Passive income is characterized by its ability to generate revenue without requiring the earner’s continuous active effort, making it a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence. The more passive income can help cover rising costs like mortgages, insurance, taxes, and other expenses, the easier it is for investors to put away money for future needs as they prepare for retirement. Dependable recurring dividends from quality, high-yield stocks are a recipe for success.
Investing $10,000 in each of these nine companies for a total of $90,000 will generate an incredible $1,039 per month in passive income. While not suited for everybody, those trying to build strong passive income streams can do exceptionally well with some of these top companies in their portfolios. Paired with more conservative blue-chip dividend giants, investors can use a barbell approach to create significant passive income streams.
Why we recommend monthly income stocks
A monthly check makes sense for many who have bills and expenses due every 30 days in a world where prices are consistently rising. 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 help in meeting those obligations.
AGNC Investment
This company has paid solid monthly dividends for years; its current yield is a massive 15.40%. AGNC Investment Corp. (NASDAQ: AGNC | AGNC Price Prediction) 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.
$10,000 buys 947 shares, which pay $1.44 per share each year, which is $0.12 per month. That equals $114 in passive income every 30 days.
ARMOUR Residential REIT
With a massive 15.17% 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.
$10,000 will purchase 527 shares, which pay $2.88 each year or $0.24 per month, which equals $127 per month.
Dynex Capital
Paying a hefty 14.70% 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 U.S. government-sponsored entity, such as Fannie Mae and Freddie Mac.
$10,000 buys 802 shares, which pay $2.04 per year, $0.17 monthly, or $137 monthly.
Ellington Financial
This quality mortgage REIT company is a favorite across Wall Street and pays a massive 11.75 dividend. Ellington Financial Inc. (NYSE: EFC), through its subsidiary, Ellington Financial Operating Partnership, 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 the U.S. government-sponsored entity
- 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.
$10,000 buys 747 shares, which pay $1.56 per share each year, which is $0.13 per month. That equals $97 in passive income every 30 days.
Horizon Technology Finance
Paying a gigantic 13.6% dividend, this stock has tremendous upside potential. Horizon Technology Finance Corp. (NASDAQ: HRZN) is a business development company specializing in lending and investing in development-stage investments.
It focuses on making secured debt and venture lending investments to venture capital-backed companies in these industries.
- Technology
- Life science
- Healthcare information and services
- Cleantech
- Sustainability
Horizon is a leading venture lending platform that offers structured debt products to life science and technology companies. Its experienced investment and operations team has provided debt capital to some of the most exciting companies for decades.
$10,000 will buy 1024 shares, which pay $1.32 yearly or $0.11 monthly. That’s $113 in income.
Orchid Island Capital
With a stunning 16.4% dividend, this stock will help pay the monthly bills easily. 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 real estate investment trust (REIT) for the United States federal income tax purposes.
$10,000 buys 1136 shares, which pay $1.44 per year or $0.12 monthly. That translates to $137 in income every 30 days.
Oxford Square Capital
This company pays a huge 15.22% dividend, which could result in a substantial total 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.
It is a private equity and mezzanine firm.
The firm invests in both 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/or equity securities of technology-related companies that operate in the 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.
$10,000 will buy 3425 shares that pay $0.42 per year or $0.035 monthly, which translates to $125 in income.
Prospect Capital
Hedge funds love this top business development company, and the gigantic 12.36% 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, recapitalizations, turnaround, growth capital, development, capital expenditures and subordinated debt tranches of collateralized loan obligations, cash flow term loans, market place 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.
$10,000 buys 2305 shares, which pay $0.54 per year, $0.045 monthly, or $104 per month.
Stellus Capital
With a 10.41% yield and trading close to a 52-week high, this stock could break out soon. 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.
$10,000 will buy 650 shares, which pay $1.60 per year or $0.13 monthly. That will bring in $85 per month.
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