Investing

Want $16,500 in Passive Income? Invest $15,000 in These Dividend Stocks

John Seetoo

Published: July 8, 2024 10:11 am

Last Updated: July 8, 2024 2:05 pm

24/7 Wall Street Insights

• There are an  estimated 29 million caregivers in the US who are caught in a spiral loop of work, caregiving, and escalating costs.
• Passive income is one of the few options available to people with no free time, mounting bills, and family medical obligations.
• Dividend stocks offer an attractive combination of liquidity, low admission cost, risk tolerance range and diversification.
• For investors seeking dividends, click herefor a free report on two high dividend stocks. 

According to the Wall Street Journal article, “When Toll of Working Full Time While Caring For a Parent”, an estimated 29 million people work while also caring for an elderly adult family member.

Due to differing laws among states, caregivers’ family obligations can put them at odds with their employers’ requirements. “More than one third of working caregivers said they plan to leave work primarily because of caregiving, according to a recent survey by AARP and S&P Global.

Others can’t afford to forgo a paycheck, because of mortgages and college expenses, and push themselves to extremes. About half of employees who left a job because of caregiving were senior executives and leaders, according to a 2024 Harvard Business School report.”For those being pushed to extremes, the financial and familial pressures can be a devastating combination that may wreak both emotional and reputational damage.

Creating a passive income stream can present a possible partial solution. Since neither forgoing the paycheck or getting a second job is a viable option, dividend stocks may present the ideal platform.

Dividend Stocks: The Answer?

Dividend stocks possess a combination of attributes that are hard to find in any other asset class, especially for the individual investor:

• Low admission cost-Real estate, limited partnerships, and other passive income vehicles all cost tens of thousands of dollars, at a minimum, to participate. Stock investments can be made in the hundreds, if desired.
• Liquidity– In case of dreaded emergencies requiring much needed cash, selling stocks now make liquid funds available at T+1 settlement, i,e., the next business day after the sale. 
• Diversification– An investment in a single entity, like a real estate property, can carry unique risks: a frivolous lawsuit, vandalism, fire, flooding, etc. A portfolio of different stocks that hail from various industrial sectors mitigates risks, as each sector is unique from the next. 
• Risk Tolerance– Some investors like the excitement of market roller-coasters. Some have restless nights if they see their stock move over a point in a single trading day. Luckily, there are thousands of dividend-paying stocks available to suit investors of all risk profiles.
• For investors seeking dividends, click herefor a free report on two high dividend stocks.

24/7 Wall Street has been publishing a voluminous number of articles on dividend stocks over the years. We have an extensive library of stocks and assemble various combinations to highlight for prospective portfolio consideration. The ones in this collection all can be considered high-yielding, with an average double digit APY, based on market price at the time of this writing. 

Sachem Capital Corp.

• Stock #1:Sachem Capital Corp. (NYSE: SACH)
• Yield: 16.54%
• Shares for $15,000: 5,639
• Annual Dividend Amount: ~$2,481

Real Estate Investment Trusts (REIT)s are a win/win scenario: The issuers get to leverage the influx of funds to expand their business; the shareholders get 90% of the profits from the real estate rent rolls, mortgage payments, or other income without the responsibilities and headaches that management of the asset might entail. That said, REITs can take on many different forms and configurations.Branford, CT based Sachem Capital Corp. is a REIT which specializes in short term debt underwritings against first mortgage liens on underlying property. These loans can take four different configurations:

• Bridge Loans
• New Construction Loans
• Fix and Flip Loans
• Refinance Loans

Sachem is trading below book value and a number of analysts have taken note. Oppenheimer, Alliance Global, and EF Hutton all rate Sachem Capital Corp. a “buy” or “outperform”.

Cool Company Ltd.

• Stock #2 : Cool Company Ltd. (NYSE: CLCO)
• Yield: 14.47%
• Shares for $15,000: 1,319.26
• Annual Dividend Amount: ~$2,170.50

For 54 years, London, UK headquartered Cool Company has been in the maritime Liquefied Natural Gas (LNG) transportation business. The name “Cool Company” is derived from the -162 degrees Centigrade shipping temperature of LNG. The company owns 11 vessels for global charters of LNG shipments. These include 7 modern tri-fuel diesel electric vessels, 2 modern two-stroke, and 2 TFDE vessels. Cool Company also manages an additional 16 LNG carriers, regasification, and marine storage units for third parties. 

Business is apparently still growing for Cool Company Ltd. The company announced a new 14- year LNGC charter with GAIL Ltd. of India to take possession of a newbuild vessel in 2025. This is in addition to (2) previously ordered newbuild vessels expected for delivery later in 2024. 

Annaly Capital Management Inc.

