Investing
Want $2,000 per Month in Passive Income? Invest $30,000 in These Stocks
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The Monday, April 29, 2024 installment of The Wall Street Journal featured an article titled, “Priced Out of the American Dream”. While homeowners are seeing the value of their homes increase due to higher interest rates and feeling current reluctance to relocate under much more expensive mortgage and rent scenarios, the younger generations who are seeking a first home or looking to move to a larger one are finding their options to be rapidly shrinking. According to the Federal Reserve Bank of Atlanta, “the median household now needs more than 40% of its income to cover payments on a median-priced home”.
The Least Painful Solution
For the millions who find themselves floundering in the ocean of upwardly spiraling prices and shrinking buying power, the only solutions are to tighten belts and cut expenses to the bone, or to augment household income. To expedite the latter, getting additional income from another job or finding a way to generate passive income are some of the only choices at hand. For the fortunate ones to have liquid investible funds available, the least painful solution may be to access dividend paying stocks, which can deliver monthly or quarterly dividend payments that may make the difference for countless families
24/7 Wall Street has a huge database of dividend paying stocks and has frequently published articles that list examples. For those seeking to obtain that extra monthly income to cover mortgage payments or rent, $2,000 can be the make or break, least painful solution. Investing $30,000 in each of the following stocks can do exactly that, based on market prices at the time of this writing.
Orchid Island Capital
Stock #1 : Orchid Island Capital (NYSE: ORC)
Yield: 17.06%
Shares for $30,000: 3,554
Total monthly dividend income:~$426.50
For tax reasons, registered Real Estate Investment Trusts (REIT) are required to distribute 90% of profits in the form of dividends to shareholders. Vero Beach, FL headquartered Orchid Island Capital, Inc. specializes in investments that classify as Residential Mortgage Backed Securities (RMBS). Its portfolio includes single resident mortgages, collateralized mortgage obligations (CMO), mortgage pass-through certificates, as well as interest-only, principal-only, and other types of securities and mortgage related paper.
The top three (3) institutional shareholders in Orchid Island Capital stock are: Invesco KBW High Dividend Yield Financial ETF (2.89% of total shares); Vanguard Total Stock Market Index Fund (2.36%); and Vanguard Extended Market Index Fund (1.75%).
AGNC Investment Corp.
Stock #2 : AGNC Investment Corp. (NASDAQ: AGNC)
Yield: 15.43%
Shares for $30,000: 3,232
Total monthly dividend income: ~$385.75
REITs can focus on a range of sub-categories in the real estate realm that can generate hefty returns if managed in a strategic fashion. Based in Bethesda, MD, AGNC Investment Corp. invests almost exclusively in US Government Agency mortgage securities, such as Fannie Mae, Freddie Mac and Ginny Mae. However, it uses leverage via repurchase agreements and aggressively incorporates hedging strategies and derivatives to both protect portfolio assets as well as to enhance returns.
Nuveen Credit Strategies Income Fund
Stock #3 : Nuveen Credit Strategies Income Fund (NYSE: JQC)
Yield: 11.82%
Shares for $30,000: 5,464
Total monthly dividend income: ~$295.50
The Nuveen Credit Strategies Income Fund is a closed-end mutual fund that mostly invests in global senior loans, high yield corporate debt, and collateralized loan obligation (CLO) debt. The fund uses leverage and may also invest in the public equities markets.
The fund has a 30% ceiling for its portfolio in securities rated CCC/Caa or lower. It also has a 25% cap on CLO issues. There are no percentage limits on instruments rated BB+/Ba1 or higher.
As of early April, 2024, San Francisco based Nuveen Credit Strategies was invested 72.2% in senior loans, 19.7% in corporate bonds, and 4.7% in Cash. Sector wise, 17.4% were Consumer Discretionary, 15.9% were Industrials, and Infotech was 14%.
Geographically, 77.6% of issues were from the US, 4.6% from U.K., and 3.2% from Luxembourg.
PennantPark Floating Rate Capital Ltd.
Stock #4 : PennantPark Floating Rate Capital Ltd. (NYSE: PFLT)
Yield: 10.70%
Shares for $30,000:2,613
Total monthly dividend income: ~$267.50
Located in Miami Beach, FL, PennantPark Floating Rate Capital Ltd. is a registered Business Development Company (BDC) that engages directly in the private debt and equity finance markets for private small-cap and middle market companies. Financing deals will most often take the form of floating rate loans or mezzanine loans, as well as common stock, preferred stock, and equity warrant investments, often as a component of the debt underwritings.
