Jul 28, 2026
Follow us on Google for more Moneywise news
Add us on Google
While we adhere to strict editorial guidelines, partners on this page may provide us earnings.
Dividend investing probably isn’t as fashionable as it once was, because the stock market and investor behavior has evolved away from it. Many investors are now focused on passively investing in index funds, while the dividend yield from these mainstream funds has gradually declined.
The S&P 500, for instance, offered a whopping 5.36% dividend yield at the end of 1981, per Multpl. In 2026, that yield has dropped to just 1.09%. This is at least partly because the largest and most profitable companies in the S&P 500 simply don’t offer attractive yields. As of July 28, Nvidia offers just 0.51%, while Apple and Microsoft offer 0.32% and 0.94% respectively, according to Seeking Alpha.
Advertisement
Even the “aristocrats” of dividend stocks, or companies that have increased their yields every year for at least 25-years, struggle to reach a high-water mark of 5.51%, according to Morningstar.
Thanks for subscribing!
Invest smarter with our free newsletter.
By signing up, you accept Moneywise Terms of Use, Subscription Agreement, and Privacy Policy.
Simply put, the conventional investing strategy that focuses on tech giants or index funds probably isn’t the best fit if you’re trying to live off dividends in 2026. But that doesn’t mean it’s impossible. There are ways to generate lucrative dividends even with relatively modest portfolios, and — if you’re willing to branch out — there are opportunities outside of stocks as well.
Here’s how.
Dividend investing in 2026
To generate meaningful dividends in 2026, you’ll need to look beyond traditional index funds to funds that are specifically designed to generate passive income for investors.
The John Hancock Preferred Income ETF (JHPI), for instance, is focused on generating dividends from a portfolio exclusively dedicated to preferred stock. Unlike common stock, preferred stocks have fixed dividends and higher yields. As of July 28, this fund offers a 5.95% 30-day SEC dividend yield — beating out some of the aristocrats mentioned above.
Similarly, the Vanguard Total Bond Market ETF (BND) capitalizes on rising interest rates. The fund manages a vast portfolio of over 11,000 bonds and offers a 4.61% dividend yield.
Finally, the State Street SPDR Portfolio S&P 500 High Dividend ETF (SPYD) tracks only 78 stocks out of the S&P 500 with the best dividend yields. At the time of writing, it offers a 4.24% yield to investors over the same 30-day SEC dividend period.
Simply put, if you’re seeking dividends, there are funds specifically designed to help you. If you’re looking to generate $40,000 in annual passive income and a combination of these stock and bond funds can help you achieve a 5% yield, you would need a portfolio worth only $800,000. Living off dividends is clearly a possibility in 2026, but it’s far from your only option — plus there’s the risk of going all in, not to mention liquidity concerns.
Even a high-yield savings account can offer you better yields than most index funds or large-cap stocks. A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.
A Wealthfront Cash Account currently offers a base APY of 3.30% through program banks, and new clients can get an extra 0.75% boost during their first three months on up to $150,000 for a total variable APY of 4.05%.
That’s 10 times the national deposit savings rate, according to the FDIC’s June report.
Advertisement
Additionally, Wealthfront is offering new clients who enable direct deposit ($1,000/mo minimum) to their Cash Account and open and fund a new investment account an additional 0.25% APY increase with no expiration date or balance limit, meaning your APY could be as high as 4.30%.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8M FDIC Insurance eligibility through program banks.
If you’re set on stocks, the good news is that you don’t have to pick and choose the best combination of these investments by yourself. Working with a professional financial advisor could help you create a robust portfolio that accounts for not just the dividend yield, but also the tax consequences, occasional rebalancing and tax-loss harvesting.
If you prefer a hands-off, tech-forward approach to building wealth, Vanguard’s Digital Advisor puts the investing expertise of one of the world’s largest asset managers right at your fingertips.
It takes the guesswork out of investing by building a personalized portfolio for you using Vanguard’s well-known low-cost ETFs and mutual funds — then keeps things running smoothly with automatic rebalancing.
The platform also offers guidance on saving for retirement and lets you set additional goals as your life evolves.
It can even help you think through debt repayment strategies, potentially freeing up more cash to invest toward your long-term plans.
With a minimum investment of just $100, it’s an easy way to get started with professionally guided investing.
Advertisement
For every $10,000 in an all-index portfolio, you’ll pay approximately $15 to $16 per year.*
You can even test-drive the Vanguard experience with no advisory fees for the first 90 days.
*All investing is subject to risk, including the possible loss of the money you invest.
Must Read
- The ultra-rich use these 5 real estate strategies to build wealth while they sleep — you can start with just $100
- Here’s the average income of Americans by age in 2026. Are you keeping up or falling behind?
- Insurance companies profit most from drivers who auto-renew without shopping around. Comparing 100+ quotes takes 2 minutes and costs nothing
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Alternative assets for passive income
The other good news is you can look beyond stocks and bonds for even better sources of passive income. Some funds focus on niche assets like datacenters, pipelines, corporate bonds, energy royalties and mortgage interest to extract much higher yields than traditional ETFs.
The Arrived Real Estate Income Fund, for instance, offers a pre-vetted portfolio of short-term loans secured by residential real estate, from construction to renovation financing. Backed by world-class investors, including Jeff Bezos, Arrived lets you access this kind of real estate-backed lending, along with individual rental properties and other funds.
The fund already manages more than $83 million in assets and has historically delivered an annualized cash yield of more than 8.1% — much higher than typical dividend stocks.
How it works is simple: Arrived offers short-term loans for professional real estate projects seeking to renovate, refinance or fund new construction. Each loan goes through a disciplined selection process and is backed by residential real estate, adding another layer of underwriting rigor and downside protection.
Advertisement
Even better, Arrived Real Estate Income Fund investors also have quarterly liquidity options beginning six months after their initial investment, offering more flexibility than many traditional income-focused investments. And the best part? You can start investing with as little as $100.
Another option, especially for those with capital on hand, is to go beyond traditional real estate to industrial assets and multifamily properties. Accredited investors can now tap into this opportunity through platforms such as Lightstone DIRECT, which gives accredited investors access to single-asset multifamily and industrial deals.
Lightstone DIRECT lets individual investors tap into the institutional approach of Lightstone, one of the largest privately held real estate investment firms in the U.S., with $12 billion in assets under management.
The platform eliminates middlemen and the extra layers of fees that can add up in traditional real estate investing, usually known as “fee stacking.” This streamlined approach provides more direct access to institutional-quality deals.
Over nearly four decades, Lightstone has delivered strong risk-adjusted performance — including a 27.6% historical net IRR and a 2.54x historical net equity multiple on realized investments since 2004.
Each opportunity requires a $100,000 minimum and undergoes a rigorous review by Lightstone’s principals, including founder David Lichtenstein.
Lightstone also invests at least 20% of its own capital in every deal — roughly four times the industry average. With skin in the game, the firm ensures its interests are directly aligned with those of its investors.
You May Also Like
- JP Morgan sees gold hitting $6,000/oz before 2027 — and a Gold IRA lets you hold the physical metal while deferring the tax bill. Get your free guide from Priority Gold
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how
- Millionaires under 43 are reshaping investing — just 25% of their portfolios are in stocks. Here’s where their money is going
Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
