Investing

Want $5,000 in Annual Passive Income? Invest $5,000 in Each Of These Stocks

John Seetoo

Published: September 18, 2024 9:06 am

The huge surge of inflation since 2021 has not been seen since the Carter Administration’s 1970’s oil crisis. Inflation is a de facto hidden tax, since the net result still leaves taxpayers with reduced spending power. Short of getting additional jobs, which many are already engaged in, passive income from investment remains the surest way to acquire the extra money to make ends meet.

24/7 Wall Street Insights

• Supplemental passive income streams are becoming increasingly urgent for a majority of American households to make ends meet.
• Dividend stocks combine a mix of features that appeal to a wide range of people with investable assets.
• Sit back and let dividends do the heavy lifting for a simple, steady path to serious wealth creation over time. Grab a free copy of “7 Things I Demand in a Dividend Stock”, plus get our 2 best dividend stocks to own today.

Why Dividend Stocks?

Unlike private businesses or physical real estate, dividend stocks possess the following attributes, which are attractive to a majority of investors, both experienced and novice:

• High Liquidity
• Low Cost of Admission
• Wide range of industrial sector selections
• Wide range of risk tolerance choices

24/7 Wall Street has an enormous database of dividend stocks from which investors from all walks of life can find something worth their consideration. Based on market prices at the time of this writing, a $5,000 investment in each of the following 9 stocks would deliver an annual passive income dividend amount of $5,125. This $45,000 investment has an average APY of 11.39%. 

abrdn Global Premier Properties Fund

Stock: abrdn Global Premier Properties Fund (NYSE: AWP)

• Yield: 10.38%
• Shares for $5000: ~1,082
• Annual Dividend Amount: $519

The abrdn Global Premier Properties Fund is a closed-end mutual fund that invests in global stocks engaged in the real estate industry. Headquartered in Aberdeen, Scotland, UK, the abrdn Global Premier Properties Fund benchmarks the performance of its portfolio against the FTSE EPRA/NAREIT Global TR Index, MSCI US REIT Gross Total Return Index, and S&P Developed BMI Property Index Net TR Index. With $474.83 million AUM as of Sept. 2024, the fund is roughly 65.9% US stocks and 33.34% foreign stocks, with the remainder in cash. 

As an added plus, the abrdn Global Premier Properties Fund pays its dividend monthly. 

Apollo Commercial Real Estate Finance

Stock: Apollo Commercial Real Estate Finance (NYSE: ARI)

• Yield: 10.36%
• Shares for $5,000: ~ 509.6
• Annual Dividend Amount: $518

Headquartered in New York, Apollo Commercial Real Estate Finance is a REIT engaged in underwriting  commercial real estate senior mortgages, mezzanine loans, and other debt structures that are collateralized by real estate. As of July, its portfolio was $8.3 billion. It is the REIT arm of Apollo Asset Management, best known for its acquisition of ADT Security Systems. 

Invesco Senior Income Trust

Stock: Invesco Senior Income Trust (NYSE: VVR)

• Yield: 12.17%
• Shares for $5,000: ~ 1,182
• Annual Dividend Amount: $608.50

With practically the entirety of its assets devoted to investing in the high-yield bond markets, Atlanta, GA based fund Invesco Senior Income Trust has not missed any monthly dividend payments for over the last 25 years. Invesco Senior Income Trust’s performance benchmark is the Credit Suisse Leveraged Loan Index.

Angel Oak Mortgage REIT, Inc.

Stock: Angel Oak Mortgage REIT, Inc. (NYSE: AOMR)

• Yield: 12.31%
• Shares for $5,000: ~476.6
• Annual Dividend Amount: $615.50

Angel Oak Mortgage REIT, Inc. acquires first lien mortgages and then securitizes them for sale to other REITs and institutions. 

Angel Oak Mortgage REIT, Inc. gets its high-quality mortgage loans from various Angel Oak companies in Atlanta, GA. The securitization of the mortgages enables Angel Oak Mortgage REIT to use term structural leverage instead of mark-to-market leverage. The REIT subsequently retains 5-10% market value of the new securities, of which the interest-only and subordinated tranches generate additional revenues without leverage. The proceeds are then used to purchase additional high-quality mortgages, and the cycle repeats.

