Got $1,000 to Invest? Here’s How to Turn It Into $50 (or More) of Annual Income

Sources of passive income can help put you on the road to financial independence. As your earnings from those passive sources grow to exceed your expenses, you’ll no longer have to work to make ends meet, and you won’t have to sell assets either.

While it takes a lot of time (and money) to reach financial independence, everyone needs to start somewhere. Here are two stocks that can turn $1,000 investments into at least $50 worth of annual dividend income.

Your pipeline to passive income

The energy sector is a great place to find stocks that offer you passive income. The average energy stock in the S&P 500 currently has a dividend yield of around 4%, more than double that index’s average yield. But many offer dividend yields that are even higher. For example, at its current share price, natural gas pipeline giant Kinder Morgan (KMI 0.66%) provides a 5.9% payout. So a $1,000 investment in the stock would produce about $59 in annual passive income.

Kinder Morgan’s high-yielding dividend is on rock-solid ground. The midstream energy company generates stable cash flows backed by long-term contracts and government-regulated rates. It also pays out slightly more than half of that steady cash flow to investors via its dividend. It retains the rest to fund expansion projects, repurchase shares, and strengthen its already-solid balance sheet.

Kinder Morgan has several natural gas pipeline expansions underway and is investing in a few renewable natural gas projects as well. These investments should lead to increases in its cash flow that should in turn enable it to continue increasing its dividend, which it has done annually for the last five straight years.

Kinder Morgan is one of several pipeline stocks with yields of 5% or more. Other solid options include Williams and ONEOK. They also generate lots of steady cash flow and have reasonable dividend payout ratios. That gives them the funds to pay attractive dividends and invest in expansion projects that should provide them with the fuel to…

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