Investing

Want $2000 in Passive Income? Invest $2500 Into These 6 Stocks

Lee Jackson

Published: January 27, 2024 11:10 am

Last Updated: February 2, 2024 7:43 am

After years of a low-interest rate environment, which has reversed significantly over the last 22 months but is again trending higher, many investors continue to turn to equities for growth potential and solid and dependable dividends that help provide an income stream. What this equates to is total return, which is one of the most potent investment strategies.

We screened our 24/7 Wall St. dividend equity research database, looking for stocks that pay massive dividends, and we found six companies that combined can generate over $2000 a year in passive income if you invest just $2500 in each stock.

AGNC Investment

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This company has paid solid monthly dividends for years, and the current yield is 14.66%. AGNC Investment Corp. (NASDAQ: AGNC) operates as a real estate investment trust (REIT) in the United States.

The company invests in residential mortgage pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by the United States government-sponsored enterprise or by the United States government agency.

The company funds its investments primarily through collateralized borrowings structured as repurchase agreements. The company has elected to be taxed as a REIT under the Internal Revenue Code 1986. It would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders.

$2500 invested in the shares at current trading levels would buy 254 shares that would produce $365 in income yearly.

Annaly Capital Management

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This is another mortgage REIT that has been around for years and is a top-income idea paying a 13.24% dividend. Annaly Capital Management Inc. (NYSE: NLY) is a diversified capital manager in mortgage finance.

The company invests in agency mortgage-backed securities collateralized by:

• Residential mortgages
• Non-agency residential whole loans
• Securitized products within the residential and commercial markets; mortgage servicing rights
• Agency commercial mortgage-backed securities
• Residential mortgage loans
• Agency or private label credit risk transfer securities

It has elected to be taxed as a real estate investment trust (REIT). As a REIT, it is not subject to federal income tax to the extent that it distributes its taxable income to its shareholders.

Investing $2500 would buy 130 shares, producing an annual income of $338.

Arbor Realty Trust

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This company trades at a ridiculous 6.9 times trailing earnings and pays a massive 12.63% dividend. Arbor Realty Trust (NYSE: ABR) invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States.

The company operates in two segments:

• Structured Business
• Agency Business.

Arbor Realty Trust primarily invests in:

• Bridge and mezzanine loans
• Junior participating interests in first mortgages
• Preferred and direct equity
• Real estate-related joint ventures
• Actual estate-related notes and various mortgage-related securities.

The company offers bridge financing products to borrowers who seek short-term capital to be used in an acquisition of property;

• Financing by making preferred equity investments in entities that directly or indirectly own real property;
• Mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction;
• Junior participation financing in the form of a junior participating interest in the senior debt
• Financing products to borrowers seeking conventional, workforce, and affordable single-family housing.

In addition, it underwrites, originates, sells, and services multifamily mortgage loans through conduit/commercial mortgage-backed securities programs.

Investing $2500 would buy 181 shares at current prices, which would pay $312 annually.

Berry Corporation

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While off the radar, trading at just ten times earnings and posting a stunning 14.06% dividend, this could be a huge winner. Berry Corp. (NYSE: BRY), an independent upstream energy company, develops and produces conventional oil reserves in the western United States.

It operates through:

• Exploration and Production (E&P)
• Well Servicing and Abandonment (CJWS) segments.

The E&P segment develops and produces onshore, low geologic risk, and long-lived conventional oil and gas reserves in California and Utah.

CJWS provides well site services in California to oil and natural gas production companies with a focus on:

• Well Servicing
• Well abandonment services and water logistics
• Rig-based and coiled tubing-based healthy maintenance and workover services
• Completion services
• Fluid management services
• Fishing and rental services
• Ancillary oilfield services.

Investing $2500 would purchase 360 shares, producing an income of $350.

FS KKR

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This is a well-known name on Wall Street, offers a solid entry point at current levels, and pays a massive 13.57% dividend. FS KKR Capital Corp. (NASDAQ: FSK) is a business development company specializing in investments in debt securities. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments.

The company also seeks to invest in:

• First-lien senior secured loans
• Second-lien secured loans
• Subordinated loans or mezzanine loans.

In connection with the debt investments, the firm also receives equity interests such as warrants or options as additional consideration. It also seeks to purchase minority interests in common or preferred equity in our target companies, either in conjunction with one of the debt investments or through a co-investment with a financial sponsor.

The fund may invest in corporate bonds and similar debt securities opportunistically.

The fund does not seek to invest in start-ups, turnaround situations, or companies with speculative business plans.

It aims to invest in small and middle-market companies in the United States with annual revenue between $10 million and $2.5 billion. It seeks to exit from securities by selling them in a privately negotiated over-the-counter market.

At current trading levels, investing $2500 would buy 120 shares, delivering an annual income of $336.

Orchid Island Capital

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While another very off-the-radar idea, this company pays investors a giant 16.65% dividend. Orchid Island Capital (NYSE: ORC) invests in residential mortgage-backed securities (RMBS) in the United States.

The company’s RMBS is backed by single-family residential mortgage loans, referred to as Agency RMBS.

Its portfolio includes

• Traditional pass-through Agency RMBS, such as mortgage pass-through certificates and collateralized mortgage obligations
• Structured Agency RMBS comprising interest-only, inverse interest-only, and principal-only securities.

Buying $2500 worth of the stock would score investors 287 shares, generating an annual income of $413.

The good news for investors is that these six stocks, with a combined purchase price of only $15,000, would generate a whopping $2115 yearly income. The downside would be that this passive income portfolio is overweighted to mortgage REITs. With that caveat in place, this is the ticket for investors who need to generate as much investment income as possible.