Investing

Want $10,000 In Passive Income? Invest $8,000 Into These 12 Dividend Stocks

John Seetoo

Published: May 21, 2024 11:36 am

24/7 Wall Street Insights:

• Since the average national salary is $59,428, one could conclude that most households need another income source, and passive dividend income can be an excellent choice.
• Roughly 34% of S&P 500 company stocks carry a dividend, so the menu of options is large. 
• Access this a free report on two high-yield dividend stocks to buy now 

Since 2021, inflation has made the cost of living skyrocket. Housing prices, for example, soared to the point where $400,000 annual income was required to afford a home in Seattle. In spite of the claims from statisticians who cite employment or other numbers to make a case for inflation slowing down, Americans across the nation have not seen the prices of essentials go down; only up.

The Daily Mail recently published a study on the real-life effects of inflation on American families, and analyzed what the average family of four would need in terms of household income to live comfortably in each state. The results were startling.

The most expensive state was calculated to be Massachusetts. A family with two children and two working parents was estimated to require $301,184 per year to live comfortably, based on contemporary cost of living prices for food, medical, utilities, and other daily expenses. 

The most inexpensive state was Mississippi, which calculated at $177,798 per family, annually. Data was culled from the Living Wage Calculator at MIT. 

Based on these results, a $100,000 salary would be categorized as “lower middle class”, and given that the average national salary is $59,428, a large majority of households are between a proverbial rock and a hard place: tighten belts and cut expenses drastically, or increase household income. To accomplish the latter, a two income household would be hard pressed to get a third job or create a side hustle. However, if the family has investable liquid assets, dividend stocks might be a viable option.

24/7 Wall Street has a large database of dividend stock from all different industrial sectors. We have published articles about dividend stocks for both the experienced investor as well as the novice. Dividend stocks offer diversification, high liquidity, a wide selection of volatility ranges to suit all levels of risk tolerance, and 24/7 price transparency, thanks to the internet. This is a combination of features difficult to match with other investment platforms and asset classes. 

The below list is a sample portfolio collection of dividend stocks that, based on market prices at the time of this writing, could cumulatively deliver $10,000 in passive income annually. 

ARMOUR Residential REIT, Inc.

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Stock #1 : Armour Residential REIT, Inc. (NYSE: ARR)

Yield: 14.99%

Shares for $8,000: ~ 416.6

Annual Dividend Income: ~$1,199.20

Located in Vero Beach, FL, Armour Residential REIT, Inc. is a real estate investment trust that manages a portfolio of US agency backed mortgage securities from Freddie Mac, Fannie Mae, and Ginny Mae. As a registered REIT, it is required to remit 90% of profits back to shareholders. While Armour Residential REIT, Inc. delivers a very high dividend, analysts do not see much fundamental reason as to why there will be any strong capital appreciation upside potential, so it is not expected to stray outside of its current 13.32-27.00 price range unless there are new announcements. 

The Cato Corporation

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Stock #2 : The Cato Corporation (NYSE: CATO)

Yield: 12.76%

Shares for $8,000: ~1,506.6

Annual Dividend Income: ~$1,020.80

Retail fashion apparel and accessories are the platform that built such successful store chains as Neiman Marcus and Nordstrom. Charlotte, NC headquartered The Cato Corporation uses that same template for its chain of retail outlets and e-commerce sales. Founded in 1946, the company is still under Cato family control, with John Derham Cato serving as current CEO, Chairman, and President. 

Sporting roughly 1,300 locations, primarily in shopping malls, Cato stores carry lines of primarily women’s fashion and sportswear, along with men’s and children’s lines, plus footwear and accessories. Most of the products are under the following brands: Cato, Cato Fashions, Cato Plus, It’s Fashion, It’s Fashion Metro, and Versona. Cato Corporation also has a finance component through its store credit card offerings. 

As of February 2024, Cato Corporation had over $100 million cash and zero debt on its books. 

Brandywine Realty Trust

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Stock #3 : Brandywine Realty Trust (NYSE: BDN)

Yield: 12.27%

Shares for $8,000: ~1,663

Annual Dividend Income: ~$981.60

One of the largest publicly traded hands-on commercial and residential real estate management REITs in the US, Brandywine Realty Trust owns, develops, and leases over 24 million square feet of space. Brandywine Realty Trust’s $5 billion real estate portfolio is focused primarily in Austin, TX, Washington, DC, and Philadelphia, PA, where Brandywine’s head office resides.  

