Want $5,000 a Year in Passive Income? Just Buy These 3 High-Yield Dividend Stocks With $50k

Earning $5,000 in passive income per year with a $50,000 total investment is possible if you use the right strategy. Dividend stocks can get you there, but you don’t want to sacrifice safety in your quest for high yield.

Maybe you’ll be tempted to go out and find individual stocks that will get you to that $5,000 yearly goal. However, $16,667 (one-third of $50,000) invested in three exchange-traded funds can provide a better risk-to-reward balance. Ultimately, picking the right high-yield ETFs is the simplest way to jump into the exciting world of dividend stock investing.

Enhance Your Returns With QDVO

If you have $50,000 to invest and want to generate $5,000 per year in passive income, you’ll need to achieve 10% average annual yield across your holdings. Bear in mind, you’ll need to subtract any fees you might end up paying.

You can try to populate your portfolio with high-yield stocks, but there aren’t many stocks offering annual dividend yields of around 10%. Even if you manage to find companies that pay 10% yields, they won’t necessarily be safe or reliable investments.

There is a simple solution, though. The Amplify CWP Growth & Income ETF (NYSEARCA:QDVO) is designed to provide consistent income without excessive risk and without the need to pick individual stocks.

With 48 stocks in its holdings, the QDVO is diversified and therefore provides a level of safety. It’s also fairly safe because the fund invests in large, well-known businesses that you’ll probably recognize.

Surely, you won’t lose sleep at night if you’re invested in QDVO stock holdings like Apple (NASDAQ:AAPL), Procter & Gamble (NYSE:PG), Coca-Cola (NYSE:KO), Costco Wholesale (NASDAQ:COST), Visa (NYSE:V), and Home Depot (NYSE:HD). And if you bought these stocks individually, you definitely wouldn’t achieve a 10% average annual dividend yield.

The Amplify CWP Growth & Income ETF uses stock dividends and sophisticated options-trading strategies to bring you a 9.87% distribution rate (i.e., annual dividend yield). Even after you deduct the 0.55% worth of operating fees, you should still get 9.32% annual yield.

With $50,000 in cash to invest, you could allocate one-third of that ($16,667) toward the DIVO ETF. As an added bonus, this fund will pay you a distribution every month, so you won’t have to wait very long to see the results.

Meet Your Goal With QQQI and SPYI

Your goal will be an average annual yield, after fees, of 10% to get $5,000 in passive income per year. DIVO will give you a 9.32% post-fees annual yield, so we’ll add two more ETFs and they’ll have yields above 10%.

First, there’s the NEOS NASDAQ-100 High Income ETF (NASDAQ:QQQI), which features an impressive 14.65% annual distribution rate. You’ll have to deduct 0.68% worth of annual operating expenses, but that still leaves you with a 13.97% yield so you can meet your goal.

Like the DIVO ETF, the NEOS NASDAQ-100 High Income ETF has a diversified basket of famous names. Based on the NASDAQ 100 index, QQQI invests in approximately 100 technology stocks such as Apple, Meta Platforms (NASDAQ:META), Amazon (NASDAQ:AMZN), NVIDIA (NASDAQ:NVDA), and Broadcom (NASDAQ:AVGO).

I’ll admit, the NEOS NASDAQ-100 High Income ETF is heavy on the tech stocks. Nevertheless, it’s fairly well diversified and besides, you’re also investing in two other ETFs with this $50,000 plan.

Moreover, QQQI pays its distributions monthly and so does the next ETF I’d like to tell you about. The third fund for this plan is another high yielder, the NEOS S&P 500 High Income ETF (BATS:SPYI).

We’d like to achieve a yield above 10% here, and SPYI absolutely delivers. This fund has a 12.15% distribution rate and deducts operating fees totaling 0.68%, for an expected net annual yield of 11.47%.

Now, between these three ETFs, we’ve got an average net annual yield above 10%. We need to make sure that the NEOS S&P 500 High Income ETF is a worthy investment, though.

Digging into the details, we’ll find that the SPYI ETF is centered around the S&P 500 large-cap stock index and encompasses around 500 stocks in its holdings. The NEOS S&P 500 High Income ETF pays out its cash distributions every month, and its holdings include large-cap overachievers like Microsoft (NASDAQ:MSFT), JPMorgan Chase (NYSE:JPM), McDonald’s (NYSE:MCD), and Walt Disney (NYSE:DIS).

Relax and Collect Your $5,000

DIVO, QQQI, and SPYI all offer monthly paychecks in the form of cash distributions, and on average, their annual yields exceed 10%. Plus, these are widely diversified funds that include many established, profitable businesses.

Just imagine how long it would take you to buy hundreds of large-cap stocks individually. Also, you certainly wouldn’t achieve an overall average yield of 10% or greater by purchasing all of those stocks yourself.

At long last, you’ve got a simple plan to turn your $50,000 into a machine that pays you $5,000 in total annual cash distributions. Your next step is to investigate DIVO, QQQI, and SPYI and, if you’re ready, start accumulating equal-sized positions in these three fantastic funds.