There are lots of ways to start making passive income. One of the easiest is to invest in dividend-paying stocks. 

There are lots of options. Some of the favorites of our passive-income-loving contributors are STORE Capital (STOR), Realty Income (O -0.23%), and STAG Industrial (STAG 0.45%). Here's why they think these stocks are surefire ways to collect a steady stream of passive income. 

STORE Capital is less sensitive to the business cycle

Brent Nyitray (STORE Capital): STORE Capital is a real estate investment trust (REIT) that focuses on single tenant operation real estate (the acronym for the company's name), usually under the triple-net lease arrangement. Most leases are gross leases, which require the landlord to pay for things like taxes, maintenance, and insurance, similar to an apartment lease. The tenant is responsible for the rent and not much else. Triple-net leases require the tenant to handle these ancillary costs. These leases are generally long term and contain periodic increases based on an inflation index. Almost 77% of STORE Capital's leases expire after 2031. Since these leases are longer term, it allows certainty both on the REIT side and the tenant side.

The typical tenant for STORE Capital is a restaurant, early childhood education center, or health club. The company also has facilities for manufacturing and retail. STORE Capital uses a rigid methodology to source tenants and requires them to provide detailed financial projections that prove they can not only make the lease payments but also grow the business and thrive. This business model has attracted legendary investor Warren Buffett, and STORE Capital is a holding of Berkshire Hathaway.

STORE Capital's tenant base includes many defensive industries, which means that consumers buy from them even if the economy goes into a recession. Even in a recession, people will still need their cars fixed, their kids watched, and to go to the gym. During the COVID-19 pandemic, STORE Capital was able to maintain its dividend when most REITs were cutting theirs. At current levels, the stock has a dividend yield of 5.3%. 

The name says it all

Matt DiLallo (Realty Income): Realty Income built its business to provide its investors with dependable monthly dividend income. The REIT has declared 626 consecutive monthly dividend payments throughout its 53-year operating history. Even better, it has steadily increased its dividend over time. Overall, it has given investors 116 raises, including in the last 99 straight quarters, growing its payment at a 4.4% annual rate since its public listing in 1994. 

Several factors have contributed to Realty Income's ability to pay a steadily rising dividend. It all starts with the company's resilient real estate portfolio. The REIT focuses on owning operationally essential freestanding properties triple-net leased (NNN) to companies operating in durable industries. Roughly 94% of its rental income comes from tenants in sectors resistant to economic downturns or the threat of e-commerce. Meanwhile, NNN leases make the tenant responsible for variable expenses like maintenance, building insurance, and real estate taxes. These features enable Realty Income to generate very stable rental income.

The REIT pays a conservative portion of its rental income (roughly 75% of its adjusted funds from operations) to shareholders via its monthly dividend. Meanwhile, it has one of the strongest balance sheets in the REIT sector with A-rated credit. Those factors give the company tremendous financial flexibility, enabling it to steadily acquire more income-producing real estate. 

Add in Realty Income's above-average dividend yield that currently clocks in at around 4%, and it's a no-brainer buy for investors seeking a steady source of passive income.

STAG Industrial continues pump out the passive income

Marc Rapport (STAG Industrial): STAG Industrial is an industrial REIT, a growing player in what used to be the staid business of owning and leasing out warehouse space. Not so staid anymore.

E-commerce has made this one of the hottest sectors in commercial real estate, and STAG has not just gone along for the ride, it's thrived. STAG has outperformed the S&P 500 and Dow Jones U.S. Industrial & Office REITs Index by 45% and 500%, respectively, since it went public in 2011.

During its first decade, the Boston-based company has grown its holdings to about 111 million square feet of space in 559 buildings spread across 40 states, including adding nine buildings in Q2 2022. STAG also reported an 18% year-over-year jump in funds from operations (FFO) per share. That's a key measure of how well the company uses its cash. The same report also said it has the liquidity to spend $1 billion on acquisitions by year's end, so expect more to come.

Of course, we're talking about passive income here, and STAG delivers on that account, too. The REIT has raised its payout by an annualized 11% over the past three years and is now yielding about 4.2% from a current dividend of $0.121667 per month. That's right, this is a monthly dividend payer, an added attraction to investors who like getting paid 12 times a year instead of just four.

E-commerce accounts for about 40% of STAG's portfolio activity. In general, the company expects to benefit both from a rebound in retail inventory and from growing demand for industrial space as companies reshore or establish new U.S. operations in a new, "just-in-case" environment rather than the traditional "just-in-time" manufacturing and distribution paradigm.

STAG stock got beaten down as e-commerce concerns roiled the market, including for the REIT's largest tenant -- Amazon accounts for about 3% of the REIT's rent. But the four analysts who cover STAG all rate it a buy and give it a consensus price target of $45.25, which would be a 30% jump from its current level of about $35 a share.

I think it's a good buy-and-hold. I own it now, and intend to add shares both for their growth potential and their nice flow of monthly income.