Investing can help you build wealth, and the right investment strategy can make it easier for you to retire early. Whether you’ve just started on your investment journey or have already built a portfolio of stocks, there’s an opportunity to reallocate your money if you want to enjoy passive income. Stocks pay dividends, and they can help generate steady income, and many companies pay monthly dividends, making it easier for you to cover monthly expenses.
Reliable dividend payers have a strong cash flow and the ability to sustain the payments. However, if you’re investing for the long term, consider two monthly dividend stocks and two exchange-traded funds that will not only generate passive income but also help your portfolio grow. Reinvestment of these dividends can increase your total returns. Let’s take a look at them.
Realty Income
Dividend yield: 5.28%
I have been pounding the table on Realty Income (NYSE:O) for a while now. The real estate investment trust (REIT) owns about 15,500 properties across different geographical locations, and it leases the property to tenants. It has a juicy dividend yield of 5.28% and calls itself “The Monthly Dividend Company.” Realty Income pays monthly dividends and has paid them for 667 consecutive months.
It manages to keep the operating expenses low by using triple-net leases. This requires the tenants to pay for property insurance, real estate taxes, and operating expenses. Additionally, it has an occupancy rate of 98.7% and has a 1% annual rent increase clause.
Realty Income stock gained 11.15% in the past year and is exchanging hands for $61.42. It has a payout ratio of 75.29% and pays an annual dividend of $3.24 per share. The REIT has grown dividends for 32 consecutive years. Realty Income is expanding across Europe and has top-quality tenants, which brings stability to the business.
Wall Street is bullish on the stock and expects a steady upside this year. It is one of the top dividend stocks, ideal for your retirement journey.
Healthpeak Properties
Dividend yield: 6.84%
Another REIT, Healthpeak Properties Inc. (NYSE: DOC), invests in the healthcare industry, life sciences, medical offices, and senior housing. The stock has a strong yield of 6.84% and a payout ratio of 66.83%. While it has only increased dividends for 1 year, it has paid dividends for 36 years. The REIT acquires, develops, owns, leases, and manages healthcare real estate across the country.
Exchanging hands for $17.83, the high dividend stock looks cheap to me. It has lost significant value in the past year, and it’s a buy before the market rotates to value. The REIT pays an annual dividend of $1.22.
There’s ample potential for the REIT to rise. The demand for senior housing is going to keep growing as the sector expands. This is when Healthpeak Properties will have some of its best days.
There are always going to be people retiring or sick, and Healthpeak will keep growing. While its third-quarter results couldn’t impress the market, it led to a sell-off but I believe the best is yet to come. DOC is a cheap stock with a juicy yield.
Global X SuperDividend ETF
Dividend yield: 7.96%
To further enjoy monthly passive income, consider investing in the Global X SuperDividend ETF (NYSEARCA:SDIV). It invests in the 100 highest dividend-paying stocks in the world. SDIV has a yield of 7.96% and an expense ratio of 0.58%. Since the fund holds only 100 stocks, you get to own the finest dividend-paying equities.
It has the highest allocation in the United States (30%), followed by Brazil (13.6%) and Britain (10.2%). In terms of sector allocation, the fund has the highest allocation to the financial sector (32.4%), followed by energy (16.5%) and materials (15.3%).
Exchanging hands for $25.28, the ETF has gained 20% in the past year and could continue the upward trend. SDIV carries a certain element of risk, but if your only goal is passive income, it could be a good choice. You might not be familiar with many of the stocks in the index, but it does offer an opportunity to invest in international stocks. It has generated an average annualized return of 28.27% in a year and 11.43% in 3 years.
If you’re looking for global diversification and want to move away from tech, this ETF will not disappoint.
JP Morgan Equity Premium Income ETF
Dividend yield: 8.13%
A great ETF by JPMorgan, the JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI) invests in low-risk, dividend-paying stocks and has 126 holdings. The fund generates income through a covered call strategy in addition to the dividends. It writes out-of-the-money call options and generates premium through it to maintain the high yield.
The fund’s dividends are predictable and generate a higher income than the typical dividend stocks. JEPI has a yield of 8.13% and an expense ratio of 0.35%. Since it targets more conservative stocks, it maintains low risk and has managed to build a monthly distribution calendar that is more beneficial for income investors.
The ETF invests in information technology (14%), followed by an equal allocation to healthcare and industrials (12.3%) and financials (11.1%). Its top holdings include Johnson & Johnson, Alphabet, Nvidia, Amazon, AbbVie, and Ross Stores. While a few of the top 10 are tech giants, the others are renowned dividend-paying companies.
Exchanging hands for $58, JEPI hasn’t seen much upside, but its dividends have remained steady. If you’re looking for a low-risk investment, JEPI can be a great choice.