3 Passive Income Powerhouses Down Between 9% and 39% to Buy in July

Core Viewpoint - Investors are looking to enhance passive income through dividend-paying stocks that are currently undervalued, with Devon Energy, APA, and McDonald's being highlighted as notable options in July. Group 1: Devon Energy - Devon Energy's stock has declined by 31% over the past year, influenced by negative sentiment towards energy stocks and increased OPEC production [3] - The company offers a quarterly fixed dividend of $0.24, translating to an annual yield of over 3%, and is projected to generate $1.9 billion in free cash flow in 2025 even with oil prices at $50 per barrel [4] - Devon is expected to maintain cash flow for share buybacks of $200 million to $300 million per quarter and may consider a variable dividend, making it attractive for passive income investors [5] Group 2: APA - APA's stock has dropped 15% year-to-date, contrasting with a nearly 7% rise in the S&P 500, but it offers a forward dividend yield of 5.1% [6] - As a pure-play exploration and production company, APA is highly sensitive to energy price fluctuations, which have negatively impacted its stock [7] - The company is successfully reducing expenses, expecting a $150 million decrease in development capital and a $50 million reduction in exploration capital, with Q1 2025 free cash flow at $126 million compared to $99 million in Q1 2024 [9] Group 3: McDonald's - McDonald's has increased its dividend for 48 consecutive years and generates significantly more free cash flow than its dividend obligations, ensuring sustainability [11] - The franchise model allows McDonald's to operate capital-light, reducing variance in results and maintaining strong free cash flow even during downturns [13][14] - Despite a nearly 10% pullback from its all-time high, McDonald's maintains a reasonable valuation with a dividend yield of 2.4%, although it faces challenges in expanding its market presence [15][16][17]