According to the Internal Revenue Service (IRS), passive income generally includes earnings from rental activity or any trade, business, or investment in which the individual does not materially participate. It can also include income from limited partnerships, stocks, bonds, and other similar enterprises in which the investor is not actively involved. The more passive income can help cover rising costs, such as mortgages, insurance, taxes, and other expenses, the easier it is for investors to set aside money for future needs as they prepare for retirement. Dependable, recurring dividends — especially those paid monthly — are a recipe for success.
Our 24/7 Wall St. passive income stock research database is a reliable source of the best passive-income investment ideas. We have identified five ultra-high-yield dividend-paying stocks, some of which pay monthly. Investing just $15,000 in each, for a total of $75,000, would yield $8,725 annually. As a caveat, these stocks are better suited for those with higher risk tolerance, but with that noted, across multiple sectors and all with long track records, they make sense for a diversified ultra-high-yield portfolio. Note that these figures are as of the day we wrote this post and may later vary somewhat.
Gladstone Commercial
Trading under $15 with a massive monthly 10.40% dividend, this is a classic passive-income home run. Gladstone Commercial Corp. (NASDAQ: GOOD) is a real estate investment trust (REIT) focused on acquiring, owning, and operating net-leased industrial and office properties across the United States.
It conducts substantially all its business activities through an Umbrella Partnership Real Estate Investment Trust structure, by which all its properties are held, directly or indirectly, by Gladstone Commercial Limited Partnership (the operating partnership).
Gladstone Commercial has about 135 properties, totaling 16.9 million square feet of rentable space, located in 27 states. Its properties are geographically diversified, and its tenants encompass a cross-section of business sectors, ranging in size from small to large private and public companies.
The company’s properties are in various states, including:
- Pennsylvania
- Texas
- Florida
- Ohio
- Georgia,
- North Carolina
- Alabama
$15,000 will buy 1,280 shares, paying $1.20 per year, for a total of $1,535.
Starwood Property Trust
Starwood Capital is a well-established global investor with international investments spanning over 30 countries and is an affiliate of this high-yielding company, which boasts a 10.50% dividend yield led by real estate legend Barry Sternlicht. Starwood Property Trust Inc. (NYSE: STWD | STWD Price Prediction) operates as a REIT in the United States, Europe, and Australia. It operates through four segments.
The Commercial and Residential Lending segment originates, acquires, finances, and manages:
- Commercial first mortgages
- Non-agency residential mortgages
- Subordinated mortgages
- Mezzanine loans
- Preferred equity
- Commercial mortgage-backed securities (CMBS)
- Residential mortgage-backed securities
The Infrastructure lending segment originates, acquires, finances, and manages infrastructure debt investments.
The Property segment primarily develops and manages equity interests in stabilized commercial real estate properties, including multifamily and net-leased commercial properties, held for investment purposes.
The Investing and Servicing segment:
- Manages and works out problem assets
- Acquires and contains unrated, investment-grade, and non-investment-grade rated CMBS comprising subordinated interests of securitization and re-securitization transactions
- Originates conduit loans to sell these loans into securitization transactions and acquire commercial real estate assets, including properties from CMBS trusts
$15,000 will purchase 810 shares and pay $1.92 per year, for a total of $1,550.
Wells Fargo has an Outperform rating and a $22 price target.
Stellus Capital
With a huge 12.30% dividend yield, this business development corporation (BDC) has consistently been rated among the best in the industry. Stellus Capital Investment Corp. (NYSE: SCM) invests in private, middle-market companies.
The investment objective is to maximize total return to its stockholders, in the form of current income and capital appreciation, through debt and related equity investments in middle-market companies. It seeks to achieve its investment objective by originating and investing primarily in private United States middle-market companies (typically those with $5.0 million to $50.0 million of earnings) through first lien, second lien, unitranche, and unsecured debt financing, with corresponding equity co-investments.
Stellus Capital focuses on a variety of industry sectors, including business services, general industrial, government services, healthcare, software, specialty finance, and others. Its investment adviser is Stellus Capital Management.
$15,000 will buy 1,130 shares, each paying $1.60 per year, for a total of $1,810.
Oppenheimer has a Market Perform rating with a $14 target.
Trinity Capital
Trinity Capital Inc. (NASDAQ: TRIN) offers venture debt financing to high-growth, venture capital-backed startups and companies seeking loans and equipment financing. It also provides an enormous 12.20% dividend. The internally managed BDC is a leading provider of diversified financial solutions to growth-stage companies backed by 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.
$15,000 will purchase 925 shares, each paying $2.04 per year, for a total of $1,885.
Citizens JMP has a Buy rating with a $17.50 target price.
TXO Partners
TXO Partners L.P. (NYSE: TXO) is a master limited partnership that acquires, develops, optimizes, and exploits conventional oil, natural gas, and natural gas liquids (NGLs) reserves in North America. It comes with a 12.92% dividend and is trading near a 52-week low.
The company’s acreage positions are concentrated in three main areas:
- Permian Basin of West Texas and New Mexico
- San Juan Basin of New Mexico and Colorado
- Williston Basin of Montana and North Dakota
Its assets consist of approximately 1,117,628 gross (549,229 net) leasehold and mineral acres located primarily in the Permian, San Juan, and Williston Basins. The assets include a 50% interest in Cross Timbers Energy, also known as Cross Timbers.
As an operator, it designs and manages the development, recompletion, or workover of all the wells it operates, and supervises day-to-day operations and maintenance activities. The company markets the majority of the natural gas, NGL, crude oil, and condensate production from the properties on which it operates.
$15,000 will purchase 1,385 shares. They pay $1.40 each per year, which totals $1,940.
Stifel has a Buy rating with a $19 target price.
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