Millions unemployed, volatile markets, irresolute leadership– these are not words that give confidence to the everyday investor. In fact, quite understandably, most people are working to secure their nest eggs and insulate themselves from the capricious market. However, fortune favors the bold, and there are more than a few ways savvy investors can organize their finances to produce passive income right now. Here’s a look at some of the best bets.
With most people retreating into safe-haven investments like gold or government bonds, many forget that there are plenty of stocks that are delivering 7% yields. With the average yield being 2.2%, the odds are in your favor to out-perform even the highest earning savings accounts. With these investments, you can not only make money from the dividends, you can also compliment those yeilds with the capital appreciation as the stock price goes up. Be sure to create a dividend reinvestment (DRIP) plan, this will ensure that the dividends are reinvested, which in turn will precipitate more returns for you. If you are looking for good-buys right now, look to stocks like Home Depot (HD), KKR Real Estate Finance Trust (KREF), or Sherwin Williams (SHW). Sherwin Williams has been a particularly strong performer. They are a member of the S&P Dividend Aristocrats, a selection of 64 stocks who have raised their dividend payouts annually for at least 25 years. That’s pretty impressive.
Real Estate Investment Trusts (REITs)
REITs have been around for awhile but have found recent popularity due to their impressive rates of return. “A real estate investment trust (REIT) is a company that owns, operates, or finances income-generating real estate. Modeled after mutual funds, REITs pool the capital of numerous investors. This makes it possible for individual investors to earn dividends from real estate investments—without having to buy, manage, or finance any properties themselves.” REITs like Fundrise have captured the attention of hoards of retail investors hungry to cash in on their low-fees and average returns between 8.7-12.4%.
Peer-to-peer lending platforms like Prosper and Lending Club are beginning to sprout up, attempting to fill the lending void for people who are unwilling or unable to borrow from traditional banks or lenders. As a lender on these platforms, you earn money through the interest payments made on the loans. Keep in mind that there is a level of strategy and risk inherent in this type of investment. Be sure to diversify your investment by creating several loans– never put all your eggs in one basket.
These investments provide some interesting alternative options for those with some extra capital. Many of the most successful investors have consistently stated that the key to achieving financial independence is generating multiple streams of passive income. Look to these options as a good starting-point. There’s no better time than now.