• Stock #3 :Annaly Capital Management Inc. (NYSE: NLY)
• Yield: 13.01%
• Shares for $15,000: 745.53
• Annual Dividend Amount : ~$1,951.50

As REITs can take shape in a number of ways, Annaly Capital Management is an example of a mortgage portfolio REIT. Located in the same NYC skyscraper that houses The Wall Street Journal, Annaly Capital Management invests its $74 billion AUM exclusively in mortgage securities.

Since it doesn’t own brick and mortar properties, Annaly’s value is tied to its portfolio. In an oddly serendipitous timing scenario, the yield curve will have been inverted for a historic 24 months come this July. During a yield curve inversion, short term yields are higher than long term ones. Analysts note that the spread has been steadily flattening. When it happens, there is anticipation of a Fed rate cut. Both events will benefit Annaly’s net interest margin, as most mortgages are for longer term. Additionally, as the Federal Reserve halted mortgage backed securities purchases in 2022, the supply has grown, giving companies like Annaly more supply and lower acquisition pricing. 

That said, Annaly’s high yields to date have been in spite of the higher interest rates caused by inflation and rampant congressional spending. Should the yield curve remain inverted for a prolonged period and other economic events negatively impact yields, that could be deleterious to Annaly’s dividend payout. If the rate cut manifests and the yield curve rectifies as analysts predict, Annaly’s yields could jump higher.

DoubleLine Income Solutions

• Stock #4 : DoubleLine Income Solutions (NYSE: DSL)
• Yield: 12.75%
• Shares for $15,000: 1,209.68
• Annual Dividend Amount: ~$1,912.50

Mutual funds are generally open-end, or closed-end. Open-end means they are priced according to their New Asset Value (NAV) and shares are added as needed to reflect the flux of funds going in and out. Closed-end means the number of shares is fixed, and their corresponding market value is based on market demand bid and ask, just like a stock.

DoubleLine Income Solutions Fund is a closed-end mutual fund that invests in global fixed-income instruments with a goal of maximizing consistent high income. Based in Tampa, FL,, it wields a $1.69 billion AUM, investment warchest. The fund’s portfolio is heavily weighted 78.15% in CCC and lower rated bonds, as of May, 2024. 65.61% of the portfolio is allocated to corporate bonds. 23.6% are securitized, and 9.06% are government, i.e. sovereign bonds. 

Among the top 10 largest issues in the portfolio are US Government notes and bonds, as well as Canadian, Brazilian, Peruvian, Spanish, and Colombian energy sector bonds, and an Indian mining company.

Seven Hills Realty Trust

• Stock #5 : Seven Hills Realty Trust (NASDAQ: SEVN)
• Yield: 11.46%
• Shares for $15,000: 1,224.49
• Annual Dividend Amount: ~$1,719

Functioning in a more traditional REIT role, Newton, MA based Seven Hills Realty Trust originates and invests in first mortgage loans collateralized by commercial real estate property. Its formula criteria consists of the following:

• Principal balance between $20 million to $75 million.
• Maximum terms of 5 years.
• Maximum stabilized LTV ratio of 75%.
• Secured Overnight Financing Rate (SOFR) or comparable index benchmark plus a competitive market spread for determination of floating interest rates.
• Experienced and capitalized sponsor who invest in the corresponding real estate property type on a non-recourse basis.

Seven Hills Realty Trust is apparently doing something right; the company announced that it was being added to The Russell 3000 Index at the end of June. 

Ardagh Metal Packaging, S.A.

• Stock #6 :Ardagh Metal Packaging, S.A.  (NYSE: AMBP)
• Yield: 11.36%
• Shares for $15,000: 4,201.68
• Annual Dividend Amount: ~$1,704

One recycling platform that has become a source of income for many of the impoverished living in urban enclaves is beverage container recycling. The few cents per plastic, glass, or metal container earned for recycling have helped countless unemployed and homeless people pay for meals.

On a larger scale, metal cans are a continually recyclable resource and help ecologically in reducing waste. Ardagh Metal Packaging, S.A. is based in Luxembourg, and owns 23 can factories in 9 different countries. The cans are distributed in North America, Europe, and Brazil.

The company is a division of Ardagh Group, which also supplies sustainable glass bottles for the same beverage clients. Ardagh Metal Packaging, S.A. has a 14.4% global market share of the Metal Can & Container Manufacturing industry, which makes it a significant player in the overall market. 

Analysts from UBS and Citigroup rate Ardagh Metal Packaging a “buy”.  Barclays, BofA Securities, Morgan Stanley, Wells Fargo, Deutsche Bank and Truist cover Ardagh as well. 

