Passive income investments can be a great way to build wealth and achieve financial independence. Common examples of passive investments include the interest that you can make from a savings account or a bond, rental income that you can receive from real estate investments, and dividends from stocks. If you're looking to receive passive income with your investments, there are a few options that you may want to consider.
Investing in a retirement account is often one of your best options, as these accounts offer tax advantages and the potential for compounding returns over time. Investing in an individual retirement account (IRA) or a 401(k) can be a great way to get started Investing in a retirement account. You may also want to consider opening a Roth IRA, which allows you to withdraw funds tax-free in retirement.
Bargain hunting for inexpensive dividend stocks is a good habit if you're trying to build a passive income stream from your investments. Dividend stocks are stocks of companies that pay out a regular dividend to shareholders. Look for stocks with a high dividend yield, which measures the percentage of the company's share price that is paid as a dividend. Many large, well-established companies have been paying dividends for decades, making them a reliable source of income.
Buying real estate investment trusts (REITs) can be a particularly good idea for passive income too. This is because such stocks are required to pay out 90% of their profits to shareholders in the form of dividends. REITs are also less risky than buying physical real estate since you don't have to worry about maintenance and other costs. Plus, you can easily buy and sell REITs on the stock market.
My picks for passive income investments in 2023 are actually some of my perennial favourite stocks. But do I think they'll continue to pay dividends in the future? Absolutely. I'm looking at stocks in a variety of industries, including energy, technology, and manufacturing. These stocks have strong fundamentals, a history of paying dividends, and are likely to continue to pay dividends into the future.
Dividend stocks, bonds, money market accounts, and real estate are common choices for those seeking investment income. Photo illustration by The Motley Fool.
For those looking for more creative ways to generate passive income, there are other options to consider. Setting up a network of websites and blogs, bringing operating costs in-house, monetizing video content, creating a blog and selling advertising, and incorporating affiliate marketing are all great options. By Investing in the best ETF data feeds, suppliers, and APIs, Datarade enables you to generate 100x more passive income.
Finally, Investing in natural gas partnerships like Enterprise Products Partners (NYSE: EPD) can also be a great way to generate passive income. Enterprise Products Partners' strong financial foundation allows it to pay a big-time distribution while Investing in expanding its operations.
