Investing

Want $3,000 per Year in Passive Income Paid Monthly? Invest Just $2,500 in These Dividend Stocks

Lee Jackson

Published: November 21, 2024 7:13 am

Last Updated: November 21, 2024 8:15 am

Key Points

• Passive income is a steady stream of unearned income that doesn’t require active traditional work.
• Ultra-high-yield stocks that pay monthly dividends are a solid idea for generating passive income.
• Investors looking to generate monthly passive income should contact a qualified financial advisor. Click here, and you can start looking for one.

According to the Internal Revenue Service (IRS), passive income generally includes earnings from rental activity or any trade or business in which the individual does not materially participate. It can also include income from limited partnerships and other similar enterprises where the individual is not actively involved.

Our 24/7 Wall St. passive income stock research database is a reliable source of the best investment ideas. We have identified nine ultra-high-yield dividend stocks that pay investors every month. Investing just $2,500 in each, for a total of $22,500, will pay out almost $250 per month in passive income, for a yearly total of $3,000. As a caveat, these stocks are better suited for those with higher risk tolerance.

Why we recommend monthly income stocks

In a world where prices seem to be consistently rising, a monthly check makes sense for many who have bills and expenses due on a 30-day basis. Items like mortgage payments or rent, utility bills, trash collection, and even grocery bills are always due each month, and a steady stream of passive monthly income can be a huge helping hand to meet those obligations.

AGNC Investment

This company has paid solid monthly dividends for years; its current yield is 14.90%. AGNC Investment Corp. (NASDAQ: AGNC) is a real estate investment trust (REIT) in the United States.

The company invests in residential mortgage pass-through securities and collateralized mortgage obligations for which a United States government-sponsored enterprise or agency guarantees the principal and interest payments.

$2,500 buys 258 shares, which pay $1.44 per share each year, which is $0.12 per month. That equals $31 in passive income every 30 days.

ARMOUR Residential REIT

With a massive 15.32% dividend yield and years of solid performance, this company is a perfect monthly dividend idea. ARMOUR Residential REIT Inc. (NYSE: ARR) invests in residential mortgage-backed securities (MBS) in the United States.

Its securities portfolio primarily consists of securities issued or guaranteed by the U.S. government-sponsored entity (GSE) and the Government National Mortgage Administration backed by fixed-rate, hybrid adjustable-rate, and adjustable-rate home loans, unsecured notes and bonds issued by the GSE and the United States treasuries, and money market instruments.

$2,500 will purchase 132 shares, which pay $2.88 each year or $0.24 per month, which equals $32 per month.

Dynex Capital

Paying a hefty 14.41% dividend, Dynex Capital Inc. (NYSE: DX) is a passive income champion for more aggressive investors. It is a mortgage real estate investment trust that invests in MBS on a leveraged basis in the United States.

It invests in agency and non-agency MBS, including residential, commercial, and interest-only securities.
Agency MBS has a guarantee of principal payment by a U.S. government agency or a GSE, such as Fannie Mae and Freddie Mac.

$2,500 buys 200 shares, which pay $1.80 per year, $0.15 monthly, or $30 every 30 days.

Ellington Financial

This quality mortgage REIT company is a favorite across Wall Street and pays a massive 12.72% dividend. Ellington Financial Inc. (NYSE: EFC), through its subsidiary, Ellington Financial Operating Partnership LLC, acquires and manages mortgage-related, consumer-related, corporate-related, and other financial assets in the United States.

The company develops and manages residential mortgage-backed securities (RMBS) backed by:

• Prime jumbo
• Alt-A, manufactured housing, and subprime residential mortgage loans
• RMBS for which the principal and interest payments are guaranteed by the U.S. government agency or a GSE
• Residential mortgage loans
• Commercial mortgage-backed securities
• Commercial mortgage loans and other commercial real estate debt

Ellington Financial also provides collateralized loan obligations, mortgage-related and non-mortgage-related derivatives, corporate debt and equity securities, corporate loans, and other strategic investments. The company offers consumer loans and asset-backed securities backed by consumer and commercial assets.