Of particular interest – recent research from Insider Monkey confirmed that 22 different hedge funds were currently shareholders of BDN stock.

Franklin BSP Realty Trust, Inc.

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Stock #4 : Franklin BSP Realty Trust, Inc. (NYSE:FBRT)

Yield: 10.81%

Shares for $8,000: ~ 609

Annual Dividend Income: ~$864.80

New York’s Franklin BSP Realty Trust, Inc. is a hybrid type of REIT that engages in direct origination of mortgages, ownership of brick and mortar properties (via foreclosure or direct purchase), as well as portfolio management of real estate related loans and other debt investments.

Institutional ownership interest in Franklin BSP Realty Trust is strong at 56%. Among the largest shareholders are asset management titan BlackRock, Inc. at 17.08%, Vanguard Group, Inc. at 10.96%, and State Street Corp., at 4.05%.

Generation Income Properties

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Stock # 5: Generation Income Properties (NASDAQ: GIPR) 

Yield: 10.68%

Shares for $8,000: ~1,826

Annual Dividend Income: ~$854.40

Generation Income Properties is a REIT that owns and manages commercial properties in a number of states, such as CA, VA, IL, TX, CO, AL, AZ, OH, GA, ME, PA, NC, and FL, where it operates out of Tampa. 

Commercial tenants include some well known entities, including Starbucks, Kohl’s, Walgreens,  Sherwin-Williams, Dollar General, La Z Boy, and Pratt & Whitney Engines. 

Cross Timbers Royalty Trust

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Stock #6 : Cross Timbers Royalty Trust (NYSE: CRT)

Yield: 10.45%

Shares for $8,000: ~568

Annual Dividend Income: ~$836.00

Another stock that pays out a monthly dividend, Dallas, TX based Cross Timbers Royalty Trust serves in a trust capacity to handle 90% of net profits from oil and gas producing properties in TX, NM and OK. Historically, the name “Cross Timbers” comes from travelers in north Texas attempting to cross to the open prairies to the east and west finding the dense woodlands an obstacle to their pathways.

Although it has a relatively innocuous presence, Cross Timbers has caught the attention of some institutions, with Beacon Pointe Advisors, LLC the largest shareholder at 1.19% of outstanding shares. Morgan Stanley owns a 0.51% stake in CRT stock as well. 

Angel Oak Mortgage REIT, Inc.

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Stock #7 : Angel Oak Mortgage REIT, Inc. (NYSE:AOMR)

Yield: 10.44%

Shares for $8,000: ~634.9

Annual Dividend Income: ~$835.20

Some REITs are set up to buy mortgage securities for their portfolios. Some create mortgages by doing the origination in-house. Angel Oak Mortgage REIT, Inc. acquires first lien mortgages and then securitizes them for sale to other REITs and institutions. 

Based in Atlanta, GA, Angel Oak Mortgage REIT, Inc. gets its high-quality mortgage loans from various Angel Oak companies. The securitization of the mortgages enables Angel Oak Mortgage REIT to use term structural leverage instead of mark-to-market leverage. The REIT subsequently retains 5-10% market value of the new securities, of which the interest-only and subordinated tranches generate additional revenues without leverage. The proceeds are then used to purchase additional high-quality mortgages, and the cycle repeats.

NextEra Energy Partners

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Stock #8 :  NextEra Energy Partners (NYSE:NEP)

Yield: 10.28%

Shares for $8,000: ~237.9

Annual Dividend Income: ~$822.40

NextEra Energy, Inc. (NYSE: NEE) is a clean energy electric utility company with a $156 billion market cap and a 2.71% yield. It formed a Limited Partnership to create NextEra Energy Partners (NYSE: NEP) to acquire, own, and manage renewable energy assets as well as new projects in the space. The bulk of these are in wind and solar power electricity generation platforms. 

Zacks currently has NextEra Energy Partners as a “buy” and estimated its earnings up 194.5% since February, 2024. 

