Redditor Who Earns $550 a Month in Dividends Shares His Top 13 Stocks and ETFs

Investors are gearing up for a potential rate cut in September and assessing the opportunities in the market to funnel their capital. Dividend stocks are set to be back in action as history suggests they tend to perform well when the Fed starts a rate-cut cycle. According to a report from Raymond James earlier this year, stocks usually face "tough" times when interest rate cuts begin because the Fed only starts cutting rates when the economy is under pressure. However, the firm said dividend stocks have historically provided "downside risk mitigation" in this environment.

Thousands of dividend investors regularly share their tips and secrets on earning a stable income in dividend-related communities on Reddit. About five months ago, someone ran a poll on r/Dividends asking people to share their monthly dividend income. 

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While many high-profile portfolios earn thousands of dollars a month, for this article, we picked a portfolio that makes a modest $550 a month since we are focusing on dividend investing strategies for beginner investors. The Redditor sharing this portfolio said he's making this income on a $60,000 investment.

Many of the stocks in the portfolio are high-yield, risky REITs and business development companies. 

The ETFs and stocks mentioned in the article are purely for informational purposes and are based on an income report/comment shared by an investor on Reddit. These are not recommendations or investing advice. 

Energy Transfer LP 

Energy Transfer LP Unit ET is an energy dividend stock with an almost 8% yield. The company is less exposed to volatile commodity prices than its rivals since most of its revenue comes from fee-based contracts. Earlier this month, Energy Transfer LP Unit ET increased its full-year profit outlook after posting strong volumes for the second quarter.

Icahn Enterprises LP

Billionaire Carl Icahn's Icahn Enterprises LP Common Stock IEP yields over 23%, but it's not the safest dividend stock out there. The company recently posted second-quarter results, according to which the conglomerate's loss came in higher than Wall Street estimates, and revenue also missed expectations. The stock is down about 12% so far this year.

Altria Group

Altria Group MO has a 7.6% dividend yield and about 54 years of consistent dividend growth history. It's one of the most popular high-yield dividend stocks among income investors on Reddit. While the tobacco industry's troubles amid declining use of traditional tobacco products have made Altria Group MO investors uneasy, they are hopeful about the company's transition toward e-vapors and nicotine pouches.

Annaly Capital Management

New York-based mortgage REIT Annaly Capital Management, Inc. NLY is another high-yield dividend stock in the Redditor portfolio. The stock yields about 12% and pays $550 per month in dividend income. 

Blackstone Mortgage Trust 

Blackstone Mortgage Trust Inc. BXMT has a dividend yield of about 9% even after a 24% dividend cut announced last month, mainly due to office loan performance problems. However, the company also announced plans to buy back up to $150 million of its class A common stock.

FS KKR Capital 

FS KKR Capital Corp FSK is a business development company with a dividend yield of about 13%. The company's second-quarter results showed signs of improving asset quality. It has an investment portfolio of $1.4 billion, mainly focused on senior secured debt. 

Easterly Government Properties

Easterly Government Properties Inc. DEA is a Washington-based REIT that lends properties to the U.S. government. Over 90% of the company's rental income comes from government leases, which makes its business model safe since government-backed leases are considered trustworthy and long-term. The stock has a dividend yield of about 7.8%. 

Rithm Capital 

Rithm Capital Corp RITM is a real estate credit services company. The company manages a portfolio of mortgage-related investments, focusing on mortgage servicing rights (MSRs). As of the end of the June quarter, MSRs were the largest asset on Rithm Capital's balance sheet, valued at $9.7 billion.

JPMorgan Nasdaq Equity Premium Income ETF

JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) is a high-yield covered call ETF that distributes monthly dividend income. The ETF invests in Nasdaq companies and generates extra income by selling call options. Its dividend yield is about 9%.

Hercules Capital 

Hercules Capital Inc. HTGC is another high-yield BDC dividend stock in the portfolio generating $550 per month. Jefferies recently increased the stock’s price target to $25 from $23, reiterating its Buy rating following second-quarter results. Hercules Capital Inc. HTGC has more than a decade of consistent dividend growth. Since 2019, the company has paid 16 special dividends.

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Arbor Realty Trust

Arbor Realty Trust Inc. ABR is a mortgage REIT with a 13% dividend yield. Earlier this month Arbor Realty posted second-quarter results. Distributable EPS in the quarter totaled $0.45, beating Wall Street estimates of $0.42. Net interest income was $88 million, missing the market's estimate of $97 million.

Blue Owl Capital 

Blue Owl Capital Corp. OBDC is a business development company. It recently announced strong Q2 results and revealed plans to merge with Blue Owl Capital Corp. III OBDE. Analysts believe that after the merger, OBDC will become the second-largest publicly traded business development company after Ares Capital. Since Blue Owl Capital Corp. OBDC lends at floating rates and borrows at fixed rates, the upcoming rate cut could be a headwind. However, the company's merger with OBDE could increase deal volumes, potentially offsetting rate-related troubles.

Ares Capital Corporation

Another business development company in the dividend portfolio generating $550 a month, Ares Capital Corporation ARCC, has a yield of about 9%. The stock has seen about 10% gain in value over the past 12 months. During the second quarter, both the core EPS and net investment income rose year over year while the company funded a net $1.77 billion in new investments.