Vodafone Group Public Limited Company

• Stock #7 : Vodafone Group Public Limited Company (NASDAQ: VOD)
• Yield: 10.69%
• Shares for $15,000: 1,646.54
• Annual Dividend Amount: ~$1,603.50

Newbury, UK  based Vodafone Group Public Limited Company is a full service telecommunications company also operating in Europe and Africa. In addition to mobile phones, it  provides broadband, WiFi, data, cloud, IT, hosting, AI, IoT, WAN, LAN, ethernet, and other communications related functions for private and public customers.

Ranked #3 in the UK by subscribers (18.5 million), Vodafone also provides drone detection and encrypted SATCOM for the UK Ministry of Defence and law enforcement.

Additionally, Vodafone boasts a robust finance division for business and merchant services, as well as insurance and, notably, M-Pesa, a mobile money management system for access to payment facilitation and other financial services. The company recently sold its stake in India’s Indus Towers for $1.82 billion to reduce debt, since its previous debt-to-equity ratio had reached 97%. 

Crescent Capital BDC Inc.

• Stock #8 :Crescent Capital BDC Inc. (NASDAQ: CCAP)
• Yield: 9.40%
• Shares for $15,000: 789.06
• Annual Dividend Amount: ~$1,410

Business Development Companies (BDC) fill a very critical private debt underwriting market need. Corporations seeking financing for expansion, executive buyouts, cashflow expansion, acquisition, refinance, and other transactions, are often outside the scope of conventional corporate banking. These financings are often short term and would be considered too risky or too expensive for the companies if done with traditional banks. The private lending companies in the BDC arena can be relatively flexible in the configurations used for finance. Placing liens on assets, taking preferred and/or common share equity stakes, and creating different types of loans for securitization are just a few of the tools that can be utilized. 

With offices in Los Angeles, Crescent Capital BDC, Inc. has managed its $1.6 billion AUM successfully, with quick turnarounds, profitable transactions with very low default levels, and a client list of 183 companies, as of April, 2024.  90% of Crescent Capital’s transactions in its current portfolio are first lien. 98% of them are sponsored, floating rate debt. Additionally, 90% of the portfolio are US businesses. The top sectors are: 1) Health Care Equipments and Services, 2) Software and Services, and 3) Commercial and Professional Services.

Analyst sentiment is bullish. Wells Fargo, Raymond James, Oppenheimer, and Keefe, Bruyette & Woods, and others all rate Crescent Capital BDC “outperform” “over weight” or “equal weight”).

Vitesse Energy, Inc.

• Stock #9 : Vitesse Energy, Inc. (NYSE: VTS)
• Yield: 9.06% 
• Shares for $15,000: 631.58
• Annual Dividend Amount: ~$1,359

Vitesse Energy, Inc. takes a unique approach towards generating income from the energy sector. Using technology and a data driven approach, Vitesse Energy partners with both large and small oil and gas operators for non-operated working and royalty interests in Williston Basin properties. These are located in North Dakota and Montana. Closer to home, Centennial, CO based Vitesse Energy also owns interests in the Central Rocky Mountain region in both Colorado and Wyoming. 

In total, Vitesse owns 50,000 acres and 6,800 gross producing wells. The model is proving very successful to date. Since its founding in 2013, Vitesse Energy has returned $124 million to shareholders via dividends.

Spok Holdings, Inc.

• Stock #10 :Spok Holdings, Inc. (NASDAQ: SPOK)
• Yield: 8.71% 
• Shares for $15,000: 1,042.39
• Annual Dividend Amount: ~$1,306.50

In an age where healthcare and medical treatment of patients has become proliferated with digital data, electronic communications of data between health care professionals, treatment centers, and patients, along with their families, is now the expected standard. Designed to enhance workflows and support administrative compliance, Alexandria, VA headquartered Spok Holdings serves a crucial medical communications niche. Its Care Connect suite products link the following services to the aforementioned parties:

• Clinical Alerts
• Contact centers
• Mobile communications and messages
• Public Safety Alerts.
• License updates
• Software Updates
• Product support services

The remote services are provided through the proprietary Spok GenA Pager unit. Spok’s customers are in the US, Canada, Europe, Asia, Australia, and The Middle East. 

In addition to serving the medical and healthcare services sectors, Spok also provides field communications for businesses, construction industry workers, sales professionals and government workers. Spok Holdings recently added 19 new customer contracts and 4 multi-year engagements in Q1 2024. It is positioned to leverage 5G and IoT, which also are part of current telecommunications trends.

The company is debt-free, $23.3 million cash positive, and Q1 2024 reported 5% total revenue growth, so Spok is looking strong. Like any other stock portfolio, it is prudent to monitor a dividend stock portfolio regularly. Market and news events can not only affect stock prices.

Dividend yields and amounts can change as a result of management or board decisions. They can also be impacted if a company suffers unexpected losses in a quarter. Luckily, there are thousands of dividend stocks available, so if there are any concerns over a stock’s dividend payout capabilities, swapping it out is a cinch that can be done over a smartphone.