Investing in dividend stocks
Although the investments in their portfolio are each made up of hundreds of other investments, this doesn’t guarantee diversification in the grand scheme of things.
- SCHD: Known for its mix of high-quality, high-yield U.S. stocks, SCHD has a solid track record of dividend growth, offering income and potential for capital appreciation.
- DIVO: This ETF focuses on income generation through dividend-paying stocks, combined with a covered call strategy, making it a reliable option for higher yields without excessive risk.
For those drawn to a dividend-focused strategy, platforms like Public make it easy to invest in dividend stocks and ETFs.
Public not only offers commission-free trading but also provides a high-yield account where you can park your cash between investments. Public also has social features, enabling users to follow and learn from other investors, share ideas, and [stay updated on market trends with real-time insights] — kind of like its own internal Reddit community.
And while community forums and friends are great sources for new ideas and launch pads, you shouldn’t take investing advice from just anyone.
That’s why the team of former hedge fund analysts at Moby, an investment research platform providing individual stock picks, is the better choice for your stock market insights.
The platform has already helped over five million users uncover stocks before they deliver multibagger returns.
Moby’s success speaks for itself. The platform’s stock picks have outperformed the S&P 500 index by an average of 11.95% over the past four years. And that’s on top of the S&P’s already consistent annualized returns — about 10% a year, on average, since the index’s 1957 inception.
Insights from Moby can help guide your decisions, whether you’re a beginner or scaling your portfolio. Moby gives you access to extensive research, broken down into simple, easy-to-understand formats.
Balancing risk with alternatives
ETFs, like those the Reddit investor chose, are good for diversification because they tap into multiple industries and geographies. But diversification works best when your assets aren’t just spread across stocks — you may also want to consider leveraging multiple asset classes.
Investors might be tempted to rely on dividend-paying stocks for passive income, but real estate can offer similar benefits. You don’t need to own property to earn rental income either, which is good news given rising home prices have priced out many first-time buyers. With the median home price climbing from $317,100 in 2020 to $412,300 in Q2 2024, and mortgage rates doubling, alternative ways to invest in property have become more appealing.
Cityfunds offers a unique way to invest in fractional shares of home equity. It lets homeowners tap into their built-up equity, while investors can access real estate without buying property outright.
For instance, Cityfunds allows you to invest in U.S. metros like Dallas and Los Angeles, starting with as little as $500. This provides exposure to the more than $20 trillion in untapped homeowner equity across the country.
Another option is the Arrived Private Credit Fund, which invests in short-term loans for real estate projects such as renovations. Investors can receive monthly interest payments on these loans, which have historically yielded around 8.1% annually. These funds back projects like renovations or new home construction, with loans secured by residential property.
And you aren’t limited to residential opportunities, especially if you are an accredited investor.
For example, First National Realty Partners (FNRP) focuses on grocery-anchored commercial real estate, leasing to major essential-needs retailers such as Walmart and Whole Foods. This sector can offer more stability, especially during economic downturns, making it a good option to add security to your portfolio.
As a private equity firm, FNRP provides insights into the best properties both on and off-market.handles all the deal details, so you can invest passively and potentially collect distribution income — just like a dividend.
Investors can research FNRP’s offerings at their convenience, request and execute investment documents and then track and manage the progress of their investments through their personalized and secure platform.
More private-market assets
For those seeking even broader protection from stock market ebbs and flows, while still earning passive income diversification, Fundrise provides access to a range of real estate portfolios, from income-focused to growth-oriented.
Fundrise gives you access to an expansive portfolio of alternative investment opportunities spanning real estate, private debt and venture capital. With over two million investors and managing over $7 billion in real estate assets alone, Fundrise is an accessible way to diversify your portfolio with the potential of yielding dividends every quarter.
To get started, all you have to do is share some details about your personal and financial background, along with your investing preferences, and they will recommend a portfolio that is aligned with your goals. Besides real estate, there are other creative ways to diversify your alternative investments, such as fine art.
Historically, art has performed well during economic downturns, acting as yet another hedge against stock market volatility. The Fine Art Group, a global advisory and art finance firm, reports a 14% return on its assets, outperforming the S&P 500's annualized return of 11.88%.
One company is looking to make art investing accessible to more accredited and non-accredited investors: Masterworks.
Here’s how it works: Instead of spending millions on a single painting at auction, investors can now purchase fractional shares of blue-chip art by renowned artists including Pablo Picasso, Jean-Michel Basquiat, and Banksy.
Simply browse their impressive portfolio of paintings and choose how many shares you’d like to buy. Masterworks will handle all the details, making high-end art investments both accessible and effortless. When the firm sells a piece you’ve invested in, you get a return from any net proceeds.
Once you join the Masterworks community of more than 60,000 investors, you can tap into a whole lot of data and insights and use them as a guide when choosing the art you want to invest in.
The Redditor’s journey to $2 million highlights the power of strategic investing and reinvestment. While dividend stocks and ETFs are excellent for generating passive income, broadening your approach with alternative sources can help create a more balanced and resilient portfolio. There are plenty of ways to build a strong investment strategy, but make sure it’s achieving what you want, rather than just following what another Redditor has in mind.
