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15 Great Ways to Generate Passive Income Now and Going Forward

By Marc Rapport - Jul 23, 2022 at 7:00AM
Passive Income written on a chalkboard with money lying on top.

15 Great Ways to Generate Passive Income Now and Going Forward

Put your money to work while you sit back and watch the income come in

Passive income is money you earn from assets you don't actively manage. That can be investments in stocks, real estate, bonds, savings accounts, and more. Here are some options to consider.

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Person standing in front of For Rent sign in front of house.

1. Buy a rental home and hire a property manager

Strictly speaking, if you manage the property, it's not passive income. But if you hire a property manager, it is, and you can benefit from that income stream while letting someone else handle the hassles. For a cut, of course.

ALSO READ: What Is Passive Income?

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Dice spelling ETF.

2. Invest in this low-volatility dividend income fund

The Invesco S&P 500 High Dividend Low Volatility ETF (NYSEMKT: SPHD) is an exchange-traded fund that owns a wide mix of stocks, including utilities, energy, consumer staples, and more. Speaking to its low volatility, it's only down about 3% in this most volatile of years, with a share price of about $44 and a yield of about 3.7%.

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A gold crown sitting atop stacks of cash.

3. Buy this Dividend King

Investors in Cincinnati Financial (NASDAQ: CINF) have been treated royally for a long time. This multiline insurance and investments company has raised its dividend for 62 straight years, giving it status as a Dividend King. Right now it's yielding about 2.46% at a share price of about $112.

ALSO READ: Dividend Kings of 2022

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Smiling person wearing apron and standing outside coffee shop has arms folded.

4. Peer-to-peer lending

You are the bank with peer-to-peer (P2P) lending. Several platforms do this, including some like Kiva that add a social empowerment touch by enabling loans to micro entrepreneurs. P2P loans tend to be fairly high-interest, smaller-dollar loans that also can carry a relatively high degree of risk.

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A person at a laptop looking at Real Estate on the screen.

5. Crowdfunding commercial real estate

Investors can plunk money down on commercial real estate of multiple asset types through a variety of crowdfunded platforms, some with very small initial investments required and others that require you to be an accredited investor because of their high minimums, easily $25,000 or more.

In exchange, you get the income from the properties you're part owners of, with no management responsibilities. Examples include RealtyMogul and CrowdStreet.

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The word Bond on an old document.

6. Investing in corporate bonds

Corporations often fund their acquisitions and expansions by issuing bonds. Investors can buy them individually or through managed bond funds such as the Goldman Sachs Access Investment Grade Corporate Bond ETF (NYSEMKT: GIGB). This ETF is currently yielding about 2.7%. You can find higher rates, but remember: With higher rates comes higher risk.

ALSO READ: Your Complete Guide to Corporate Bonds

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Word REIT spelled out on dice sitting atop coins from all over the world.

7. Buy this monthly dividend REIT

Realty Income (NYSE: O) is a real estate investment trust (REIT), which means it owns a pool of income-producing real estate and is obligated by tax law to pass on at least 90% of its taxable income to shareholders.

Realty Income has paid monthly dividends without fail for more than 50 years -- with a current yield of about 4.2% -- and now has a global portfolio of more than 11,000 retail properties, primarily in the United States.

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Three people shop in a toy store.

8. We can Agree on this monthly payer

Agree Realty (NYSE: ADC) is another retail REIT that over the long run has outpaced the greater market in total return. And unlike Realty Income, and most other stocks, Agree Realty is up about 5% this year. It now trades at about $75 a share and yields about 3.8%.

ALSO READ: 2 REITs That Are Outperforming the Dow Jones

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A person writing Municipal Bonds in a notebook.

9. Invest in tax-exempt government bonds

Bonds issued by local, state, and federal agencies are typically tax-exempt. That gives you income so passive you don't even have to worry about it come tax time.

Like corporate bonds, you can buy these individually or through a vast array of funds. Just one example: the Nuveen Select Tax-Free Income Portfolio (NYSE: NXP), which currently sells for about $14 a share and yields about 3.9%.

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An oil refinery with workers.

10. This oil stock keeps pumping out the passive income

Chevron (NYSE: CVX) is a Dividend Aristocrat, with 35 straight years of dividend hikes that now have the giant oil multinational paying a yield of around 4% at a share price of about $138. You're paying so much at the pump now, you might as well get paid back a little, amirite?

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

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Person using a laptop and calculator to research mortgage loans.

11. Buy this mortgage REIT

Mortgage REITs make their living from buying, selling, and holding mortgages and mortgage-backed securities, and they typically pay larger dividends than their equity REIT counterparts. You can enjoy a current yield of about 8.7% from Blackstone Mortgage Trust (NYSE: BXMT), which specializes in commercial loans across North America, Europe, and Australia.

ALSO READ: Investing in Mortgage REITs

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A riverside power plant.

12. Con Ed can help light up your income stream

Consolidated Edison (NYSE: ED) is not only the oldest company on the NYSE -- dating back to 1824 and its predecessor, New York Gas Light Company -- it's also raised its dividend for 48 straight years and now pays at the rate of about 3.4% at a share price of about $93, with a captive audience of about 10 million customers in and around the Big Apple.

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Two gleeful young people sitting with lots of cash in hand and bags of it next to them.

13. Guaranteed savings accounts and CDs

Rising interest rates are finally being seen for those savings accounts and certificates of deposits (CDs) offered by banks and credit unions.

The highest right now for savings accounts tend to be around 1.5%, while CDs can be gotten for around 2.5%. But the latter, of course, require you to keep the money in them for terms ranging up to three years.

But then, they are guaranteed, so you don't even have to watch the share price. That's pretty passive. Plus, you can watch for rates to rise as inflation continues and competition increases for these deposits.

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An egg in a nest with the word Retirement on it.

14. Buy an annuity

Annuities are insurance contracts that take your money and then pay a guaranteed stream of income for a specified period, including for life. They can help ensure you don't outlive your assets in retirement and limit market risk, but also come with high management and surrender fees. They're not for everybody, but can be a valuable part of a retirement plan.

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An overhead view of people working in a warehouse.

15. Buy some warehouse space

Buying warehouse space yourself is out of reach for most folks, naturally, but you can buy shares of Prologis (NYSE: PLD) for about $121 a piece and enjoy a yield of about 2.6% from this owner of about a billion square feet of high-demand logistics and distribution space around the planet. Analysts who follow this company rate it a buy because of the key spot it holds in the international supply chain.

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Person sitting on the floor in an empty home and looking at paint swatches for the interior walls.

So many choices. So much time. Choose wisely.

There are countless ways to generate passive income to help you through your working years and retirement. Don't rush into your choices. There also is a limitless amount of information out there to help you decide, and hopefully this little list helps.

Marc Rapport has positions in Agree Realty, Blackstone Mortgage Trust, and Realty Income. The Motley Fool has positions in and recommends Prologis. The Motley Fool has a disclosure policy.

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