Fortitude Gold Corporation

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Stock #9 : Fortitude Gold Corporation (OTC: FTCO)

Yield: 10.09%

Shares for $8,000:~1,639

Annual Dividend Income: ~$807.20

One of the most reliable asset classes to hedge against inflation is precious metals. However, with gold at over $2,400 per ounce, investors with deep pockets have already been accumulating it and driven the world market price up. Physical gold and any ETF that holds gold is likely to move in tandem, so the next best opportunity for less affluent individual investors looking for a lagging indicator to latch onto might be in a gold mine stock that also delivers a sizable dividend.

With ownership of five gold mine properties in Nevada, Colorado Springs, CO headquartered Fortitude Gold Corporation is a gold and silver mining company with ongoing operations. Their flagship project is the Isabella Pearl Mine, which has 601 unpatented claims stretching across  10,430 acres in Nevada. Proven reserves can potentially yield up to 220,000 oz. of gold and 1.3 million oz. of silver. 

Redwood Trust, Inc.

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Stock: #10 : Redwood Trust, Inc. (NYSE: RWT)

Yield: 9.65%

Shares for $8,000: ~1,240

Annual Dividend Income: ~$772.00

Based in Mill Valley, CA, Redwood Trust, Inc. is a REIT that is involved with multiple segments on the financial side of real estate. Redwood Trust separates its myriad operations into various divisions:

• Residential Consumer Mortgage: this segment deals with third party acquisition of individual residential mortgages, mortgage-backed securities, and mortgage related debt. 
• CoreVest – Residential Investor: this segment originates loans on residential properties. The loans can take the form of long-term mortgages, shorter term bridge loans, construction loans, or revolving credit lines.  
• Investment Portfolio: this division manages the portfolio of cumulative mortgages, mortgage-backed securities, and mortgage-related debt, both originated by CoreVest or acquired by the Residential Consumer Mortgage segments.   
• RWT Horizons:  created as a venture capital entity specializing in financial and real estate technology at the seed capital and early development stages, RWT Horizons initiates strategic partnerships with those cutting-edge companies whose products and/or technologies will contribute to better efficiencies and strategic advantages for Redwood Trust.
• Aspire: created a real estate investment platform as opposed to a loan program, Aspire provides home equity upfront cash to homeowners in exchange for the future value of the appreciated percentage stake in the property. 

Global Medical REIT Inc.

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Stock #11 : Global Medical REIT Inc. (NYSE: GMRE)

Yield: 9.44%

Shares for $8,000: ~898.8

Annual Dividend Amount: ~$755.20

Global Medical REIT Inc. owns and manages commercial real estate property that specifically leases to tenants in the medical and healthcare fields. From its Bethesda, MD headquarters, Global Medical REIT Inc. manages 394 leases across 185 buildings. 

At the end of the first quarter of 2024, the GMRE portfolio consisted of $1.4 billion in real estate properties and included $4.8 million of total leasable square feet, 96.4% occupancy, 5.8 years of weighted average lease term, 4.8 times rent coverage, with 2.2% weighted average contractual rent escalations. The company recently acquired a 15 property portfolio of outpatient medical real estate, fully occupied and triple net lease, for $81 million. 

Black Stone Minerals, L.P.

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Stock #12 : Black Stone Minerals, L.P. (NYSE: BSM)

Yield: 9.41%

Shares for $8,000: ~494.7

Annual Dividend Income: ~$752.80

Houston, TX based Black Stone Minerals, L.P. has been in the natural resources business for 148 years. The company’s origins were focused on the lumber business, but it would subsequently expand to include mineral royalties, along with oil and gas drilling, in the 1960s. By 1998, Black Stone Minerals, L.P. had divested itself of timber, oil, and gas to focus on mineral rights and land acquisitions. It is presently one of the largest mineral rights companies in the US.

Prudent monitoring of any stock portfolio on a regular basis is only common sense. However, dividend stocks from which the investor is reliant on dividend income require more meticulous monitoring, as news, market events, and Board decisions can often affect dividend amounts, schedules, and ex-dividend dates. Luckily, dividend stocks are routinely high liquidity and there are more than sufficient alternative stocks for one to switch within a portfolio to generate close to equivalent returns.