Bulging Economy, Best Chance to Create Passive Income from Dividends

In a growing economy, the ways to Earn Passive Income are galore. However, the path to generate wealth than income is very slender.

Building Passive Income Ideas emanate from the feeling of having greater financial freedom without working actively. Passive income can help one in securing money for retirement and leave with time to pursue your passions.

Wealthy people follow a common principle that if you do not find a way to make money while you sleep; you will work until you die. Going by this, investing in dividend stocks is possibly one of the Best Ways to Make Passive Income. A good dividend yielding stock not only generate potential regular income but may or may not also drive capital appreciation over time.

Best Passive Income Investments in below given stocks have the potential to offer steady returns.

Santos Limited (ASX: STO)

Santos Limited recently announced the signing of a binding long-term LNG Supply and Purchase Agreement (SPA) with Hokkaido Gas Co., Ltd. This agreement entails the provision of LNG from Santos’ portfolio of world-class LNG assets. 

During the 1Q 2024 quarter ended 31 March 2024, the company reported production of 21.8 million barrels of oil equivalent (mmboe) despite severe weather events and planned maintenance activities. The company also achieved strong free cash flow from operations amounting to US$692 million and sales revenue of US$1.4 billion.

Santos Limited has established itself as a consistent dividend payer, as evidenced by its track record of returning value to shareholders through regular dividend distributions

Santos Limited has announced a final dividend of US17.5 cents per share unfranked, totalling US$569 million. This represents a notable 14% increase from the previous fiscal year (FY22). 

This significant increase in dividends reflects Santos’ strong financial performance and commitment to delivering value to its shareholders. Moreover, the company’s completion of its previously announced share buy-back program further underscores its dedication to enhancing shareholder returns and confidence in its future prospects.

Santos Limited is on track for some exciting developments in its dividend payouts! With a projected increase to $0.1 per share, followed by further escalations to $0.21 per share by February 2025 and $0.35 per share by February 2028, shareholders have reason to be optimistic. These forecasts suggest a commitment from the company to prioritize shareholder returns, which can contribute to investor confidence and potentially attract new investors looking for steady income streams.

MyState Limited (ASX: MYS)

MyState Limited in its 1H24 results declared on 23 February 2024, revealed various key insights. The period saw a 4% increase in new customers, reaching 7,690, and a slight 1% uptick in home lending, totaling $7.9 billion. Notably, the Net Promoter Score (NPS) surged by 7 points to +41, indicating improved customer satisfaction and loyalty.

The company’s operating costs decreased by 1.5% to $49.8 million, reflecting better cost management, while the total capital ratio strengthened by 16 basis points to 15.6%, ensuring financial stability.

Moreover, Total Permanent Trust (TPT) funds under management exceeded $1 billion by 31 December 2023, highlighting growth and stability in fund management activities.

The company’s financial performance has shown positive trends as indicated by the decrease in both the Price-to-Sales (P/S) and Price-to-Earnings (P/E) ratios. These declines suggest improved efficiency in generating sales and a more favorable assessment of earnings by investors. Overall, these shifts in valuation metrics imply strengthened investor confidence and positive prospects for the company’s financial performance.

The company has established itself as a reliable dividend payer, with its dividend yield showing a consistent increase since 2020. Demonstrating a commitment to maintaining consistency in dividend payments, the Board declared a final dividend of 11.5 cents per share, fully franked, for the 2023 fiscal year, representing a payout ratio of 64.9% of after-tax earnings. 

The company anticipates promising growth in its dividend cash flows, projecting a gradual increase in the coming years. As of August 2024, the forecasted dividend sits at $0.07 per share, indicating an initial uptrend. This positive momentum is anticipated to continue, with dividends projected to climb to $0.12 per share by August 2025 and further to $0.13 per share from August 2026 to August 2028. These forecasts underscore the company’s steadfast dedication to sustaining and potentially enhancing shareholder returns in the foreseeable future.

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