and market share is being firmly regained across key categories. Management believes it can sustain this momentum, investing in marketing and advertising to support growth.
Clorox has consistently rewarded its shareholders with a growing, reliable dividend, uninterrupted for 40 consecutive years, currently yielding 2.9%. Even when Clorox faced challenges, its investors could depend on the company's stable, growing dividend. With higher valuations across the market, fewer companies can meet the trinity of appealing traits: stability, a long dividend history, and a healthy financial situation. Clorox remains a standout buy in this regard, providing investors a compelling income source with dependable growth.
While considering diversifying your portfolio, you might want to consider Vitesse Energy's focus on investing in productive assets, which helps mitigate risk through investments in multiple wells. With a 7.5% dividend yield, Vitesse Energy could be an attractive option for investors seeking passive income, especially those who are confident in oil's price stability due to its hedging strategy.
Moreover, in the realm of renewable energy, ExxonMobil is strategically preparing for the future by investing in projects such as the expansion of its recycling operations and collaborating with LG Chem for future lithium production projects. Despite the concerns about fossil fuels losing their critical role, ExxonMobil's vast energy value chain operations and commitment to rewarding shareholders, as evidenced by its 42-consecutive-year history of dividend hikes, make it a reliable dividend gem in the oil patch. Investors seeking reliable dividend stocks should certainly consider ExxonMobil.
