Work smarter, not harder, says the adage. Passive income is derived from ownership rather than labor or active involvement in an enterprise. One of the best ways for investors to create a stream of passive income is by owning stocks with healthy and reliable dividends or distributions.
We screened our 24/7 Wall St. dividend equity research database, looking for stocks that pay massive dividends, and we found five that combined can generate over $1,000 a year in passive income if you invest just $1,500 in each stock.
AGNC Investment
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- Stock: AGNC Investment Corp. (NASDAQ: AGNC)
- Shares for $1,500: 160
- Yield: 15.3%
- Annual passive income: $229.50
This real estate investment trust (REIT) invests in residential mortgage pass-through securities and collateralized mortgage obligations with principal and interest payments guaranteed by the U.S. government. AGNC pays dividends on a monthly basis. The stock is up more than 34% since its 52-week low last October, outperforming the S&P 500 in that time. However, shares are down about 5% year to date.
Chicago Atlantic Real Estate Finance
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- Stock: Chicago Atlantic Real Estate Finance Inc. (NASDAQ: REFI)
- Shares for $1,500: 96
- Yield: 13.8%
- Annual passive income: $207.00
This commercial real estate finance company was incorporated in 2021. It offers exposure to the cannabis industry via its private credit opportunities to licensed cannabis operators. The stock is marginally higher than a year ago but down about 4% year to date. The consensus recommendation is to buy shares, and the analysts have a mean price target that indicates the shares have about 13% potential upside in the next 12 months.
CION Investment
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- Stock: CION Investment Corp. (NASDAQ: CION)
- Shares for $1,500: 137
- Yield: 14.6%
- Annual passive income: $219.00
Based in New York City, this business development company saw its co-CEOs buy small batches of shares back in November, and it declared a special distribution of $0.15 per share in December. The share price is more than 8% higher than the 52-week low seen last spring, but it is down about 3% year to date. The analysts’ mean price target is around 5% higher than the current share price.
CVR Energy
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- Stock: CVR Energy Inc. (NYSE: CVI)
- Shares for $1,500: 43
- Yield: 13.3%
- Annual passive income: $199.50
This petroleum refiner and nitrogen fertilizer manufacturer is based in the Houston area. The company was founded in 1906 and is now a subsidiary of Icahn Enterprises. It pays a dividend three or four times a year and also pays out special dividends. The somewhat volatile share price is up less than 10% in the past year, underperforming the Down Jones industrials. That gain includes a 14% pop year to date. The stock currently has overrun the consensus price target of analysts.
Starwood Property Trust
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- Stock: Starwood Property Trust Inc. (NYSE: STWD)
- Shares for $1,500: 78
- Yield: 9.7%
- Annual passive income: $145.65
Another REIT, this one originates, acquires, finances and manages commercial mortgage loans and other commercial real estate debt and equity investments. It too has found the lending market challenging. While the shares are down less than 9% both in the past year and year to date, they are also about 20% higher than the 52-week low. Six out of seven analysts who cover the stock recommend buying shares.
$1,000 in Passive Income
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So, for a $7,500 investment split evenly between these five stocks, the investor creates a passive income stream of almost exactly $1,000 per year.
| Stock | Investment | Annual Income |
|---|---|---|
| AGNC | $1,500 | $229.50 |
| REFI | $1,500 | $207.00 |
| CION | $1,500 | $219.00 |
| CVI | $1,500 | $199.50 |
| STWD | $1,500 | $145.65 |
| Total | $7,500 | $1,000.65 |
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