Insights

Want $5,000 in Passive Income? 2 High-Dividend Stocks to Buy Now With $200,000

Passive income can be especially valuable during a down market. Moreover, dividend stocks tend to outperform their non-dividend-paying peers, simply because generating enough cash to pay a regular dividend requires consistent execution and disciplined capital allocation. In other words, dividend stocks are typically backed by high-quality businesses.

With that in mind, $200,000 split evenly across these two investments would generate $5,000 per year in passive income while also providing exposure to some of Warren Buffett’s largest holdings and leaving room for share price appreciation.

Let’s dive in.

1. Walker & Dunlop

Walker & Dunlop (NYSE: WD) is a commercial real estate services company with two primary operating segments. Through its capital markets platform, it originates loans (primarily in multifamily housing), and it provides debt brokerage and property sales services. Through its servicing and asset management platform, the company offers loan serving, housing industry research, and investment management services focused on the affordable housing sector.

Walker & Dunlop is the fourth-largest lender in the commercial real estate space and the largest provider of capital in the multifamily housing industry. To reinforce its competitive position, the company has made several key acquisitions of late, including its $696 million buyout of Alliant last year. That move strengthened its affordable housing platform, boosting assets under management eightfold to $16 billion.

Financially, Walker & Dunlop has produced solid results over the past year. Revenue soared 26% to $1.4 billion, fueled by especially strong results in its debt brokerage and property sales business lines, and earnings climbed 6% to $8.48 per diluted share.

More importantly, shareholders have reason to believe the company can maintain that momentum in the coming years. Single-family home prices have skyrocketed across the United States over the past decade, which has created a need for affordable, multifamily units. That trend should drive demand for Walker & Dunlop’s lending and asset management services.

More broadly, U.S. commercial real estate loans totaled $890 billion last year, according to the Mortgage Bankers Association. That puts Walker & Dunlop in front of a big opportunity, and as one of the largest players in the industry, the company is well-positioned to capture market share. That should translate into share-price appreciation for investors.

Additionally, Walker & Dunlop currently pays a quarterly dividend of $0.60 per share, which works out to a dividend yield of 2.28%. To that end, an investment of $100,000 would generate $2,280 in passive income each year. That’s why this stock is a smart long-term investment.

2. Vanguard High Dividend Yield ETF

The Vanguard High Dividend Yield ETF (NYSEMKT: VYM) is an index fund with exposure to 443 different stocks. Among its top 10 holdings are Chevron, Bank of America, and Coca-Cola — three stocks that collectively comprise more than 25% of Warren Buffett’s portfolio through Berkshire Hathaway. The fund also includes positions in blue chips like Johnson & Johnson and Home Depot. To that end, investors benefit from instant diversification, and with an expense ratio of just 0.06%, you would pay only $60 per year on a $100,000 portfolio.

Currently, the dividend yield on the ETF sits at 2.72%, meaning a $100,000 portfolio would generate $2,720 in passive income on an annual basis. Of course, a broad index fund doesn’t offer the same upside potential as a mid-cap stock like Walker & Dunlop, but the Vanguard High Dividend Yield ETF is the safer of the two investments discussed in this article. That peace of mind is especially valuable in turbulent market environments (like the current one).

In summary, investing in Walker & Dunlop and the Vanguard High Yield Dividend ETF can help diversify your portfolio while leaving room for share-price appreciation. Additionally, with $200,000 split evenly between both, you would earn a collective $5,000 in passive income each year.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway (B shares), Home Depot, Vanguard High Dividend Yield ETF, and Walker & Dunlop. The Motley Fool recommends Johnson & Johnson and Walker & Dunlop, Inc. and recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Free Share Allocation Reward Levels

STARTER

Class
$ 2,500 Deposit & Trade
  • REWARD^
  • 1 x Marathon Oil Corporation (NYSE:MRO)

ECONOMY

Basic
$ 5,000 Deposit & Trade
  • REWARD^
  • 1 x Pfizer Inc (NASDAQ:PFE)

ECONOMY

Standard
$ 10,000 Deposit & Trade
  • REWARD^
  • 1 x Amazon.com Inc (NASDAQ:AMZN)

ECONOMY

Plus
$ 25,000 Deposit & Trade
  • REWARD^
  • 2 x Apple Inc (NASDAQ:AAPL)
POPULAR

BUSINESS

Class
$ 50,000 Deposit & Trade
  • REWARD^
  • 4 x Apple Inc (NASDAQ:AAPL)

FIRST

Class
$ 150,000 Deposit & Trade
  • REWARD CHOICES^
  • 12 x Apple Inc (NASDAQ:AAPL)
  • 2 x Tesla (NASDAQ:TSLA)
^Please refer to the Free Share Promotion Terms and Conditions for details.

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex Securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

FREE AAPL, TSLA, AMZN, PFE or MRO Share(s)
REGISTER TO BE ELIGIBLE FOR FREE SHARES
TRAVEL ACROSS THE FINANCIAL WORLD
Act Fast - Promotion Ends In
Click Here To Get Started
FREE AAPL, TSLA, AMZN, PFE or MRO Share(s)
REGISTER TO BE ELIGIBLE FOR FREE SHARES
TRAVEL ACROSS THE FINANCIAL WORLD
Act Fast - Promotion Ends In
Click Here For More Info