One way for investors to work smarter, not harder, is with passive income. Such income is derived from ownership rather than labor or active involvement in an enterprise. Investors can create a stream of passive income by owning stocks with healthy and dependable dividends.

Why Invest for Passive Income?

Investing for income has many possible benefits:

• Diversifying your portfolio
• As a cushion for the unexpected
• To reduce stress and anxiety
• For long-term growth
• To provide financial freedom and security

We screened our 24/7 Wall St. dividend equity research database, looking for stocks that pay generous dividends. We found 12 that combined can generate over $10,000 a year in passive income for an investment of $7,500 in each one.

Barings BDC

• Stock: Barings BDC Inc. (NYSE: BBDC)
• How many shares for $7,500: 781
• Dividend yield: 11.0%
• Annual passive income: $885.00

This North Carolina-based business development company posted better-than-expected fourth-quarter results, along with declaring a quarterly dividend. The dividend has been increasing since 2018, and the first-quarter report is due soon. The stock is up about 12% since the beginning of the year, outperforming the S&P 500. The share price is more than 32% higher than a year ago. The consensus analyst recommendation is to buy shares, and their current mean price target of $10.25 suggests there is more than 7% further upside in the next 52 weeks.

Black Stone Minerals

• Stock: Black Stone Minerals L.P. (NYSE: BSM)
• How many shares for $7,500: 457
• Dividend yield: 9.2%
• Annual passive income: $892.50

This owner and manager of oil and natural gas mineral interests was founded in 1876. The owner was buying shares late last year for more than $18 apiece. The stock was last seen changing hands for over $16 a share, which is about 10% lower than six months ago. However, it is up almost 11% since the company posted solid quarterly results in February. However, the analysts’ $17.00 consensus price target represents less than 4% upside this year. Still, four of the five analysts who cover stock recommend buying shares.

Civitas Resources

• Stock: Civitas Resources Inc. (NYSE: CIVI)
• How many shares for $7,500: 98
• Dividend yield: 8.0%
• Annual passive income: $937.50

Earlier this year, this Denver-based exploration and production company completed an acquisition and repurchased some shares. The stock is up 12% or so year to date, well more than the Dow Jones industrial average. Over the past five years, it is more than 226% higher, also outpacing the broader markets. Analysts see an additional 24% or more upside potential, based on their consensus price target of $95.36. One analyst sees shares going to $106 apiece, which would be a multiyear high. Analysts on average recommend buying shares.

Global Ship Lease

• Stock: Global Ship Lease Inc. (NYSE: GSL)
• How many shares for $7,500: 323
• Dividend yield: 6.5%
• Annual passive income: $552.00

Despite geopolitical uncertainties, this container ship owner reported growth on the top and bottom lines in its most recent quarterly report. The shares have gained more than 11% since that report and are up almost 19% year to date. They recently hit a multiyear high above $23, and the $27.00 mean price target indicates that analysts see an additional 15% upside in the coming year. Their consensus recommendation is to buy shares of this Athens- and London-based company.

New Fortress Energy

• Stock: New Fortress Energy Inc. (NASDAQ: NFE)
• How many shares for $7,500: 282
• Dividend yield: 1.5%
• Annual passive income: $817.50

This energy infrastructure company is based in New York City. It posted record fourth-quarter and full-year results back in February. Earlier this year, it boosted its presence in Brazil, and it has begun construction of a power plant there. The stock has retreated nearly 29% since the beginning of the year. And it is much closer to its 52-week low of $25.06 than its $40.04 52-week high. The consensus price target of $40.56 would be a new 52-week high. Analysts on average recommend buying shares and have for at least three months.

NextEra Energy Partners

• Stock: NextEra Energy Partners L.P (NYSE: NEP)
• How many shares for $7,500: 248
• Dividend yield: 11.3%
• Annual passive income: $945.00

This Florida-based clean and renewable energy generator sold its Texas-based natural gas pipeline portfolio late last year. Fourth-quarter results fell short of expectations on the top and bottom lines, while the first-quarter report was mixed. The share price is almost 3% lower than at the beginning of the year. However, the stock is up around 44% from a multiyear low seen last October. Analysts have a mean price target of $32.46, which means they see almost 10% upside in the next 12 months. The consensus recommendation is a cautious buy.

