Investing $1,000 usually isn't a stressful endeavor simply because (for most households anyway) it's not a life-changing amount of money; a luxury handbag or a nice weekend getaway can easily cost just as much.
Figuring out how to put $50,000 to work generating passive income, however, is a different story. This is a much more serious amount of money for most people, and must be handled in a way that makes the most effective use of it while minimizing risk.
To this end, here's a rundown of five dividend stocks to consider if you're looking to invest a bigger sum of money to produce reliable recurring income. In the same order you'll likely want to add them to your portfolio...
1. Verizon
If you're looking for some capital appreciation even from your dividend-paying holdings, Verizon Communications (VZ +1.28%) offers some, but not nearly enough to view it as even a modest growth holding. It's first and foremost (and almost entirely) an income stock. But it plays this role extremely well, offering newcomers a chance to plug into a forward-looking yield of 5.6%, which is based on a dividend that's now been raised for 19 consecutive years.
The reason these payments are apt to endure indefinitely isn't tough to figure out. Most people living in the U.S. market it serves are practically addicted to their mobile phones, and have no intention of giving them up. Harmony Healthcare IT reports the average American spends more than five hours every day looking at their phone screen, for perspective.
NYSE: VZ
Key Data Points
2. Realty Income
Technically speaking, it's not a stock ... at least not in the sense that most investors understand publicly traded shares of conventional corporations. Although it's bought and sold via an exchange like any other ticker, Realty Income (O -0.12%) is a real estate investment trust, or REIT, for short. That just means it owns a bunch of revenue-generating real estate. As long as the majority of its profits are passed along to shareholders in the form of dividends, it's not first taxed at the corporate level. That ultimately means its investors put more money in their pockets.
That's not the chief reason that income-seeking investors might want to own this or any other REIT though. For that matter, neither is its respectable forward-looking yield of 4.9%. Rather, the most compelling aspect of owning a stake in Realty Income is that it makes its dividend payments every month rather than every quarter, at the same cadence people incur bills. The fact that it's also raised its annualized per-share payout every year for the past 31 years, of course, only bolsters the bullish argument.
3. ADP
With just a passing look, Automatic Data Processing (ADP +0.99%) -- you'll likely know the payroll processor by its more familiar name, "ADP" -- doesn't look like a heroic income-generating stock. Its dividend yield of 3.2% is OK, but hardly thrilling.
Image source: Getty Images.
Now take a step back and look at the bigger picture. Over the course of the past 10 years this reliably profitable company's quarterly per-share dividend payment has more than doubled, from $0.53 in early 2016 to $1.70 per share now, extending a long-established pace of dividend growth. It's just the nature of its business model paired with the additions of related offerings like personnel time and attendance solutions, benefits management, employee recruitment, and other HR functions.
4. Brookfield Asset Management
Just as the name suggests, Brookfield Asset Management (BAM +0.04%) is an investment management outfit. It oversees a handful of publicly traded partnerships that bear the same Brookfield name, in fact, scraping off a small fee from these entities' total values every calendar quarter.
The company is compellingly different than most other mutual fund and exchange-traded fund (ETF) managers though. Rather than establishing investment pools that will buy anything and everything, Brookfield is hyper-focused on proven growth industries like renewable energy, artificial intelligence (AI) data centers, water infrastructure, logistics, power distribution, and more. Moreover, most of its holdings are privately owned organizations rather than publicly traded entities, giving investors a chance to own stakes in attractive businesses that aren't investable in a conventional brokerage account.
NYSE: BAM
Key Data Points
Perhaps more important, while this ticker's forward-looking yield of 4.3% is solid to be sure, the company's long-term annualized growth target of between 15% and 20% per year is completely achievable, given the nature of its underlying businesses. Indeed, this year's per-share payment is 15% better than last year's, which was 15% better than 2023's.
5. JPMorgan Equity Premium Income ETF
Lastly, if you already own the four dividend stocks above (or enough names like them with similar yields and risk profiles), consider adding the JPMorgan Equity Premium Income ETF (JEPI +0.69%) to your portfolio while its trailing 30-day dividend yield stands at just under 7%.
That big number comes with an equally big footnote. That is, this yield isn't consistent. Sometimes it's less. Other times it's more. Over the course of the past 12 months its dividend yield has averaged over 8%, but at times it can be measurably less than its current 7%.
Given the sheer size of its monthly (yes, monthly) payouts most of the time though, this uncertainty may be worth it to investors who are also already collecting more predictable passive income from other holdings.
The JPMorgan Equity Premium Income ETF is able to generate this sort of income by "writing" covered call options. That just means it sells call options on stocks it also owns, essentially using these stock positions as collateral for these option trades that might eventually need to be undone one way or another. Whether or not it gets to keep these shares or is forced to sell them doesn't change the fact, however, that writing -- or selling -- covered call options repeatedly generates real cash flow.
The only arguable catch here is that JEPI's price tends to underperform its benchmark S&P 500 essentially because it's converting what could have been long-term capital gains into short-term income. In other words, you'll achieve about the same overall net return with this JPMorgan ETF that you would with an S&P 500 index fund. You'll just be achieving most of it in the form of dividend income rather than through price appreciation.