$2,500 buys 203 shares, which pay $1.56 per share each year, which is $0.13 per month. That equals $26.38 in passive income every 30 days.

Orchid Island Capital

With a stunning 18.32% dividend, this stock will help pay the monthly bills quickly. Orchid Island Capital Inc. (NYSE: ORC) is another specialty finance company that invests in RMBS in the United States.

The company’s RMBS is backed by single-family residential mortgage loans, referred to as Agency RMBS. Its portfolio includes traditional pass-through Agency RMBS, such as mortgage pass-through certificates and collateralized mortgage obligations, and structured Agency RMBS comprising interest-only, inverse interest-only, and principal-only securities. The company has elected to be taxed as a REIT for the United States federal income tax purposes.

$2,500 buys 318 shares, which pay $1.44 per year or $0.12 monthly. That translates to $38.16 in income every 30 days.

Oxford Square Capital

This company pays a 15.56 % dividend, which could result in a substantial return home run if the stock moves higher. Oxford Square Capital Corp. (NASDAQ: OXSQ) is a business development company that operates as a closed-end, non-diversified management investment company.

A private equity and mezzanine firm invests in public and private companies. It invests in secured and unsecured senior debt, subordinated debt, junior subordinated debt, preferred stock, common stock, and syndicated bank loans.

Oxford Square Capital primarily invests in debt and equity securities of technology-related companies that operate in these sectors:

• Computer software
• Internet
• Information technology infrastructure and services
• Media, telecommunications, and telecommunications equipment
• Semiconductors
• Hardware
• Technology-enabled services
• Semiconductor capital equipment
• Medical device technology
• Diversified technology and networking systems sectors

$2,500 will buy 919 shares that pay $0.42 per year or $0.035 monthly, which translates to $32 in income.

Prospect Capital

Hedge funds love this top business development company, and the gigantic 11.97% dividend makes it a potential total return home run. Prospect Capital Corp. (NASDAQ: PSEC) specializes in:

• The middle market, mature, mezzanine finance
• Later stage, emerging growth
• Leveraged buyouts
• Refinancing, acquisitions and recapitalizations
• Turnaround,
• Growth capital,
• Development, Capital expenditures, and subordinated debt tranches of collateralized loan obligations
• Cash flow term loans
• Marketplace lending and bridge transactions

It also invests in the multi-family residential real estate asset class. The fund makes secured debt, senior debt, senior and secured term loans, unitranche debt, first-lien and second-lien, private debt, private equity, mezzanine debt, and equity investments in private and microcap public businesses.

$2,500 buys 552 shares, which pay $0.54 per year or $0.045 monthly, or $24.84 every 30 days.

Stellus Capital

With an 11.45% yield and trading closer to a 52-week high, this stock could break out in 2025. Stellus Capital Investment Corp. (NYSE: SCM) is a business development company specializing in investments in private middle-market companies.

It invests through first-lien, second-lien, unitranche, and mezzanine debt financing, often with a corresponding equity investment. The fund prefers to invest in the United States and Canada and seeks to invest in companies with an EBITDA between $5 million and $50 million.

$2,500 will buy 181 shares, which pay $1.60 per year or $0.13 monthly, for $23.57 per month.

Trinity Capital

Based in Phoenix, this business development company pays a massive 14.26% dividend. Trinity Capital Inc. (NASDAQ: TRIN) is a venture capital firm specializing in venture debt for growth-stage companies seeking loans and equipment financing.

The company is an internally managed business development company that is a leading provider of diversified financial solutions to growth-stage companies with institutional equity investors.

Trinity Capital’s investment objective is to generate current income and, to a lesser extent, capital appreciation through investments, including term loans, equipment financings, and equity-related investments.

$2,500 will purchase 174 shares, which pay $2.04 each year or $0.17 per month, which equals $29.58 per month.

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