All It Takes Is $3,500 Invested in Each of These 3 High-Yield Dividend Stocks to Help Generate Over $500 in Passive Income per Year

Dividends are a simple way to collect income from stocks without selling part of a position. In this vein, dividends can be an excellent way to earn a return regardless of what stock prices are doing. Top companies support their dividend programs even during stock market sell-offs. Investors can then put that capital to work through buying stocks on the cheap during a market downturn.

Chevron (CVX -0.95%), ExxonMobil (XOM -0.49%), and Whirlpool (WHR -1.76%) are three dividend stocks with yields that are far higher than the S&P 500 (^GSPC -0.00%) yield of just 1.3%.

You can expect a $3,500 investment into each stock to produce an average yield of 5.3% and generate $560 in annual dividend income. Here’s why these three dividend stocks stand out as particularly compelling buys now.

Chevron is a big oil stock that provides investors with big dividends

Scott Levine (Chevron): There should be room (although amounts will vary) in most portfolios for growth stocks that have the potential for high rewards. But that’s not to say that dividend stocks should be left by the wayside. Reliable dividend stocks — like Chevron — should also play a role in helping investors grow their personal wealth. Even if you’re not familiar with the oil patch, Chevron stock — along with its enticing 4.5% forward dividend yield — is a great option right now.

For 38 consecutive years, Chevron has hiked its distribution higher. That’s no small thing. For a company to achieve a feat like this, it requires a management team that’s not only committed to shareholders but has the prowess to maintain the company’s financial health while positioning it for growth. This is incredibly challenging for Chevron, which has to navigate the volatility stemming from drops in energy prices.

Over the past three years, for example, the price of U.S. oil benchmark West Texas Intermediate has traded as high as $120 per barrel to below $70 per barrel. Nonetheless, the company is standing on firm ground with a conservative net debt-to-earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio of 0.4. A peek at its robust free-cash-flow generation over the past five years illustrates how the company has been able to source its dividends safely.

CVX Free Cash Flow Per Share (Annual) data by YCharts.

Management foresees sustained free-cash-flow growth in the coming years, thanks to the development of assets located off the Gulf Coast and the acquisition of Hess, expected in the third quarter of 2025.

There’s no guarantee that Chevron will continue hiking its dividend for another 38 years. Still, it seems well positioned to continue raising it for the foreseeable future, making it a great dividend opportunity for investors looking to boost their passive income.

ExxonMobil can thrive even at lower oil prices

Daniel Foelber (ExxonMobil): I agree with Scott that many oil and gas stocks are great buys right now. Especially financially sound majors like Chevron and ExxonMobil.

ExxonMobil stock has been sliding and reached a 52-week low last week. Lower oil prices and concerns of slowing economic growth are to blame.

West Texas Intermediate (WTI) crude oil prices, the go-to benchmark in the U.S., are hovering in the mid- to high $60 per barrel range at the time of this writing, which is noticeably lower than the average last year.

WTI Crude Oil Spot Price data by YCharts

According to data from the U.S. Energy Information Administration, WTI crude oil prices averaged $76.63 per barrel in 2024, $77.58 in 2023, $94.90 in 2022, and $68.13 in 2021. So present-day oil prices are on the low end of that four-year range.

ExxonMobil has a massive refining business and a growing low-carbon solutions division. But the upstream segment drives the bulk of earnings. Lower oil prices mean lower margins for ExxonMobil’s upstream business, so it makes sense that the stock price can move in lockstep with oil prices.

However, long-term investors may want to look past these short-term gyrations and focus on the big picture. Oil prices may be down, but ExxonMobil’s investment thesis is stronger than ever.

In its December corporate plan, ExxonMobil outlined how it expects to grow annual cash flows by $30 billion off a 2024 base — assuming $65 per barrel Brent crude oil prices and $3 per MMBtu Henry Hub natural gas prices. For context, Brent crude oil prices ($69.65 per barrel at the time of this writing) tend to be about $3 or $4 higher than WTI crude oil prices.

ExxonMobil doesn’t depend on higher oil prices, as we saw from 2022 to 2024. Rather, it plans its expenses, investments, and capital return program (buybacks and dividends) around more modest oil prices.

As for the dividend, ExxonMobil is about as good as it gets in the oil patch — with a 3.8% yield and 42 consecutive years of boosting its payout.

Add it all up, and ExxonMobil has the makings of a foundational dividend stock to buy now and boost your passive income stream.

Whirlpool will suit enterprising investors

Lee Samaha (Whirlpool): The appliance maker Whirlpool is a speculative buy for investors looking to capture a 7.7% dividend yield and the prospect of a turnaround in its fortunes in 2025. However, the company can do little about a weak housing market and, in turn, consumers’ reluctance to spend discretionary income on home improvements.

As such, the appliance market has shifted to lower-margin replacement demand. That shift hurt Whirlpool in 2024, and the company also had a disappointing fourth quarter on the back of a North American retailer destocking. In other words, selling existing inventory without replacing it like for like.

End market conditions are likely to remain challenging in 2025, and Whirlpool has $1.85 billion of its $6.6 billion in net debt maturing this year, and the sustainability of its dividend (costing $384 million in cash in 2024) is under question.

That said, management expects $500 million to $600 million in free cash flow in 2025 and intends to raise $550 million to $600 million by selling its remaining 51% stake in Whirlpool India to 20%. That should give it the resources to carry out management’s plan to pay down $700 million in debt, maintain its dividend, and refinance $1.1 billion to $1.2 billion of debt in 2025.

While its end markets remain weak, Whirlpool is launching over 100 new products this year. If the destocking in the fourth quarter turns out to be a one-off event and Whirlpool meets its guidance, then the plan is likely to work. Looking further out, an eventual recovery in housing, driven by lower interest rates, will drive sales growth and margin expansion.