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Generate $1000/Month in Passive Income by 2026: A Risky Strategy?

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  //stocks-investing.news-articles.net/content/202 .. -in-passive-income-by-2026-a-risky-strategy.html
  Published in Stocks and Investing on Tuesday, December 30th 2025 at 0:06 GMT by The Motley Fool

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Seeking Passive Income? This Strategy Aims for $1000+ Monthly by 2026 – But Proceed with Caution

The allure of passive income is strong, especially as many seek ways to supplement their earnings or build financial independence. A recent MSN Money article explores a strategy targeting a significant monthly payout: generating over $1,000 in passive income by 2026 through an investment of $12,500 spread across five "ultra-high-yielding" dividend stocks. While the prospect is enticing, understanding the underlying principles and potential risks is crucial before diving in.

The Core Strategy: High Yield, Long-Term Growth (Potentially)

The article's premise revolves around identifying companies that consistently pay high dividend yields – a percentage of their stock price distributed to shareholders. The idea isn’t just about immediate income; it also incorporates the potential for dividend growth over time and, ideally, some appreciation in the underlying stock value. The $12,500 investment is divided equally ($2,500 per stock) across five specific companies identified by the article's contributor, Mark Skousen.

The Five Featured Dividend Stocks (as of late 2023/early 2024):

Here’s a breakdown of the stocks mentioned and their key characteristics as presented in the MSN Money piece:

1. Realty Income Corp. (O): This is a Real Estate Investment Trust (REIT) specializing in freestanding retail properties leased to strong tenants. It's known for its monthly dividend payments, earning it the nickname "The Monthly Dividend Company." The article highlights O’s consistent track record and relatively stable income stream. As of the time of writing, Realty Income had a yield around 5.2%. [ You can find more information about Realty Income here ].
2. Enbridge Inc. (ENB): A Canadian energy infrastructure company involved in pipelines and utilities. The article emphasizes Enbridge's essential services, which provide a relatively predictable revenue stream even during economic downturns. ENB’s yield was cited as approximately 7.5%. [ Learn more about Enbridge here ].
3. Altria Group Inc. (MO): A tobacco company known for its brands like Marlboro. While the industry faces long-term challenges, Altria’s high dividend yield (around 8.5%) reflects a commitment to returning capital to shareholders. The article acknowledges the ethical considerations surrounding investing in tobacco companies. [ Explore Altria's website ].
4. Goodman Manufacturing Co., Ltd. (GM): This is a Chinese manufacturer of air conditioning and heating equipment, accessible through an American Depository Receipt (ADR). The article points to GM’s strong growth potential in the Asian market and its impressive dividend yield (around 10%). ADRs represent shares of foreign companies traded on U.S. exchanges. [ Find more details about Goodman here ].
5. Chevron Corp. (CVX): A major integrated oil and gas company. The article highlights Chevron’s strong cash flow and dividend history, benefiting from global energy demand. CVX's yield was approximately 3.7%. [ Discover more about Chevron here ].

Projected Income & Assumptions:

The MSN Money article projects that with a $12,500 investment spread across these five stocks, and assuming dividend yields remain consistent (or even grow slightly), an investor could potentially generate over $1,000 per month by 2026. This projection is based on several assumptions:

• Consistent Dividend Yields: This is a major assumption. Dividend yields fluctuate with stock prices and company performance.
• Dividend Growth: The calculation anticipates some dividend increases over the next two years, which isn't guaranteed.
• No Significant Stock Price Declines: A substantial drop in any of these stocks would reduce the overall income generated.
• Reinvestment Not Considered: The calculations don’t factor in reinvesting dividends to accelerate growth (DRIP – Dividend Reinvestment Plan).

Why High Yields Can Be Risky:

While high dividend yields can be attractive, they often signal underlying risks. Companies with unusually high yields might be facing financial difficulties, struggling to maintain profitability, or experiencing a decline in investor confidence. The market may be pricing in these risks by lowering the stock price and thus increasing the yield. It's crucial to investigate why a company offers such a high yield.

Important Considerations & Caveats:

The MSN Money article presents an appealing scenario, but it’s essential to approach this strategy with caution and a thorough understanding of the potential pitfalls:

• Due Diligence is Paramount: Don't simply take the recommendations at face value. Research each company thoroughly – analyze their financial statements, understand their business model, and assess their competitive landscape.
• Dividend Sustainability: A high dividend isn’t sustainable if it consumes more cash than a company generates. Look for companies with strong free cash flow to support their dividends.
• Diversification is Key: While the strategy involves five stocks, consider whether this provides sufficient diversification within your overall portfolio. Over-concentration in any single sector (like energy or REITs) can increase risk.
• Tax Implications: Dividend income is typically taxable. Factor these taxes into your calculations to accurately assess your net return.
• ADRs Carry Additional Risks: Investing in ADRs, like Goodman Manufacturing, introduces currency exchange rate risks and potential regulatory complexities.
• Ethical Considerations: As noted with Altria, some high-yield companies operate in industries that may conflict with an investor's personal values.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing in the stock market involves risk, and you could lose money. Always consult with a qualified financial advisor before making any investment decisions.

I hope this provides a comprehensive summary of the MSN Money article while also highlighting important considerations for potential investors. Let me know if you'd like me to elaborate on any specific aspect or provide additional information!