How to Structure a $3 Million Portfolio to Generate Safe $250K Income

Here’s a challenge: take $3 million in available cash and turn it into a machine that creates $250,000 worth of income per year. Not long ago, a Reddit user posed this challenge, asking what would be an “ideal mix” of stocks and exchange traded funds (ETFs) to “generate $250k/yr off of that $3M while still having relatively low-medium risk on the actual value of the stocks I’m buying.”

Doing some quick math, it would require an average annual yield of $250,000 / $3 million, or 8.33%, to achieve this goal. There are high-yield stocks out there, and a few of them are worth considering.

However, in order to achieve “relatively low-medium risk,” there needs to be wide diversification. Therefore, most of the $3 million portfolio should be dedicated to ETFs containing multiple stocks and/or options on those stocks. So, let’s kick off our hypothetical portfolio plan with a handful of stocks that offer sizable yields.

A Few Supersized-Yield Stocks

I recently highlighted five stocks with 12%+ annual yields and, separately, four stocks with 10%+ yields that pay monthly. Taking a portion of a $3 million cash account and buying some of those stocks should help to maintain an average yield of 8.33% or more.

That said, it should be acknowledged that stocks with yields in the double digits tend to carry moderate to high risk. Keeping risk management in mind, here are the bullet-point rundowns for five stocks with big yields to consider.

• PennantPark Floating Rate Capital (NYSE:PFLT): 13.98% forward annual dividend yield. Primarily invests in “U.S. middle-market companies” across a variety of market verticals, so at least there’s a diversification element here. Pays distributions on a monthly basis, so there are frequent reinvestment opportunities.
• B&G Foods (NYSE:BGS): 17.39% forward annual yield. Distributes packaged foods, including some recognizable brands. Held $54.084 million worth of cash and cash equivalents earlier this year, so the dividends should be sustainable for a while at least.
• Ellington Financial (NYSE:EFC): 11.43% forward annual yield. Derives income from residential and commercial mortgage loans along with other mortgage-related asset types. This one’s a profitable monthly dividend payer that reported Q2 2025 net income of $51.073 million.
• TXO Partners (NYSE:TXO): 17.15% forward annual yield. A master limited partnership (MLP), this firm acquires and develops oil and gas properties. Maintained cash and cash equivalents totaling $7.953 million a few months ago, suggesting a sufficient near-term capital runway to continue paying a high yield.

Again, the objective is $250,000 worth of annual income with “relatively low-medium risk.” Note that these four stocks offer yields that are much higher than the targeted average of 8.33%, and bear in mind that they’re moderately risky.

Consequently, it makes sense to dedicate $250,000 to each of these stocks, for a total of $1 million or one-third of the $3 million account. Anything higher than that would probably be too risky. With that, we still have $2 million left and for diversification purposes, it makes sense to focus on ETFs now.

Seeking Variety With ETFs

Three ETFs immediately come to mind as they feature high annual yields but also include baskets of 100 or more stocks. By committing $666,666.67 to each of the following three ETFs, a $3 million account would indirectly invest in hundreds of stocks spanning multiple market sectors.

The JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI) deducts 0.35% worth of annual operating expenses but advertises an expected yield of 7.17%. That’s below the 8.33% targeted average annual yield, but the other funds and stocks should make up for that.

An important feature of the JEPI ETF is that it includes 124 stocks from a variety of sectors. Plus, it’s a nice bonus that the fund pays out monthly distributions. Overall, the JPMorgan Equity Premium Income ETF leans into defensive stocks and doesn’t charge excessive fees, so it would be a great addition to a $3 million portfolio.

The NEOS S&P 500 High Income ETF (BATS:SPYI) uses options-trading strategies to extract income from members of the S&P 500. Thus, the SPYI ETF provides indirect exposure to roughly 500 stocks, imparting a strong element of portfolio diversification.

While the NEOS S&P 500 High Income ETF deducts 0.68% worth of annualized operating expenses, which is a bit on the high side, it also advertises a hefty 12.16% distribution rate. At the end of the day, this fund offers an interesting way to derive significant income without veering too far into risky territory.

The last piece of the $3 million puzzle is the Amplify CWP Growth & Income ETF (NYSEARCA:QDVO), which includes 54 stocks in its holdings list. This fund utilizes options-trading strategies to generate extra income from carefully selected stocks, and SPYI distributes its cash payouts on a monthly basis.

It’s comforting to know that the Amplify CWP Growth & Income ETF emphasizes businesses with strong earnings and cash flow as well as a history of dividend growth. The SPYI ETF imposes annual operating expenses totaling 0.55% but also features an attractive 12.02% distribution rate. Combining that fund with JEPI, SPYI, and a handful of cautiously chosen stocks should unlock $250,000 in reasonably safe yearly passive income.