Forget Bitcoin! I’d buy these dividend stocks for lifelong passive income

Bitcoin, Ethereum, and Cardano are all rallying in early 2023. But I’m looking at the stock market for passive income investing.

Cryptocurrencies

Since cryptocurrencies do not generate cash, the only way to earn money is to sell them to others. This gives me two problems from a passive income perspective.

The first is to get a return on my investment depending on the price going up. And this may be uncertain and difficult to predict.

The second problem is that making money by selling always means I have less than when I started. As an investor, I want to build assets, not sell them.

With stock, there is no such problem. And there are two stocks in particular that I plan to buy for my portfolio this month.

Bank of America

Top of the list of passive income stocks to buy right now is Bank of America (NYSE: BAC). Warren Buffett loves stocks and I don’t think it’s hard to see why.

At current prices, the stock yields a dividend yield of more than 2.5%. So a £1,000 investment would now return around £23 a year in dividend income after tax.

But there’s more to Bank of America as a passive income stock than dividends. The company has also been repurchasing shares by an average of 2.8% per year over the last decade.

This means that I can sell a portion of my investment in Bank of America each year without diluting my stake in the overall business. Doing so will generate additional income.

InterContinental Hotels Group

I have eyes too InterContinental Hotels Group (LSE:IHG). This is a business that provides passive income.

IHG operates on a franchise model. That means the hotel is run by individual entrepreneurs, while the business takes a cut of the profits in exchange for using the brand.

As a result, the company has very low costs. About 80% of the company’s operating income is free cash that can be distributed to shareholders.

The dividend yield on this stock is 2.2%. An investment of £1,000 today will generate around £22 in passive income per year.

The company has increased its dividend over time, though. Despite the pause during the pandemic, the dividend paid to IHG shareholders has increased by an average of 6% annually.

Stock dividend

I’m not saying it’s impossible to make money by buying cryptocurrency. It really is, if the price goes up.

You can also make money like this through stocks, though. And I see no reason to think that the price of BItcoin is more likely to rise than the price of equity.

Unlike cryptocurrency, stocks like the two I know can generate cash regardless of what happens to the stock price. That’s why I prefer them to be investors looking for passive income.

A recession is a significant risk for both companies. Economic weakness could challenge profits at Bank of America and InterContinental Hotels.

But both businesses have been through recessions before and each has a balance sheet to overcome the other. That’s why I see the economic slowdown as a temporary headwind for stocks that can provide lifetime passive income.