1 of my best passive income stocks has dipped!

This Fool details a passive income stock with an incredible dividend record. Shares have fallen recently, so should he add some to his holdings now?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Various denominations of notes in a pile

Image source: Getty Images.

As part of a diverse portfolio of holdings, I own specific stocks that help me make a passive income via dividend payments.

Smith & Nephew (LSE:SN) has an extraordinary dividend payment record. Recently, the shares have dipped. Should I add the cheapened shares to my holdings to make a passive income?

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

Medical technology

Smith & Nephew is a leading medical technology company with a presence in over 100 countries. It operates via three segments: orthopaedics, sports medicine and ENT, and advanced wound management.

As I write, Smith & Nephew shares are down 22% compared to this time last year. The shares are trading for 1,255p right now whereas, a year ago, they were trading for 1,613p.

The Covid-19 pandemic, stock market crash, and continued impact of the pandemic has hindered Smith & Nephew’s share price, in my opinion. A lot of its work is in elective surgeries. Due to the pandemic and stretched medical resources, elective surgeries were postponed as resources were dedicated to help assist with the pandemic. I believe the elective medical market is going to turn around. This should boost the Smith & Nephew share price and hopefully provide further returns and a passive income. 

Pandemic risk

The obvious risk for Smith & Nephew’s fortunes in the immediate future is the continued impact of the pandemic. New variants of the virus have emerged since the pandemic began in 2020. These new variants have caused new restrictions, as well as macroeconomic issues, and even mini market crashes. If another variant were to occur, and hospitalisations were to increase, elective procedures could be halted once more. This could hamper the company’s performance and any passive income I hope to make.

Passive income seeker

There aren’t many shares on the FTSE index that can profess to paying a consistent dividend since 1937. Well, Smith & Nephew can do that. It even paid a dividend during 2020, throughout the market crash period. Many firms across the globe cancelled dividends during the pandemic and crash to conserve cash, but not Smith & Nephew. As I write, its current dividend yield stands at a respectable 2%.

I do understand that past performance is not a guarantee of the future, however. Dividends can be cancelled at any time, of course, which would affect any passive income. My bullish stance towards SN stems from recent and historic performance. After all, good performance leads to shareholder returns. Looking back, I can see revenue and operating profit increases year on year for three years prior to 2020. 2020 levels were not far behind 2019 pre-pandemic levels.

Coming up to date, a notice of results released yesterday confirmed full-year 2021 results were due on 22 February. A Q3 update in November mentioned pre-Covid momentum was returning operationally and financially.

With the continued vaccine rollout, better management of the pandemic, and an ageing population, the market is primed for Smith & Nephew to grow rapidly in the coming years. This should lead to good performance and more dividend payments.

Overall, I think the Smith & Nephew shares are a no-brainer for my passive income portfolio. The shares look cheap right now due to the recent dip. A good track record of performance and a fantastic dividend payment record fill me with confidence that the future could involve lucrative shareholder returns for my holdings. I would add the shares to my portfolio.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Jabran Khan has no position in any shares mentioned. The Motley Fool UK has recommended Smith & Nephew. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Saucepan on a gas hob
Investing Articles

The Centrica share price is up 65%. Here’s why I sold

The Centrica share price has soared nearly two-thirds in a year. So why has our writer dumped his shareholding?

Read more »

Modern suburban family houses with car on driveway
Investing Articles

As the Howden Joinery share price falls, I’d buy and hold

The Howden Joinery share price has been falling. But Christopher Ruane likes its business model and is weighing adding it…

Read more »

Hand holding pound notes
Investing Articles

The tumbling Persimmon share price means an 11.3% yield! Should I buy?

A falling Persimmon share price has pushed the dividend yield into double-digits. Our writer considers his next move.

Read more »

Innovation and new ideas lightbulb concept 2022
Investing Articles

As stock markets crash, I’d buy these 4 FTSE 100 fallers!

After US stock markets tumbled on Wednesday, the FTSE 100 duly followed suit on Thursday. But falling share prices revealed…

Read more »

Compass pointing towards 'best price'
Investing Articles

A 7.6% dividend yield! Is the Aviva share price a bargain not to be missed?

The Aviva share price has recovered well since the 2020 stock market crash. As one of the top FTSE 100…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Investing Articles

Stock market crash: I’m hunting giants for future gains!

In this latest stock market crash, selling pressure is slamming share prices. But some great company stocks are being crushed,…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

With a P/E of just 8, this social media newcomer is a cheap stock pick!

This social media firm looks like a cheap stock pick for my portfolio. For a growing tech firm, it certainly…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

Warren Buffett has been selling dividend stocks. Should I be doing the same?

As Warren Buffett sells out of Abbvie, Bristol-Myers Squibb, and Verizon, our writer wonders whether he ought to be looking…

Read more »