Dividend stocks
Investing in the stock market has never been more accessible, allowing everyday investors to create passive income streams through dividend-paying stocks—just like Warren Buffett. Companies that consistently pay dividends enable investors to earn income without having to sell their shares. High-quality companies like Coca-Cola can even increase these dividends over time, amplifying the income stream.
There are companies that consistently pay out dividends to shareholders, allowing investors to earn income regularly without selling their shares. And with high-quality companies like Coca-Cola, that income stream can also increase over time.
Buffett highlighted the power of this approach in his 2022 letter to shareholders, where he wrote, “The cash dividend we received from Coke in 1994 was $75 million. By 2022, the dividend had increased to $704 million. Growth occurred every year, just as certain as birthdays. All Charlie and I were required to do was cash Coke’s quarterly dividend checks. We expect that those checks are highly likely to grow.”
Indeed, Coca-Cola has raised its dividend every year for the past 62 years, demonstrating a strong commitment to shareholders.
However, keep in mind that past performance isn’t a guarantee of future results. When buying a dividend stock, don’t just focus on its payout or yield. Take the time to understand the company’s business fundamentals, and if you’re following Buffett’s lead, look for companies with durable competitive advantages.
Real estate
Real estate is another popular option since well-chosen properties can provide investors with a steady stream of rental income. It is also considered a reliable hedge against inflation, with property values and rental income often rising alongside the cost of living.
While the prospect of collecting monthly rent checks sounds appealing, being a landlord does have its challenges. Property ownership involves ongoing responsibilities like handling maintenance issues — from fixing leaking faucets to managing major repairs— as well as dealing with tenant-related concerns, which can sometimes be time-consuming and unpredictable.
But these days, you don’t need to be a landlord to start investing in real estate. There are plenty of real estate investment trusts (REITs), as well as crowdfunding platforms that allow you to earn rental income without becoming a landlord.
DLP Capital, for instance, offers tax-advantaged, private REITs through various investment funds, which are primarily focused on acquiring or developing safe, affordable rental housing for working families across the burgeoning Sun Belt region. These funds target potential annual returns from 9% to 13%. Investors in these funds can earn passive income through monthly, quarterly, or annual distributions while making a positive impact on American communities.
Another option is First National Realty Partners (FNRP) , which targets necessity-based commercial real estate. The platform lets accredited investors own a share of institutional-quality properties leased by national brands like Whole Foods, CVS, Kroger and Walmart. Investors can expect to collect stable, grocery store-anchored income every quarter.
High yield savings options
High-yield savings accounts offer a low-risk way to generate passive income while keeping your funds accessible. These accounts usually provide higher interest rates than traditional savings accounts, allowing your money to grow steadily without being tied up in long-term investments.
For those willing to lock in their funds for a set period, certificates of deposit (CDs) are another solid option. CDs often come with even higher interest rates than high-yield savings accounts, making them an excellent choice for those seeking a bit more return with minimal risk.
You can explore a solid way to optimize your savings through CD Valet.
With CD Valet – an online CD marketplace – users can shop and compare top certificate of deposit rates from various banks and credit unions nationwide. Their extensive database shows the most competitive rates without bias, with daily rate updates and earnings calculators which give consumers an array of free tools to help them find the right CD to meet their savings goals.
There are also non-bank options like the Wealthfront Cash Account, offered by Wealthfront, a financial services company known for its robo-advisor platform. The cash account currently offers a 4.50% APY, along with FDIC insurance coverage of up to $8 million through partner banks.
The account comes with zero account fees and offers unlimited, fee-free transfers and withdrawals, making it a flexible and secure option for growing your cash reserves.