PennantPark Investment

• Stock: PennantPark Investment Corp. (NYSE: PNNT)
• How many shares for $7,500: 1,056
• Dividend yield: 11.9%
• Annual passive income: $915.00

Since last October, the monthly dividend from this Miami Beach-based business development company has been $0.07 per share. The firm specializes in direct and mezzanine investments in middle-market companies primarily in the United States. Its stock is up almost 44% in the past year, outperforming the broader markets. However, it is less than 3% higher year to date, but still near a recent 52-week high of $7.27. Analysts so far do not expect any real upside in the coming year, as their consensus price target is just $7.14.

PennyMac Mortgage Investment Trust

• Stock: PennyMac Mortgage Investment Trust (NYSE: PMT)
• How many shares for $7,500: 510
• Dividend yield: 10.9%
• Annual passive income: $862.50

First-quarter results from this California-based specialty finance company exceeded expectations on the top and bottom lines. Its dividend has been $0.40 per share since the end of 2022. Year to date, the stock is down 1% or so. However, it is up over 40% from the 52-week low of $10.52 from last October. The analysts don’t see much room for the shares to run, as their mean price target is about the same as the current share price. Only two of the six analysts who follow the stock recommend buying shares.

Prospect Capital

• Stock: Prospect Capital Corp. (NASDAQ: PSEC)
• How many shares for $7,500: 1,431
• Dividend yield: 13.8%
• Annual passive income: $930.00

Here is another monthly dividend payer. The business development company is based in New York City. Its payout has been a steady $0.06 per share since 2017. The share price is about 12% lower than at the beginning of the year. Much of that retreat followed a mixed quarterly report released in February. Analysts appear to be hesitant about this stock, as the consensus price target is only a little higher than the current share price. And none of those who cover the stock currently recommend buying shares.

TXO Partners

• Stock: TXO Partners L.P. (NYSE: TXO)
• How many shares for $7,500: 414
• Dividend yield: 11.4%
• Annual passive income: $802.50

Texas-based exploration and production company had its IPO at the beginning of 2023, and it has hiked its dividend in each of the past three quarters. The share price is about the same as at the beginning of the year. However, the stock is down more than 17% from the IPO. Analysts have high expectations, demonstrated by their $29.33 consensus price target (which would be over a 61% gain). Also, two of the three analysts covering the stock rate it at Strong Buy, while the third also recommend buying shares.

Vodafone

• Stock: Vodafone Group PLC (NASDAQ: VOD)
• How many shares for $7,500: 872
• Dividend yield: 11.3%
• Annual passive income: $870.00

This U.K. telecom has sold its Italian and Hungarian businesses and has a pending merger being investigated by regulators. Shares are changing hands for less than $9 apiece, marginally lower than at the beginning of the year. The stock traded for more than $41 a share back in 2014 but has trended lower ever since. Analysts see the shares rising to $14.07 this year, which is higher than the 52-week high of $12.01. All three analysts covering the stock recommend buying shares, two of them rating it at Strong Buy.

Westlake Chemical Partners

• Stock: Westlake Chemical Partners L.P. (NYSE: WLKP)
• How many shares for $7,500: 339
• Dividend yield: 8.6%
• Annual passive income: $636.75

When this Houston-based chemicals producer posted its first-quarter report, results were largely in line with expectations. The ethylene producer has paid out 39 consecutive quarterly distributions. The share price is about 3% higher than at the beginning of the year, as well as marginally higher than a year ago. The 52-week range is a narrow $20.86 to $23.68. And yet, analysts expect the stock to almost double this year to $44.20. One analyst sees the shares going to $123 apiece.

$10,000 in Passive Income

So, for a $900,000 investment split evenly between these 12 diverse stocks, the investor creates a passive income stream of a little over $10,000 per year.

Stock	Investment	Annual Income
Barings BDC	$75,000	$885.00
Black Stone Minerals	$75,000	$892.50
Civitas Resources	$75,000	$937.50
Global Ship Lease	$75,000	$552.00
New Fortress Energy	$75,000	$817.50
NextEra Energy Partners	$75,000	$945.00
PennantPark Investment	$75,000	$915.00
PennyMac Mortgage Investment Trust	$75,000	$862.50
Prospect Capital	$75,000	$930.00
TXO Partners	$75,000	$802.50
Vodafone	$75,000	$870.00
Westlake	$75,000	$636.75
Total	$900,000	$10,046.25

Is a $900,000 investment a little too rich? Note that a $25,000 investment in each stock results in annual passive income of about $3,359, while $50,000 investments net $6,718 per year, and so on.

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