Want $1,000 of passive income every year? Buy these 2 shares now

Building a passive income stream from your investments is a dream shared by many, and it’s no surprise why. Seeing dividend payments flow into your account is extremely satisfying, especially since you don’t have to work for it other than choosing the right companies to invest in.

If you want to generate truly passive income, you’ll need to invest in businesses that are eminently stable and unlikely to be under serious financial pressures that would require a significant dividend cut to keep the lights on. In that vein, there are two solid passive income stocks that investors should be aware of. They probably won’t beat the market anytime soon, but with a little diligence, it won’t be too hard to rack up enough stock to bring in $1,000 in annual payouts you can count on for the long haul.

1. Real Estate in Alexandria

Alexandria Real Estate Stocks (ARE 1.21%) is a real estate investment trust (REIT) specializing in the development and leasing of biomedical laboratory and office space to leading companies in the sector, and it is also a passive income machine for investors who have a little patience .

It derives its rental income from its roster of over 850 tenants, many of whom are household names like Modern and Pfizerand even a few non-biopharmaceutical companies like UberTechnologies. That means its biggest tenants are unlikely to default and, when paired with annual rent increases, it also means Alexandria’s income will continue to rise even if it doesn’t buy and build. no new properties.

In the first half of 2022 alone, thanks to aggressive rental volumes and rising rental prices, it brought in more than $1.2 billion, a 27.2% increase over the first half. from last year. Alexandria stock currently has a forward dividend yield of just over 3%, which is pretty low for a REIT. But its dividend payout has increased 123% over the past 10 years, and management plans to continue to increase it steadily to take advantage of its strong cash flow.

Either way, you’ll need to invest a good chunk of change to reach $1,000 of passive income per year, or just over $32,573, to be exact. Most investors won’t have that much money lying around, so it makes sense to set up a recurring purchase of the company’s stock to build up a sufficiently sized position over the course of a few years. At its current price and yield, if you buy $500 worth of stock each month, it will only take you about five years and a few months to achieve a totally passive annual income.

While it won’t get you rich quick, it will provide cash flow from your portfolio, not to mention ownership of a top-tier life science REIT that is likely to retain its value. value over time, regardless of economic conditions.

2. Boston Properties

Like Alexandria, Boston Properties (BXP 0.19%) leases both lab space and office space – although lab space is only a small part of its portfolio. And, despite the name, he actually owns properties on both coasts of the United States, including Boston in particular. Its main tenants are powerful biopharmaceutical players, such as biogenicas well as multinational software companies like Alphabet and Microsoft.

From the first quarter of 2012 to the first quarter of 2022, its compound annual growth rate (CAGR) of rental income from its tenants in the technology, life sciences, healthcare and media sectors was 11%. In the second quarter of this year, this growth translated into revenue of $773.9 million. And with over 16 million square feet of floor space under development, it can continue to grow for the foreseeable future.

Boston Properties’ forward dividend yield of 4.9% means you’ll need to invest around $20,400 to achieve $1,000 in annual passive income, which is a bit more accessible than with Alexandria. With a monthly investment of $500, it would only take you about three years to accumulate enough stock.

But it’s important to remember that because Boston Properties’ portfolio is primarily concentrated in office space (for which there are many alternative providers) rather than rarer and more valuable laboratory space, it is not not as resilient to economic downturns. Its passive income potential is therefore a bit more risky than that of Alexandria.

Suzanne Frey, an executive at Alphabet, is a board member of The Motley Fool. Alex Carchidi has no position in the stocks mentioned. The Motley Fool has positions in and recommends Alexandria Real Estate Equities, Alphabet (A shares), Alphabet (C shares) and Microsoft. The Motley Fool recommends Biogen, Moderna Inc. and Uber Technologies. The Motley Fool has a disclosure policy.

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