3 Passive Income Powerhouses Down Between 9% and 39% to Buy in July
Key Takeaways
As the calendar turns to the second half of the year, some investors may be looking to boost their passive income s from dividend-paying stocks at compelling valuations. Devon Energy...
Article Overview
Quick insights and key information
6 min read
Estimated completion
real estate
Article classification
July 8, 2025
05:45 AM
The Motley Fool
Original publisher
As the calendar turns to the second half of the year, some investors may be looking to boost their passive income s from dividend-paying stocks at compelling valuations
Devon Energy (DVN -1. 65%), APA (APA -0. 59%), and McDonald's (MCD -0. 19%) are down between 9% and 39% from their 52-week highs at the time of this writing
Here's what makes these dividend stocks stand out in July
Image source: Getty Images
Devon Energy's dividend is safer than you think
Lee Samaha (Devon Energy): Sentiment toward energy stocks and oil has shifted to negative over the last year or so, whether in terms of investor sentiment or oil company management
A combination of fears over global growth in the light of the tariff conflict and an increase in OPEC duction has accentuated the decline in oil stocks over the last year, including the 31% decline in Devon Energy stock
However, that may not be such a bad thing
It presents value opportunities for investors seeking passive income, and Devon Energy is a great example. 24 quarterly fixed dividend equates to an annual dividend yield of just over 3% at the current price
In addition, it's set to generate bundles of cash even with a price of oil as low as $50 a barrel -- management estimates it will generate $1. 9 billion in free cash flow in 2025 at that price
That would easily cover the $650 million in cash it needs to pay the fixed dividend
Finally, Devon is a strong candidate for being one of the independent oil companies that increased hedging during the recent oil price spike
All told, unless the oil price drops considerably, Devon will have the cash flow to continue making $200 million to $300 million in buybacks per quarter and might even be willing to pay a variable dividend, making Devon Energy an excellent choice for passive income-seeking investors
Energy prices are down, making today a great time to gas up on APA stock Scott Levine (APA): At first glance, the fact that APA stock has plunged 15% year to date is certainly disconcerting -- especially considering that the S&P 500 has ripped nearly 7% higher during the same time period
But at second and third glances, you'll find that there's good reason to add APA stock and its 5. 1% forward-yielding dividend to your buy list for July
To consider a position in APA, investors have to recognize the nature of its as a pure-play exploration and duction company
Operating assets in the U. , Egypt, and Suriname, APA is strongly impacted by energy prices
Because its is only one end of the energy value chain, APA can't pull levers in the same way that oil supermajors Chevron and ExxonMobil can to compensate for declining energy prices
Consequently, the company is extremely sensitive to movements in energy prices
With the price of oil benchmark West Texas Intermediate plunging over the past year, the decline in APA stock is unsurprising
Addressing the lower energy prices environment, APA is taking steps to reduce expenses and ensure strong free cash flow -- and it's achieving success
In its first-quarter 2025 earnings presentation, the company noted that by imving efficiencies and reducing its rig count, it expects a $150 million reduction in development capital and a $50 million reduction in exploration capital
The company's off to a strong start in 2025
In Q1, it generated $126 million in free cash flow compared to $99 million during Q1 2024
For investors who have the resolve to endure volatility in energy prices -- and the comparable dips in APA stock -- today's a great time to invest
Hanging on the discount rack, APA stock is trading at 1. 6 times operating cash flow, a discount to its five-year average multiple of 2
A balanced buy for risk-averse investors Daniel Foelber (McDonald's): The fast food giant is a passive income powerhouse that is hiding in plain sight
McDonald's has raised its dividend for 48 consecutive years and consistently generates considerably more free cash flow (FCF) than its dividend -- allowing the company to raise its dividend year after year without straining its balance sheet
MCD Free Cash Flow Per data by YCharts McDonald's secret sauce and greatest competitive advantage is its franchise model -- whereby McDonald's corporate owns and operates around just 5% of locations
The other 95% or so are franchised
McDonald's buys the land -- which has been an excellent real estate investment over time
Its franchisees pay McDonald's rent and royalties
In exchange, they benefit from the instant global recognition of the McDonald's brand, its impeccable supply chain, marketing efforts, and more
By operating as a capital-light model, McDonald's drastically reduces the variance in its results
Even during the pandemic, McDonald's still generates so much FCF that it was nearly enough to cover its dividend
McDonald's stock has pulled back just under 10% from its all-time high in May -- ly because some investors are shifting away from dividend-paying value stocks toward growth stocks
McDonald's has a reasonable valuation at 31. 6 times FCF and 24 times forward earnings, but it isn't a dirt-cheap stock
The dividend yield is decent at 2. 4% -- but there are plenty of higher-yielding names out there for investors looking to really juice their passive income
McDonald's isn't growing at nearly the rate it used to in the past
Some investors may be concerned that the market is saturated and there are fewer opportunities for McDonald's to expand by opening new locations
Rather, the company needs to demonstrate it can grow comparable sales (comps) from existing locations
Its mobile app and rewards gram have helped
And McDonald's has experimented with different value options and items
However, these efforts have yet to yield meaningful bottom-line results
Despite room for imvement, McDonald's remains a solid blue-chip dividend stock for investors seeking a quality company to purchase in July
Daniel Foelber has no position in any of the stocks mentioned
Lee Samaha has no position in any of the stocks mentioned
Scott Levine has no position in any of the stocks mentioned
The Motley Fool has positions in and recommends Apa and Chevron
The Motley Fool has a disclosure policy.
Related Articles
More insights from FinancialBooklet