Investing
Want $26,000 in Passive Income? Invest $120K in These Dividend Stocks
Published:
- Stocks have been rallying in 2024, and investors might not want to dip into their profits just yet.
- Dividend stocks provide a way for investors to earn steady passive income while also delivering portfolio diversification.
- Discover more ways to enhance your overall returns through our latest report, “Two Dividend Legends to Hold Forever.”
While stocks have been hitting all-time highs, investors might not want to sell. However, they might also be in need of passive income. Fortunately, there’s no shortage of dividend stocks to choose from that will provide investors with regular checks in the mail. As a result, they won’t have to dip into their portfolios and instead can continue to ride the bullish wave being fueled by tech stocks. Another benefit to buying dividend stocks is that they lend themselves to diversification in a portfolio given the wide range of sectors in which they operate.
If you’re looking to earn $26,000 in passive annual income this year, one surefire way to do this is to invest $120,000 across several high-yielding stocks. You’ll need to target a yield of 24% among them, and we’ve identified three dividend-paying stocks that will take you to your goal.
1.) Icahn Enterprises: Activism Cuts Both Ways
- Dividend Yield: 24.6%
- Annual Distribution: $4.00
Billion investor Carl Icahn is behind Icahn Enterprises (Nasdaq: IEP), a diversified holding company with exposure to sectors like real estate, pharmaceuticals, energy, auto and more. This stock has a dividend yield of 24.6%. By investing in Icahn’s company, you can expect to earn $4.00 in an annual distribution. Icahn Enterprises, formerly known as American Real Estate Partners, has been around since 1987, providing stability to investors who are in it for the long term.
A $40,000 allocation to Icahn Enterprises would generate $9,840 in passive income this year.
While the stock itself has decreased by 9.5% year-to-date, Icahn Enterprises boasts $3.2 billion in liquidity as of Q1 2024. Last year, activist investor firm Hindenburg Research took aim at IEP, heavily shorting the stock and causing Icahn to pledge a reset in the face of investor backlash. Icahn said the company would stick to its knitting from now on. While the share price might be under pressure, Icahn is the original corporate raider and therefore is not uncomfortable with shareholder activism. Despite the share price struggle, the company has made steady dividend payments for approximately 75 consecutive quarters.
2.) Saga Communications: Right Frequency
- Dividend Yield: 21.4%
- Annual Distribution: $1.00
Saga Communications (Nasdaq: SGA), a media company that focuses on local markets, pays a quarterly cash dividend of $0.25 per share for an annual distribution of $1.00. At a dividend yield of 21.4%, Saga’s combined quarterly dividend distribution amounts to $1.6 million and is funded from cash on its balance sheet. The company paid its maiden special dividend back in 2012, since which time it has distributed $132 million in dividends to shareholders, a sign that it prioritizes shareholder value.
A $40,000 allocation to Saga would generate $8,560 in passive income this year.
Saga’s share price currently hovers at approximately $16 per share and has declined 27% year-to-date. Investors have been punishing the stock in response to Q1’s falling revenue (owing to a decline in political-related sales), rising expenses and operating loss. Digital is a potential bright spot, currently representing 8% of total revenue and projected to comprise 11% in 2024.
Nevertheless, the board of directors is determined to continue declaring special cash dividends and variable dividends as well as share repurchase programs. The company recently introduced a variable dividend program in addition to its regular quarterly dividend. Since Saga adopted a dividend program in 2012, it’s distributed $130 million in cash dividends, a trend management sees continuing.
Saga has $28.8 million of cash and short-term investments on its balance sheet and plans to direct as much as $5.5 million in capex this year. The company is acquiring five radio stations in Indiana.
3.) Granite Point Mortgage: Turnaround Strategy
- Dividend Yield: 19.5%
- Quarterly Distribution: $0.05
Granite Point Mortgage Trust (NYSE: GPMT), a REIT, has not been immune from the headwinds in the commercial real estate industry amid tight lending markets and persistently high interest rates. As a result, the company in Q2 lowered its regular dividend amount to $0.05 per share, down from $0.15 in the previous quarter. The company attributed the lower distribution to several factors, not least challenges in the real estate industry. Meanwhile, management is maintaining its focus on book value during a period of “reduced profitability.”
However, they haven’t lost sight of shareholder value as the company has been repurchasing common shares. They are chipping away at some non-performing loans and believe they are setting themselves up for success when market conditions improve.
A $40,000 investment in Granite Point Mortgage would generate $7,850 in passive income this year.
The Federal Reserve is expected to lower interest rates once this year, potentially in September, according to market experts, which should make its way to mortgage rates by year-end. If you’ve got an appetite for risk, believe in the commercial real estate space for the long term, Granite Point Mortgage Trust, with a diversified portfolio of loans, is a REIT that could prove to be a rewarding turnaround play.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
