With interest rates rising, there are many more ways to turn idle cash into a passive income investment. Yields on government bonds and bank CDs are higher. Meanwhile, this-year's bear market has lowered stock prices, pushing up dividend yields.

Because of that, there are many options to turn cash you don't need over the next few years into a lucrative income stream. Three great ways are to invest in real estate investment trusts (REITs), master limited partnerships (MLPs), or high-yield dividend stocks.  

Passive income from real estate

REITs are specialized vehicles that Congress created in 1960 to allow anyone to invest in income-producing real estate. To comply with IRS regulations, these entities must distribute 90% of their taxable income to shareholders.

Because of that, most REITs offer high dividend yields. However, it's worth noting they pay non-qualified dividends that the IRS taxes at a higher rate than qualified dividends. As a result, it's best to own REITs in a tax-advantaged account like an IRA so you can keep more of the passive income. 

One great REIT for passive-income seekers is Digital Realty Trust (DLR -1.16%). The company owns and operates data centers, leasing space to companies that need to house servers and other data storage and networking equipment. That business model enables Digital Realty to generate recurring revenue to support its dividend.

Digital Realty's stock price has tumbled with the broader market this year. It's down over 40% from its recent high, pushing its dividend yield up to 4.9%. Because of that, $1,000 invested in Digital Realty's stock should produce about $49 of annual passive income. 

That dividend income will likely rise in the coming years. Digital Realty has increased its payout every year since it came public in 2004, including by 5% earlier this year. In addition to steadily rising lease rates, the REIT's other growth drivers are development projects and acquisitions. 

Piping lots of passive income

MLPs are also great options for those seeking to earn passive income. They share many characteristics of REITs, including a requirement to distribute the bulk of their income to investors. While they can cause some tax challenges -- MLPs provide investors with a Schedule K-1 instead of a Form 1099-DIV and aren't allowed in many IRAs -- that extra paperwork can be worth it for the tax-advantaged passive income.

One of the best MLPs for passive-income production is Enterprise Products Partners (EPD -0.74%). The pipeline company has increased its distribution to investors for 24 straight years. The MLP currently offers an attractive payout at a 7.5% yield. That suggests a $1,000 investment could generate about $75 of annual passive income. 

That income stream should keep rising in the coming years. Enterprise Products Partners currently generates enough cash to cover its high-yielding payout by a comfortable 1.9 times. That enables it to retain money to fund its continued expansion. The MLP had over $5.5 billion of expansion projects under construction, which should fuel its growth for the next several years.

Big yields from mature businesses

Many traditional corporations also pay sizable dividends. These companies tend to operate in mature industries and generate lots of recurring revenue and cash flow. That enables them to produce more cash than they need to expand their businesses, allowing them to pay lucrative dividends.  

Telecom-giant Verizon (VZ 1.16%) stands out for its dividend, which currently yields 7.2%, following a more than 30% sell-off in its stock. Verizon can easily afford that high-yielding payout.

The telecom company produced $28.2 billion of cash flow from operations during the first nine months of 2022. That was more than enough to fund the $15.8 billion it spent on maintaining and expanding its network. That enabled Verizon to generate $12.4 billion of free cash flow, which easily covered its $8.1 billion of dividend payments.

Verizon also has an excellent track record of increasing its dividend. The company delivered its 16th consecutive dividend increase earlier this year, the longest streak in the telecom sector. With a business producing excess cash and a strong balance sheet, Verizon has the financial flexibility to continue growing its payout in the future.

Great ways to collect passive income

Rising interest rates and falling stock prices give investors more ways to generate passive income. Three great ones are REITs, MLPs, and high-yield dividend stocks.

While there are many options within each category, Digital Realty, Enterprise Products Partners, and Verizon stand out for their high current yields and growth track records. Because of that, they can turn $1,000 into a lucrative (and growing) passive-income stream.