Oct 15, 2021
Earning a healthy passive income isn’t easy these days.
Despite rate and inflation fears all over the news, the national average interest rate for savings accounts remains at a paltry 0.06%.
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And thanks to the massive bull run over the past several years, most dividend stocks aren’t yielding as much as before.
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But you don’t have to go home empty-handed.
If you’re willing to look beyond the hottest stocks and trending tickers, you can find plenty of companies returning generous amounts of cash to shareholders.
Here are three dividend stocks offering oversized payouts to investors.
One of them could be worth jumping on with your spare change.
Morgan Stanley (MS)
The financial sector has made a strong comeback after being hit hard by the pandemic. And banks are rewarding shareholders with major “pay raises.”
Case in point: Financial giant Morgan Stanley announced a 100% increase to its quarterly dividend rate in June. It also plans to buy back as much as $12 billion of its own shares through June 2022.
In Q3 of 2021, both revenue and net income increased by more than 25% from the year-ago period.
The investment bank currently sports an annual dividend yield of 2.9%, higher than what’s being offered by other big financial stocks like Bank of America (1.9%), Goldman Sachs (2.1%), and JPMorgan Chase (2.5%).
To be sure, Morgan Stanley shares trade at nearly $100 apiece. But you can get a slice of the bank using a popular stock trading app that allows you to buy fractions of shares with as much money as you are willing to spend.
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Verizon Communications (VZ)
Moving up the yield ladder, we have telecom giant and household name Verizon.
The company’s 4G LTE network covers 99% of the U.S. population. It’s also one of the first to deploy 5G in the country.
At the end of June, Verizon’s consumer segment had 94.6 million retail connections, 90.5 million of which were postpaid.
With customers paying Verizon every single month, the company is able to deliver a healthy stream of recurring dividends to investors.
Last month, Verizon boosted its quarterly payout to 64 cents per share, which translates to an annual dividend yield of 5%.
Arch rival AT&T is yielding an even juicier 8.1% as of this writing. But earlier this year, management hinted at a potential dividend cut.
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The telecom sector hasn’t been a market favorite over the past six months.
But if you’re on the fence about jumping in, some investing apps will give you a free share of Verizon or AT&T just for signing up.
Ellington Residential Mortgage REIT (EARN)
For dividend investors who really crave high yields, check out Ellington Residential Mortgage REIT.
Structured as a real estate investment trust, it invests and manages residential mortgage and real estate-related assets.
Ellington has a unique focus: mortgage-backed securities for which the principal and interest payments are guaranteed by a U.S. government agency.
In June, Ellington Residential raised its quarterly dividend rate from 28 cents per share to 30 cents per share.
More recently, management decided to switch to a monthly distribution schedule and declared an inaugural monthly dividend of $0.10 per share payable on Nov. 26.
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“By shifting to a monthly dividend,” CEO Laurence Penn says, “we are further aligning our distribution practices with the interests and expectations of income-oriented shareholders.
At the current share price, the REIT offers a mouth-watering dividend yield of 10.2%.
Collect regular rental checks without being a landlord
Owning real estate is one of the oldest ways to earn a passive income.
But you don’t need to be a landlord to collect rent checks. And you don’t have to limit yourself to the stock market.
For instance, some popular investing services let you lock in a steady rental income stream by investing in premium real estate properties — from commercial developments in LA to residential buildings in NYC.
You’ll gain exposure to high-end properties that big-time real estate moguls usually have access to.
And the best part? You'll receive regular payouts in the form of quarterly dividend distributions without any headaches or hassles.
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Jing is an investment reporter for Moneywise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.