Goldman Sachs BDC, Inc.

Stock: Goldman Sachs BDC, Inc. (NYSE: GSBD)

• Yield: 12.62%
• Shares for $5,000: ~350.1
• Annual Dividend Amount: $631

Goldman Sachs has a presence on any financial platform where money can be made. Goldman Sachs BDC, Inc. is the representative in the Business Development Company arena..

Similarly to its platform rivals, Goldman Sachs BDC engages in private corporate finance underwritings and originations of secured debt, both senior and junior, first in-last out unitranche debt, mezzanine debt, and, in limited quantities, equities. Candidates for Goldman Sachs BDC to invest anywhere between $10 million to $75 million in financing, are, by and large, US companies. Their annual EBITDA should be between $5 million and $75 million.

Barings BDC, Inc.

Stock: Barings BDC, Inc. (NYSE: BBDC)

• Yield: 10.51%
• Shares for $5,000: ~ 505.56
• Annual Dividend Amount: $525.50

Barings has a long history as a British merchant bank, dating back to the late 1700’s. The original Barings helped Thomas Jefferson to finance the Louisiana Purchase for the US, and was one of the first European companies to do business in China and Japan. 

Registered as a Business Development Company, Barings BDC engages in senior secured debt, mezzanine debt, first lien debt and other types of finance for private corporations. Use of proceeds can range from Leveraged Buyouts, management buyouts, acquisitions, growth finance and recapitalizations to Employee Stock Ownership Plans. 

US companies are Barings BDC’s primary financing targets. Qualifications: EBITDA between $10 million and $75 million in manufacturing, technology, business services, transportation and logistics, and consumer services. Maturities average between 5 and 7 years, while interest income target is normally LIBOR +450 basis points to LIBOR +650 basis points per annum. 

Vodafone Group Public Limited Company

Stock: Vodafone Group Public Limited Company (NASDAQ: VOD)

• Yield: 9.60%
• Shares for $5,000: ~492.1
• Annual Dividend Amount: $480

 Newbury based Vodafone Group Public Limited Company is a full service telecommunications company also operating in Europe and Africa. Ranked #3 in the UK by subscribers (18.5 million) of mobile phones, the company also provides broadband, WiFi, data, cloud, IT, hosting, AI, IoT, WAN, LAN, ethernet, and other communications related functions for private and public customers. In the government sector, Vodafone provides drone detection and encrypted SATCOM for the UK Ministry of Defence and law enforcement.

PennyMac Mortgage Investment Trust

Stock: PennyMac Mortgage Investment Trust (NYSE: PMT)

• Yield: 11.27%
• Shares for $5,000: ~350.6
• Annual Dividend Amount: $563.50

Founded in 2009 and based in Westlake Village, CA, PennyMac Mortgage Investment Trust is a Real Estate Investment Trust (REIT) that acts as a large correspondent lender dealing with diversified collection bundles of securitized mortgages.

Under its Credit Sensitive Strategies segment, PennyMac engages in Credit Risk Transfer swaps, CRT securities, subordinate mortgage-backed securities, distressed loans, and direct real estate finance. Agencies such as Fannie Mae and Freddie Mac use CRT swaps to provide a vehicle for offloading risk.

PennyMac’s Interest Rate Sensitive Strategies division handles agency and non-agency senior mortgage-backed securities,  interest rate spreads, mortgage servicing rights, and hedging strategies.

The Correspondent Production arm acquires, pools, and resells mortgages or securitizes them for sale to government sponsored entities. 

Calamos Dynamic Convertible and Income Fund

Stock: Calamos Dynamic Convertible and Income Fund (NASDAQ: CCD)

• Yield: 13.29%
• Shares for $5,000: ~ 205.59
• Annual Dividend Amount: $664.50

Naperville, IL based Calamos Dynamic Convertible and Income Fund is a closed-end mutual fund that invests in publicly traded convertible securities, as well as corporate bonds, equity  linked notes, and floating rate bonds. The fund also uses option trading to boost returns.

The fund’s portfolio of $806.5 million AUM as of the end of August. Nearly 99% of all investments were in Utilities and Energy.

Like all other stock portfolios, it is wise to monitor stock news on a daily basis in order to swiftly sell in the event of adverse news or market conditions that can affect either the dividend or the stock price.