Direct loans will usually be between $2 million and $20 million. Some of PennantPark’s larger underwriting deals presently on its books include a First Lien term loan to American Insulated Glass, LLC, a Second Lien with equity loan to Blackhawk Industrial, and a First Lien loan with equity to Cano Health.
Calamos Convertible Opportunities and Income Fund
Stock #5 : Calamos Convertible Opportunities and Income Fund (NASDAQ: CHI)
Yield: 10.34%
Shares for $30,000: 2,712
Total monthly dividend income: ~$258.50
Convertible bonds are a niche area of investing that does well in situations where stocks may offer more ROI potential than bonds. Issued as bonds by public companies, convertible bonds contain an option for the bondholder to convert the bond to a predetermined number of equivalent common stock shares.
The Calamos Convertible Opportunities and Income Fund is a closed-end mutual fund that is focused on the convertible bond market. The Naperville, IL fund has a $1.2 billion warchest and its assets are invested in a menu of sectors. The top three largest positions are in Infotech (19%), Consumer Discretionary (17.3%), and Healthcare (15.7%).
15.3% of bonds are BB, 10.8% are BBB, and B are 8.9%. The three largest convertible bond issuer positions being held in the portfolio are from Uber Technologies (1.9%), Wayfair, Inc. (1.5%), and DeXCom Inc. (1.4%) – all statistics as of April 2024.
EPR Properties
Stock #6 : EPR Properties (NYSE:EPR)
Yield: 8.33%
Shares for $30,000: 731
Total monthly dividend income: ~$208.25
Just as some REITs specialize in mortgage securities, others manage commercial real estate properties, and some will focus on retail shops, factories, and other areas. EPR Properties bills itself as “The Diversified Experiential REIT”, and its $6.8 billion in investments are a testament to that. Pioneering the particulars of the movie theater business, ERP currently owns and manages::
- 166 commercial spaces for chains like AMC;
- 11 ski resorts;
- 58 Family Entertainment Centers in collaboration with partners like Topgolf;
- 23 Attractions (i.e., amusement parks, water parks, and indoor skydiving centers);
- 7 Experiential Lodging properties, which provide lodging adjacent to some of the aforementioned entertainment and/or resort properties);
- 20 fitness and gym locations;
- 3 Cultural properties (i.e.,museum, zoo, aquarium);
- 1 Gaming (i.e, casino) Resort property;
- 9 Private School locations,
- 61 Child-care centers
EPR Properties are in 44 different states within the USA.
BlackRock Health Sciences Term Trust
Stock #7 : BlackRock Health Sciences Term Trust (NYSE: BMEZ)
Yield: 8.10%
Shares for $30,000: 2,040
Total monthly dividend income: ~$202.50
Recently reporting over $10 trillion AUM, BlackRock has a foot in every modern financial platform in existence. The BlackRock Health Sciences Term Trust is a closed-end mutual fund that invests in the global market of stocks engaged in the healthcare and life science sectors.
With the fund’s $1.8 billion AUM, BlackRock Health Sciences Term Trust is invested 82.76% in the US companies, 4% in German issuers, and 3% in British company stocks. The three largest holdings are: Cencora, Inc. (NYSE: COR) – 2.35%; Amgen, Inc. (NASDAQ: AMGN) – 2.18%, and Novo Nordisk A/S (NYSE: NVO) – 2.0% – all statistics as of April, 2024).
Investors should understandably take care to monitor their stock portfolios regularly, with special attention to news or market events that could affect these dividends, since the liquidity of the capital markets affords the ability to exit quickly and enter with a new purchase almost concurrently.
| Name: | Yield: | Monthly Dividend income |
| Orchid Island Capital (NYSE: ORC) | 17.06% | $426.50 |
| AGNC Investment Corp. (NASDAQ: AGNC) | 15.43% | $385.75 |
| Nuveen Credit Strategies Income Fund (NYSE: JQC) | 11.82% | $295.50 |
| PennantPark Floating Rate Capital Ltd. (NYSE: PFLT) | 10.70% | $267.50 |
| Calamos Convertible Opportunities and Income Fund (NASDAQ: CHI) | 10.34% | $258.50 |
| EPR Properties (NYSE:EPR) | 8.33% | $208.25 |
| BlackRock Health Sciences Term Trust (NYSE: BMEZ) | 8.10% | $202.50 |
| TOTAL: | $2,045.00 |
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