All It Takes Is $3,000 Invested in Each of These 3 Dividend Kings to Help Generate $280 in Passive Income in 2025

There are plenty of ways to generate passive income, such as real estate, bonds, certificates of deposit, savings accounts, and more. You can even generate passive income from holding stocks.

Some companies choose to pass along a portion of their profits to shareholders through dividends, which is a way to gain passive income without selling shares. The best dividend-paying companies have track records for increasing payouts, solid yields, and runways for future earnings growth that can support more dividend raises.

An especially elite cohort of dividend stocks are Dividend Kings, which have raised their payouts for at least 50 consecutive years. Illinois Tool Works (NYSE: ITW), Stanley Black & Decker (NYSE: SWK), and Target (NYSE: TGT) are three standout Dividend Kings. Investing $3,000 in each stock should generate about $280 in passive income in 2025 based on the yield of each stock at the time of this writing. However, you can expect the amount of passive income to increase every year if each company continues raising its payout.

Here’s why all three dividend stocks are great buys for the new year.

Sparks fly as a person wearing personal protective equipment uses a power tool in an industrial setting.
Image source: Getty Images.

Illinois Tool Works, commonly known as ITW, is down about 8% during the past month. The sell-off presents a unique opportunity for investors to scoop up shares of this proven winner.

A wave of split-ups is sweeping the industrial sector. GE has had success operating under three separate stand-alone business units — GE Aerospace, GE Vernova, and GE HealthCare Technologies. Honeywell International may soon follow suit by spinning off its aerospace segment. FedEx just announced the spin-off of its freight business. It seems the conglomerate business model is out of favor, but that doesn’t mean it can’t be a good fit for companies like ITW.

ITW is an excellent example of a well-executed conglomerate business model. The company focuses mainly on business-to-business sales and has seven different business segments — automotive, food equipment, test and measurement and electronics, welding, polymers and fluids, construction products, and specialty products. Despite their differences, all seven segments are known for generating high operating margins and steady growth, with no single segment making up too large a share of the broader business.

ITW gives a lot of freedom to each segment, encouraging what it calls customer-back innovation. Instead of ITW developing new products and hoping they stick, the company listens to its customers — knowing that if it can solve their problems, customers are more likely to increase their order volumes.