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Successful passive income investors are those who most effectively balance risk, dividend yield and share price before committing their capital. Any stock with a 25-year streak of increasing dividends is worth considering, especially if it’s underpriced. That’s why you may be interested in these potentially undervalued dividend aristocrat stocks that investment author Rick Orford believes are primed to break out in 2025.
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Chevron provides a product that is the lifeblood of global shipping, transportation and travel and has a massive market share. These factors have combined to make Chevron stock a reliable dividend option for passive income investors. Public filings show Chevron has increased its dividend for 37 straight years, meaning most Gen Z investors weren’t even born the last time this petroleum giant cut its dividend.
Despite that, Chevron shares are trading at almost 10% less than their 52-week peak, which means there is considerable upside here next year. Rick Orford notes that analysts see Chevron’s shares topping out in the $190 range, which leaves plenty of room for growth from its current $150 share price range. Buy now and you could get all that upside while earning a 4.33% dividend.
Real estate investment trusts can be excellent options for dividend investors and Federal is a prime example. This REIT operates prime retail and mixed-use assets in some of America’s most competitive metro areas. The highly trafficked and visible nature of Federal’s assets allows this REIT to rent space on long-term, triple-net leases at a healthy price premium. This advantage has translated to solid earnings for shareholders.
Federal Realty Investment Trust is a rarity in that it holds both dividend aristocrat and dividend king status, which it earned on the back of a 56-year streak of increased dividends. Better still, analysts at Raymond James just upgraded their target for Federal to $120 and it’s currently trading at $112. That leaves plenty of room for share appreciation in 2025 while earning a 3.86% dividend.
Although big tech is getting the lion’s share of the investment world’s attention, the pharmaceutical sector is still immensely profitable. AbbVie is a pharmaceutical company that produces a variety of popular medications, such as Humira, Skyrizi, Rinvoq and Botox. The combined annual revenue for these drugs is in the tens of billions of dollars. Since they treat chronic conditions like arthritis and autoimmune diseases, AbbVie looks set to continue earning for its shareholders.
Morgan Stanley analysts recently upgraded AbbVie’s share price target to $218 and Citigroup isn’t far behind with its $215 prediction. Both represent an upgrade from previous price targets and TD Cowen sees AbbVie shares topping out at $225. With AbbVie shares currently trading in the $187 range and paying a 3.27% dividend, 2025 could be a huge year if it meets analysts’ expectations.
It’s also worth noting that AbbVie is working on a drug to treat Parkinson’s disease. The current expectation is that this drug may hit the market in 2027, which could make AbbVie a stock to buy and hold soon. Of course, nothing is ever guaranteed, but adding a Parkinson’s drug to an already strong pharmaceutical lineup might push AbbVie shares into the stratosphere.
The current interest rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through publicly-traded REITs.
